While both FIFO and FEFO have their respective benefits, one will surely matter more to you depending on the products you sell.
For inventory management best practices, stock rotation is right near the top. At its core, stock rotation is a strategy that helps you to ease the problem of stock loss. It’s about organizing your stock in a way that allows you to avoid loss through expiration or obsolescence.
There are two main stock rotation or inventory maintenance methods that are worth noting: First-In, First-Out (FIFO), and First-Expired, First-Out (FEFO). Let’s look at the core differences:
FIFO Stock Rotation Method
What is First-In, First-Out?
The FIFO method means you aim to sell the products that arrive first in your store. Slightly older products are placed at the front of the shelf, newer products near the back.
You would expect items in front will be the first items out. That’s especially true if customers are in a rush and want to grab the first product off the shelf.
A well displayed shelf goes a long way to persuading your shoppers that all of your products are worth buying.
What are the benefits of FIFO?
For one, it allows you to avoid the problem of dead stock.
By using a FIFO method, you avoid the problem by selling inventory that arrives first. As you arrange it accordingly on your shelf, you shouldn’t need to worry about facing dead stock.
Secondly, it reduces the impact of inflation.
FIFO reduces the impact because you’re selling your oldest items first. If you assume that inflation is constant, the purchase price of older inventory is lower than that of the stock you bring in later.
Who should use the FIFO method?
When choosing this method, one of the deciding factors is the type of products you sell. It works well if you stock seasonally items, fresh food or have a policy of displaying and selling older stock first.
It also works best if you stock products that have short demand cycles, such as clothes where styles can quickly become outdated.
FEFO Stock Rotation Method
What is First-Expired, First-Out?
While First-in, First-Out is the most common used stock rotation method, a second accepted method is First-Expired, First-Out (FEFO).
FEFO is an approach to dealing with perishable products or those with expiry dates that begin at your warehouse and ends at the store. It’s the expiry or sell-by date that triggers this process.
Instead of immediately putting products at the back of the shelf, you first check the expiry dates. Then place those items with the shortest shelf-life near to the front, if not directly at the front, so customers will tend to buy them first.
Assigning expiry dates to batches allows everyone in the supply chain know what’s happening right up to when your product reaches the shelf. With a robust inventory management system that tracks the information in place, you’ll know exactly when to push stock from your warehouse to the store effectively.
What are the benefits of the FEFO method?
One benefit of following FEFO is that it allows you to guarantee product quality, which leads to customer satisfaction and a boost in reputation.
For example, let’s say you sell Dairy products. Using the FEFO method will ensure that you sell these products either by their sell-by date or before. Your customers will know when they buy your products, they will receive products of high quality.
Similar to FIFO, following the FEFO method allows you to avoid dead stock. While FIFO refers to dead stock at store level, FEFO helps avoid obsolete inventory at a warehouse level.
A third benefit is cost reduction. By following it, you can reduce the cost of stock expiring on your shelf, plus the cost of collateral damage to the brand name.
Who should follow the FEFO method?
The ‘E’ in FEFO – Expired – gives its main purpose away. Therefor it’s best to use the FEFO method if you sell perishable goods, food and beverage industry, or a pharmacy where offering a product past its expiry date can have serious consequences.
The term milk run may bring cows, farms and sentimental thoughts to mind, but there’s a reason the updated concept is beneficial to your business.
Why Is It Called a Milk Run?
Don’t let the old-school name put you off. The milk run method might solve your delivery and efficiency woes. The Milk run got its moniker from the milk industry practice wherein a single tanker goes to different dairy producers every day to collect milk and then deliver it to the milk processing firm.
This ensures that there’s a regular supply of fresh milk and that overstocking is prevented. It also ensures just-in-time delivery and reduces the possibility of waste and material damage.
How Does It Apply to Material Handling?
Using the Milk Run method has become quite common for many lean manufacturing facilities. Remember that the lean concept focuses on optimizing every aspect of production including material handling and transportation.
