Description

O3-L5 Warehousing 

 1 of 51 Welcome to the level 5 warehousing option. The reading material below covers the unit entirely, though there are a few links and some suggested reading you may wish to have a look and this will help you to understand more of the background to each of the sections.

When you are happy with the subject, complete the assignment questions associated with this section. 

INTRODUCTION 

If you consider a supply chain as a river flowing from source to destination, warehouses exist as a sort of reservoir for goods or inventory moving along the river. They are positioned at one or more points along the route to ensure that the supply of goods does not run out. Warehouses are points of temporary storage. They can also act as hubs where goods are collected re-arranged and then re-directed to the next stage along the route.

Warehouse location, frankly is often a result of whatever is available, though ideally there are a number of factors relating to regional geography, the location of cities, towns and transport communications, which will influence decisions. However, the over-riding factor is the need to reduce costs whilst maintaining an effective operation, sufficient to satisfy the customer.

Looking in more detail, we need to examine the two key aspects of a supply chain: supply and demand:

Supply can be considered as goods coming into a warehouse. This stock becomes known as Inventory and is a significant cost to the business. Inventory holdings are therefore kept to a minimum. Factors which would lead to variations in holdings are many, but include opportunities for discount for buying in bulk, seasonal demand variations, supplier lead times (goods are increasingly brought in from the Far East and therefore lead times due to the time it takes to bring the stock over are relatively high, in comparison to locally purchased items), the longer it takes for goods to arrive, the greater the amount of stock that must be held in the warehouse. 

Demand variables relate to goods going out of the warehouse and the variety of reasons for this are relatively complex. Seasonal variations account for significant fluctuations, such as Christmas and New Year, summer for certain specific goods such as outdoor products and BBQ food, etc. The car industry gears up production to match the twice yearly new registration plates. When the plates only changed once per year there was a significant surge in car demand, but twice a year has tended to flatten out the increase.