Summary of Key Points
Warehousing’s role in the supply chain has become more critical and at an escalating rate during the past two decades. Responsibilities of warehouse operators have evolved from maintaining long-term storage of materials and products to supporting economies of purchasing, production, and transportation to including light manufacturing and facilitating time-based supply chain strategies.
Warehouse operations contribute to the overall total cost of managing a supply chain, and as such, the trade-offs between warehousing costs and services to that of other critical functions of the firm must be evaluated. It is when warehousing contributes to reduced costs and improved service, flexibility, and responsiveness that warehouses become more valued to the organization and supply chain as a whole.
Value is provided through
- Storing product to fulfill customer demand and protect against uncertainties in demand and lead-time
- Providing customers with product assortment
- Postponing or delaying inventory commitment to form or location until demand is better known
- Achieving low total cost and improved lead-time through consolidating multiple orders
- Reducing lead-time through cross-docking
- Sequencing materials and components from multiple third-party logistics (3PLs) providers for time-based delivery to factory production lines
- Performing light manufacturing, assembly, and kitting
Most important, warehouses impact the receiving customer in many critical ways. Frontline warehouse personnel may be the final customer service defense in ensuring product accuracy, quantity, timing of shipment and delivery, accuracy of documentation, and overall product condition—all of which impact total cost and customer perception of the brand.