The Milk Run method simply allows more frequent deliveries of materials and supplies to more than one area that needs to be re-stocked. Often this helps reduce the levels of overstocking or having to manual call for more materials.
It also keeps production processes flowing across a shop floor which drastically reduces downtime. This is why it is regularly applied to optimize a supply chain.
Deliveries are most commonly made to areas that are in constant need of being re-supplied. These delivery routes are normally timed out during the shift to operating at peak efficiency, to ensure that the assemblers can continuously assemble according to production schedules.
The operator will pick up their materials at a central warehouse or “supermarket” and then follow the route delivering or dropping off the material to the assemblers at different points.
What is milk run system?
These deliveries are most effective and efficient when completed by a system.
In a larger set-up, there will be more material handlers back at the storage area preparing the next milk run route so the driver can easily begin his next delivery route. Whereas in smaller operations this is completed by the same material handler/driver.
Thus, the method used in preparing the next delivery route usually depends on the size and practices in a factory or warehouse.
Generally, the steps within a milk-run route can be reduced down to:
- Handling of Materials at the drop stations
The biggest challenge when initially setting up Milk Run routes is the design and creation of the routes and the timing of the intervals. This is because it’s the determining efficiency factor when establishing the method.
Lot of testing, experimenting and time goes into the process before you get it right. The area of the route and the distance from the storage area to the different delivery points all play a big role in the effectiveness and efficiency of such a route.
Also, the amount of demand your delivery points would generate and how often they would need to be re-supplied. This can be difficult to manage and implement because many times a production schedule is unknown and can be fluid. So, the final Milk Run plan must consider these factors and the effect of real-time occurrences.
The aim is efficiency
It might take years of practice and modification until a milk run is operating at peak efficiency. Brimich Logistics is more than happy to work alongside organizations, increase their success, and implement milk run routes into their material handling practice.
Is it time for you to consider a drop trailer or drop and hook freight service for your business?
Capacity crunch and driver shortage has caused serious issues in many businesses’ supply chains and has increased the demand for drop trailer / drop and hook shipping programs.
What is a drop trailer program?
A drop trailer program is when a carrier brings a tractor to the loading dock and picks up a trailer loaded previously. Drop-and-hook takes the process of trailer shipping one step further. A carrier will arrive with an empty trailer to drop, pick up a loaded trailer, and continue on.
In the US, many shippers are now considering such programs mainly because of the new hours of service rules issued by the Federal Motor Carrier Safety Administration (FMCSA) which are more strictly monitored by the ELD mandate.
Drop trailer services can also have a significant impact on the efficiency of your supply chain. Drop trailer programs help shippers and carriers plan more effectively for deliveries and outbound shipments as it’s important for them to align their schedules.
Without drop trailers, a carrier must arrive within a narrow time window to load or unload the trailer. Depending on how the appointment coordinates with their on-duty schedule, and considering other conditions such as traffic, weather, breakdowns or unexpected events, the driver may be forced to wait for hours, thus missing the appointment altogether.
In these situations, detention fees, late delivery fees, and a negative vendor scorecard are unpleasant results.
Drop Trailer Benefits for Carriers:
- Better trailer planning. You decide when you pick up and drop off.
- No more waiting to pick up a load or be live-loaded.
- Great for time-consuming loads, like floor-loaded freight.
- Higher delivery percentages that are on time.
Drop Trailer Benefits for Shippers:
- A smoother supply chain operation. You can load or unload a trailer at your convenience or when staffing levels are adequate; no more paying overtime to load or unload when a truck is early or late.
- Superior for time-consuming loads.
- Avoid extra driver or truck detention charges.
- Higher on-time delivery percentages.
- Decrease fines from strict retail Must Arrive By Date (MABD) requirements.
- Better retailer relationships with vendor scorecard performance.
On the downside, there may be an initial cost to implement a program. Every trailer that a carrier takes out of over-the-road service is lost revenue, so to recoup it, there will be a cost for a drop trailer. Of course, this cost will pay for itself because there should never be any detention fees.
