May 05, 2020

Types of warehouse operation

There are many different roles for a warehouse in today’s supply chain. As can be seen in Figure 1.1, warehouses can be operated by raw materials suppliers, components and finished goods manufacturers, wholesalers, retailers, and companies involved in reverse logistics. The warehouses are often owner-operated or subcontracted to third-party logistics providers.

These warehouses fulfil the following roles:

Raw materials storage

These warehouses store raw materials and components either the purpose of"> on the brink of the point of extraction or on the brink of the manufacturing point. Raw materials must be held so as to make sure continuous production. These materials include plastics, precious metals, sand, aggregates, etc.

Intermediate, postponement, customization or sub-assembly facilities

These warehouses are wont to store products temporarily at different stages in production. These centres also are wont to customize products before final delivery to the customer.
Postponement and sub-assembly activities can include the following:

  • specific packaging or labelling being changed or added, eg for store ready items or printing in several languages;
  • computer assembly to incorporate different graphics cards, memory chips,
  • software, etc;
  • product bundling for promotional activity;
  • country-specific items being added like electrical plugs; and
  • special messages being added, eg stencilling of greetings messages on mobile phones.

Finished goods storage

These warehouses store products ready purchasable, on behalf of manufacturers, wholesalers and retailers. They provide a buffer or safety stock for companies, enabling them to create up stock in preparation for brand spanking new product launches, expected increases in demand and to affect seasonality.
Consolidation centres and transit warehouses
Consolidation centres receive products from different sources and amalgamate them for onward delivery to the customer or onto an assembly line. This can include just-in-time centres where automotive parts are delivered to a warehouse where they're brought together and sequenced for delivery onto the assembly line. They can even be retail stock consolidation warehouses where products from different suppliers are consolidated for onward delivery to the stores. Rather than deliver part-loads to the Retail Distribution Centres (RDC), manufacturers deliver to these facilities where their stock is consolidated with other suppliers for onward delivery to the RDC. These differ from cross-dock centres therein product can remain within the centre for a period of your time awaiting call-off
from the final destination. Many of these consolidation centres are operated by third parties.
Transhipment or break-bulk centres
Transhipment centres receive products in large quantities from suppliers and break them down into manageable quantities for onward delivery to varied locations.

Cross-dock centres

Cross-dock centres are seen as being the longer term for warehousing. Efficient consumer response and quick response within retail require operations to be ready to move goods quickly through the availability chain. Cross docking requires deliveries into these centres to be already labelled and prepared for onward delivery. Here the items are identified and consolidated with other deliveries, ready for despatch. Items should remain within the warehouse for as short a time as possible. Same-day receipt and despatch is the target. Although companies are starting to realize the efficiency of cross docking, there are variety of barriers to a successful introduction. These can include warehouse management systems support, internal control systems, reliability and cooperation of suppliers and carriers, warehouse design and unsure demand. Cross-dock warehouses or transhipment centres also are utilized in outlying geographic areas to transfer products onto local, radial distribution vehicles. This transhipment process can happen either inside or outside the warehouse. Typical cross-dock products are perishable items like fruit and vegetables, meat and fish, which require to be rushed through the availability chain. Motorola’s recent study (2013) showed that 31 per cent of companies practised cross docking and this was expected to extend to 45 per cent by 2018.

Sortation centres
Sortation centres are utilized in the most by letter, parcel and pallet distribution companies. Goods are collected from all parts of the country, delivered into hubs or sortation centres, sorted by zip or post code, consolidated and delivered overnight to their respective distribution areas for onward delivery.
Today’s retailers also are moving towards automated sortation centres with pallets being de-layered on entry, the utilization of mini-load systems for temporary storage and retrieval and eventually automated pallet build on exit.

Fulfilment centres
The growth of e-retailing has seen an increase in the number of customer fulfilment centres. These warehouses have been designed and equipped specifically. to manage large volumes of small orders.
These centres also can double up as returns processing centres as e-commerce features a larger percentage of returns than normal retail activities. This area is roofed in greater detail later during this chapter.

Reverse logistics centres
The growth of e-retailing and specific environmental legislation like the ecu Union’s Waste Electrical and equipment (WEEE) Directive (2007) has compelled companies to focus time and energy on reverse logistics.
Today, companies recognize that returning product to stock or removing it quickly can positively affect income . As a result, variety of warehouses are found out specifically to affect returned items. Third-party contractors are providing a service to retailers where customers return unwanted or defective items to the stores; the things are then consolidated and sent to the returns centre, where they are checked and either repackaged, repaired, recycled or disposed of. Waste legislation has also resulted in large quantities of returned packaging having to be disposed of in an environmentally friendly manner. This includes sortation by type and use as fuel or recycled material. There are case studies within the environmental section that enter more detail on this subject.
Other reverse logistics processes include the return of reusable transit packaging equipment like roll cages, barrels, kegs, pallets, tote boxes and trays. When utilized in the food industry added services include washing and sanitizing the things before they re-enter the availability chain. For example, Norbert Dentressangle, a 3PL, service and maintain quite 1,000,000 roll cages, also as 230 million trays and flower buckets and dollies for Tesco.

Public sector warehousing

Outside the commercial world there also are warehouse operations which support the general public sector, soldiers and therefore the third sector. The increasing number of natural disasters such as earthquakes, droughts and tsunamis is resulting in third-sector organizations opening up warehouses in strategic locations across the globe. This ensures that they are closer to the disaster areas and thus able to react quicker.

Other public sector warehouses will store supplies for local government facilities such as schools and offices. Products will include stationery, uniforms, furniture, hardware and software, etc.
All the warehouse operations mentioned above are often owned, leased or operated by third-party companies on behalf of a principal.
Warehouses operated by third-party logistics providers are either dedicated operations on behalf of one customer or are often shared-user or public warehouses where variety of various customers share resources and are accommodated under one roof.
These include:
companies with different products but with common customers like retailers or automotive manufacturers;
companies with an equivalent or similar products delivering to common customers, eg tyre manufacturers; bicycle manufacturers, pharmaceutical companies and multimedia companies (a typical example is where Sony, Universal and Warner share a warehouse in the United Kingdom);
companies needing similar sorts of service, eg fulfilment or returns processing; and
companies requiring an equivalent environmental conditions, eg hazardous goods, explosives or temperature controlled.
Users of shared-user warehouses are, within the main, companies trying to find economies of scale through sharing facilities, equipment and labour costs.

Why do we hold stock?

A supply chain with the minimum amount of stock within its pipeline is utopia. Unfortunately this happens very rarely. Our society and our markets aren't predictable and thus we'd like to carry stock at various stages within the availability chain. Increased consumer demand for greater choice has resulted during a proliferation of product ranges and sizes resulting in unprecedented demands on storage capacity.
Reasons for holding stock are as follows.

Uncertain and erratic demand patterns 

Suppliers of frozen dessert , suntan lotion, umbrellas and therefore the like will potentially experience erratic demand patterns supported the changeability of the weather. Other unpredictable sales can revolve around the launch of a new product and the progress of a team in a major competition such as football’s World Cup or baseball’s World Series events.

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