Drop trailers should not become warehouses; the maximum time a trailer should sit is a week. In most drop trailer programs, trailers turn two or three times a week.
There’s a lot of up-front heavy lifting to implement a drop trailer program. Not all carriers supply a drop trailer service therefor finding one that does can be time-consuming. Trailers make carriers money, if one of your carriers doesn’t want to drop a trailer, simply look at using a different one.
What Can Your Business Expect from 3PL Providers in the Ever-Evolving Digital Age?
There’s no doubt the third party logistics (3PL) landscape has altered significantly within the last decade. As mobile technologies and ‘smart’ working practices continue to develop, further growth, and potential benefits, are inevitable.
With expected growth in third party logistics markets forecast to be as high as 15 percent, the demand to service in these markets in 2020 is sure to generate fierce competition.
A greater consumer demand for 24/7 services and reduced costs means efficiency and accuracy are going to be a crucial points for successful 3PL providers. Businesses will remain focused on the goal to drive down their own operational and labor costs by outsourcing logistics to 3PL service providers. But success will also depend on their willingness to adopt new technologies.
The following are the most influential changes predicted within the next 7 years. There’s a very good likelihood they will become common among most third party logistics companies.
1. Extended Collaboration Between Shippers and 3PL Companies
Third party logistics companies will rely heavily on technology to collaborate, connect, and interact with customers. Electronic data exchange services are going to be critical, not just for the performance and integrity of the info, but also to accommodate the speed of change.
Vendor managed inventory, where the supply chain vendor monitors the buyers inventory and makes periodic resupply decisions, are going to be commonplace and allow smaller 3PL services to operate via web-based portals and user-friendly access systems.
2. Mobile Application Expansion
Dependency on paper records in warehouses is becoming a continually diminishing memory. Everything will be focused around agility through mobility. As we’re already seeing, mobile devices are becoming more commonplace and will eventually be used by all third party logistics firms.
With the potential for RFID enabled devices to carry data information with them, product and providence for identification and traceability become easier. Customers are going to be ready to order and process freight shipments anytime, anywhere, 24/7.
3. Dedicated Smart Technology from Third Party Logistics
Third party logistics providers will see the advantages of investing in smarter IT and software systems which may deliver a quick and solid ROI.
By decreasing inefficiencies, software like Transportation Management Systems (TMS), will drive down costs and save time. As voice recognition becomes more accurate, voice prompts and commands are going to be standard within the supply chain process, like stock inquiries or freight tracking.
Improved speech recognition software also will allow workers to speak directly with their Warehouse Management System (WMS) to enhance stock records, speed up order turnarounds and shorten staff training periods.
4. Leveraging Massive Data and Knowledge Sharing
Cloud-based technologies are going to be employed by the bulk of third party logistics companies as they embrace the new age of ‘Big Data’.
3PLs will recognize the necessity to permit client access to their own systems to enhance efficiency in areas linked to seasonal trends, and therefore accommodate the demands of flexible operations. Shared data will also allow the traceability of an item at any given point within the supply chain.
5. A More Globalized Economy
In 2020, an increasingly globalized economy is going to be more integrated. 3PL providers are going to be expected to figure on a bigger scale with a distinctly international outlook.
Distribution will also expand globally with more opportunities opening up. This will create a more complex supply chain, varied costs, increased integration processes, and thus a rise in expert third party logistics.
The 3PL industry will face many challenges within the future, but by 2020 the world will also have grown dramatically, largely due to the expansion of emerging global markets.
As we’ve seen with the meteoric rise of technology itself, change can happen swiftly. We will see more and more mergers & acquisitions over the approaching 7 years within the third party logistics world.
With such a competitive landscape, we will also see more standardization in the expectations of shippers and supply chain managers. The foundational businesses, those that actually start the wheels turning, will experience the end benefits.
At Brimich Logistics, we strive to stay on the most productive cutting edge of 3PL technologies in order to serve you better.
Contract Packaging Just May Be The Ticket To Growing Your Business
When people hear the term co-packing, also known as contract packaging, there are two questions they ask. “What is co-packing, and how does it work?”
This is an arrangement whereby a firm (let’s call them firm A) allows another firm (firm B) to handle the packaging of its products. Let’s look at co-packing agreements in depth.
How does co-packing work?
What is a co-pack agreement? Co-packing is an agreement between a firm A and its co-packer, firm B. It allows firm B to handle all the packaging processes for firm A.
This contract allows firm A to focus on its specialty, which is production, and firm B focuses on the packaging, branding, and logistics. The two companies have to come to a formal co-packing agreement which outlines the nature of their relationship.
Why do firms opt for co-packing?
There are many reasons why your firm might want to consider co-packing as a way of streamlining its business operations, including:
- Cost – For most firms that opt to enter into a co-packing agreement, cost is the main driving factor. Instead of firm A establishing a packaging unit, these costs can be saved by outsourcing the services of a co-packer.
- Technology – Co-packers invest a lot of resources in technology that helps to make the packing exercise smooth and time efficient. Many companies lack this technology, so it is necessary to seek a partnership with a co-packer.
- Spike in demand – A co packer’s services can come in handy if a company is experiencing a spike in demand for its products. This sudden increase may mean the company is unable to meet the packaging requirements at its facility, so they need to enter into an agreement with a co-packer.
- Specialization – Specialization is a core principle of economics and running a business. Companies that choose to specialize in one specific task might find the services of a co-packer to be necessary. This may inform their choice to enter into a co-packing agreement.
Which industries can co-packing serve?
Co-packing, as has been established, focuses on the packaging and branding of products given to them with permission from another company. The services of a co-packer can cut across many industries.
With the question of what co-packing is and how it works answered, the following list of industries stand to benefit most from agreements with a co-packer.
- Cosmetics – The cosmetic industry is one that relies heavily on the right packaging to make a dent in the market. The services of a co-packer can help a firm in this industry to transform into a market leader.
- Pharmaceuticals – Many times, medicine isn’t packed by its manufacturing firm. Co-packing is a crucial aspect of collaboration in this industry.
- Beverages – Bottling companies are a must have for the beverage industry. Without them, it would present a challenge for a company to distribute its products.
Is Co-packing Right for You?
The answer to this question will be based on two things; what you produce and in what quantity. This is what determines whether your firm needs a co-packer.
Who Do You Trust to Manage Your Products Within The Supply Chain?
Transit inventory consists of goods that are still in transit between companies. When a transaction involves the shipping of large quantities, it can take days or even weeks to occur.
Transit inventory can also result in accounting and ownership issues for companies that don’t track shipments between locations.
Large firms use the services of freight consolidators to combine inventories from several locations into one shipping source to establish economies of scale and reduce the input cost per unit. Consolidating shipments increases the size of transit inventory as well as the transit time.
Some firms find themselves in volatile conditions, uncertainty in terms of product quality and delivery times from suppliers, and fluctuating demand.
To protect themselves against these conditions, companies keep buffer or safety inventory, which is stock at hand that exceeds demand.
When a firm runs out of existing inventory, it doesn’t have to backorder items, and as it can source them from buffer inventory.
Customer service is a crucial motivator to hold buffer inventory, as the firm is less likely to run out of stock and make the customer wait for the next order cycle. Buffer stock also mitigates the risk of customers switching to another supplier for their orders.
Anticipation inventory is stock that firms purchase in addition to their current need when they anticipate an increase in demand.
When there are anticipated events like seasonal increases in demand or labor strikes, firms ramp up their orders or production to be able to meet all orders.
Retailers typically stock anticipation inventory before demand increase for, for example, Christmas or the back-to-school season.
Manufacturers also maintain or increase production when demand is low, so they have stock available when demand rises again.
Producing anticipation inventory also eliminates the need to employ additional means of production in reaction to a demand increase.
MRO Goods Inventory
MRO goods are the maintenance, repair, and operating supplies that support production processes. Firms consume MRO goods during production, but they don’t form part of the finished product as raw materials or work-in-process inventory.
Examples of MRO goods include:
- Fuel, oils, lubricants, and coolants
- Janitorial supplies, protective clothing, and uniforms
- Packing materials and storage products
- Tools, screws, nuts, and bolts
Secondary supplies to support the production infrastructure can also fall under MRO goods, for example, stationery, paper, and toner.
Theoretical inventory is the average inventory at a given throughput while assuming an ideal situation where is inflow, processing, and outflow rates are equal. In other words, no work-in-process item has to wait for processing.
Firms determine theoretical inventory to calculate the minimum amount of stock that is necessary to maintain the given process throughput.
Theoretical inventory = Throughput x Theoretical Flow Time. Theoretical time includes the sum of all processing times for one unit and doesn’t include wait times.
Work-in-process inventory is equal to theoretical inventory when the actual process flow time is equal to theoretical flow time.
In case you missed it, check out Part 1 of this article here >>
What Can Be Measured Can Be Controlled – for Profit!
Most businesses that supply products carry inventory, which is a stock or store of goods. A company manages its inventory and keeps it at hand so it can meet demands or carry out its daily operations.
The types of managed inventory that a business has depends on the industry. For example, retailers have finished products in stock, and manufacturers use raw materials or work-in-process.
An organization must manage its inventory carefully to ensure that it can fulfill its reason for existence, especially in volatile conditions with fluctuating demand.
In this section, we’re looking at the different types of managed inventory.
Raw materials are a type of managed inventory that manufacturers use in the production of product components, subassemblies, or finished products.
Raw materials typically consist of commodities, extracted products, elements, or objects that the firm extracted or purchased.
Commodities that organizations implement in their production process as raw materials include things like minerals, ore, wood, steel, and chemicals.
Raw materials can also be finished products like nuts, bolts, wheels, and engines if the firm purchased the inventory to produce components.
Work-in-process is a type of managed inventory that:
- Is not a raw material,
- Is a component of a parent,
- Is processed or about to be processed in the production system
Work-in-process inventory includes materials, components, subassemblies, assemblies released for initial processing.
This inventory can also be fully processed materials that are awaiting inspection before inclusion in finished products.
Finished goods are completed products that underwent and passed final inspection and that are ready for order by wholesalers, retailers, or final users. This type of inventory does not have a parent in the production process.
However, the end-user may purchase a single unit to use as a component in another product, for example, car engines that are manufactured as finished goods and sold to wholesalers.
The machines in a production facility typically don’t have the same output rate. One station can take longer to process parts as the one before it in the production process.
Additionally, some machines may be removed from the production line for repairs or maintenance.
When looking at a functioning line, however, it may appear as if all the machines have a corresponding output and that the production process is flowing smoothly.
Production flows because of decoupling inventory or safety stock that ensures an indirect feed between devices and acts as shock absorbers in a production line.
Decoupling inventory prevents inventory from piling up at slow-moving stations in the production process, eliminating bottlenecks that can affect other stages in the process.
Ordering or producing large quantities, the ordering cost per unit decreases. However, ordering large quantities can increase carrying and holding costs.
Economic order quantity is a concept that businesses follow to balance carrying and holding costs with the costs related to orders or production.
When the costs related to holding and carrying costs are equal, the total cost per unit is at its lowest. Cycle inventory is the excess stock that the business order to achieve this minimization point.
Continue to the second part of this series: Types of Managed Inventory Part 2
Pharmaceuticals Help Keep Us Healthy, But How Do You Keep Pharmaceuticals Healthy?
More than 131 million people use prescription drugs, which is 66% of all adults in North America according to the Georgetown Health Policy Institute. Many people depend on these drugs to manage severe or chronic conditions and maintain a certain quality of life.
The supply chain of prescription drugs and other pharmaceutical products must meet specific requirements. If a drug loses its quality or potency at some point between production and consumption, it offers no medicinal value.
Warehousing is a crucial component of the pharmaceutical supply chain management that contributes significantly to the wellbeing of millions of people.
In Canada, pharmaceuticals are regulated by the Health Products and Food Branch (HPFD) of Health Canada. In the United Sates, the Food and Drug Administration (FDA) regulates pharmaceuticals.
There are numerous regulatory standards that apply to pharmaceutical warehousing, products, and processes through the Good Manufacturing Practice (GMF) standards.
Included are several pharmaceutical warehousing requirements in the GMF standards:
- Warehouses must store drugs in a manner to prevent contamination, and that allows for thorough inspection and cleaning of the area.
- Each drug lot must have a unique and traceable code to allow for lot identification and lot status identification (approved, quarantined, rejected.)
- Each drug in the warehouse must have written procedures that describe the processes for distribution and recalls.
- The written procedures of each drug must describe appropriate storage conditions.
Appropriate storage requirements present unique challenges to pharmaceutical warehouses. Each drug has individual storage requirements in terms of temperature, lighting, and humidity. The warehouse must follow the drug manufacturer’s storage requirements to the letter.
Meeting storage requirements often involves setting and monitoring the environmental parameters of a storage section’s temperature- and climate control.
Temperature control involves controlling and monitoring the temperature of the facility.
Climate control refers to the regulation of a storage unit’s temperature and humidity.
What to Look for in a Warehouse Partner
A pharmaceutical warehousing provider should not only meet GMF standards, but the facility should also meet the following requirements:
- The warehouse should be sterile with enough space for storage, maintenance, and inspection.
- The facility should have sufficient ventilation and lighting.
- The facility should have a dedicated quarantine area for drugs that are no longer usable.
- The warehouse should have indoor and outdoor security systems in place to prevent unauthorized entry and theft.
- The warehouse should be able to store drugs without specific storage requirements at room temperature.
- The warehouse partner should be able to provide the client with written documentation of policies, distribution, inventory, and procedures.
Brimich Logistics for Pharmaceutical Warehousing
Brimich Logistics in Ontario provides a wide range of warehousing and value-added services. Our facilities are HACCP-compliant, and SQF certified. The benefits of Brimich Logistics include:
- Real-time data on inventory
- Efficient warehouse staff
- Facilities to store pharmaceutical drugs according to manufacturer instructions
- Industry-standard safeguarding against drug contamination
Brimich Logistics provides pharmaceutical clients in Ontario with responsive and reliable warehousing solutions. We are ready to assist you with your pharmaceutical warehousing solutions today. To learn more about our warehousing, logistics, value-added, and transportation services, contact us today.
If You’re Shipping Internationally, You Need to Know This
A Container Freight Station (CFS) refers to an area of a port where the loading and unloading of containerized cargo is completed.
This area, in most cases, is an extension of the port but still under the jurisdiction of the customs authority. Here is how CFS impacts logistics.
One of the most commonly asked questions when it comes to matters of the logistics of importing and exporting goods is, “What are CFS charges?”
CFS charges refer to the fees that apply for each activity performed at a CFS, namely the import and export of goods through customs.
Various parameters determine these charges. In some cases, CFS charges can be uniform for a specified category of goods being handled.
CFS charges have a high impact on logistics when it comes to shipping goods into or out of a country. These charges can and will eat into a logistics budget if they happen to be higher than was expected.
If you are an exporter, it’s especially crucial that you understand what export CFS charges are. These are the charges that are involved when your containerized goods are packed onto the ship.
In some instances, the customs authority may liaise with customs authorities at the target destination so that they can charge an all-inclusive CFS fee that will cater for both countries, but this is uncommon.
This means that an exporter needs to always have the right information before exporting his or her goods.
How Does CFS Affect Logistics?
The smooth movement of your containers from one place to another is necessary for a logistics team to manage their products effectively.
This gives you both the peace of mind that is required to run a business and also allows you the confidence needed to make the right business decisions.
With CFS charges in play, a lot can change with regards to your logistics. This is how CFS affects logistics.
- Delays – A failure to negotiate CFS charges on time is one of the leading causes of delays that are experienced in the logistics industry. It is necessary to have an agreement in place to prevent these delays.
- Increased costs – CFS charges contribute largely to increased costs of logistics. For people thinking about getting into imports or exports, it is vital to partner with a firm that helps you with logistics to avoid these inflated costs.
- Deteriorating relationships – CFS charges are usually a bone of contention between custom authority officials and the importers and exporters. Many of the deteriorating relationships between their parties are caused by CFS charges and the failure to agree to a figure that appeals to both.
How Logistics Companies Help
- Negotiate – Logistic companies help you negotiate CFS charges with customs authorities. This takes the stress off your plate, especially if you are not knowledgeable about matters of customs.
- Streamline the logistics – Logistics, handled on an individual level, require that you keep track of each movement. This can be quite hectic. Logistics companies do this for you.
Final Thoughts: Dealing with CFS Charges
There’s no such thing as a way around them when it comes to CFS, customs, and charges that may apply to your goods. It’s essential as a business, to partner with firms and agents that help make this easier for you.
Is It Time to Move Your Business in a Different Way?
You have a business, big or small, and it’s doing great. Your products are moving, and your orders keep growing—but as usual, you wonder, could we do more? The answer is yes, and warehouse logistics can help you expand.
What is a Logistics Warehouse?
Logistics refers to elaborate planning, organizing, and management of materials and products, as well as the implementation of various complex operations. Within several industries, such as warehousing, logistics also extends to define the flow of goods, both physical and informational.
Warehouse logistics encompasses all the details of product and information flow within a warehouse. Some of these details include shipment and receiving of parcels, management of the physical inventory, and the movement of more abstract goods such as time and information.
What is the Difference Between a Warehouse and Warehousing?
Beyond the definition of a logistics warehouse, one separates a warehouse from storage by the external use of each factor. A warehouse, for instance, serves as a commercial building that stores goods and is often used by business people.
Warehouses come in various forms; some can be temperature controlled while others have specialized designs to receive different kinds of goods.
Warehousing describes the function and actions required to ease the storing of goods. The intricate process of logistics within the business chain comes from efficient warehousing.
What are the Objectives of Warehousing?
The main goals of warehousing are:
- Essential storage-warehousing should result in a safe, central location to store your materials and product
- Accessibility -that location should be accessible and suitable for your product
- Better inventory management-increase turnover and decrease shrinkage by tracking your inventory more efficiently
- Shorter lead times-accessible, well-managed storage facilitates shorter lead times, which increases customer satisfaction
- Reduce cost-efficiency in the warehousing process should result in reduced costs
Why is Warehousing Required?
The benefits of warehousing are far-reaching, both in the short-term and long-term. Here are some benefits that are proven from businesses who have consistently adopted a warehouse logistics model and a clear argument of why warehousing is required.
- The inventory counts are real-time and accurate all the time. In a unified system, the warehousing process will calculate the inventory available at any given time, their specific locations, and their use.
- The accuracy of the inventory also means a decrease in return items. In most cases, the goods get checked before being sent.
- The inventory details also mean the stock will always be available. In most cases, the stock levels operate with a required minimum, which, when hit, will trigger the purchase of more stock.
- Warehouse logistics also ensure that space is utilized effectively.
What is Warehousing in Supply Chain Management?
Warehousing forms an integral aspect of the logistics and supply chain management pattern. Put simply, warehousing is the process that makes a warehouse or storage area run smoothly within the supply chain.
The success and expansion of any business largely depend on its ability to perform well in warehousing logistics.