The Importance of Warehousing in a Logistics System
Logistical management system includes warehousing and warehouse management. Warehousing services are very common nowadays and they are found everywhere. Warehousing is part of or is a component of a supply chain management. A warehouse is a place where finished goods are stored. Apart from storage, a warehouse also is where packing and shipping of goods is done. Warehousing provides a very important economic benefit to the owner or business and to the customers. Here are some of the reasons why a warehouse is important;
A warehouse is centrally located so that it can be easy to receive, store and at the same time distribute products. When the inbound shipment arrives in a store it is the role of the warehouse personnel to identify the products, sort the products and at the same time dispatch the products to the storage locations. A warehouse should be centrally located in the sense that it must have the security measures and the environment should be friendly.
What are the economic benefits of warehousing? They provide economies of scale and they do this through the storage facilities, efficient operations and a central location. It’s through accumulation and consolidation operations that the warehouse is able to realize economic benefits. The role of accumulation operations is to enable the warehouse to act like the buffer so that it can be able to balance both the supply and demand. The consolidation operations ensure that the outbound delivery costs are cut and this should be done to both the businesses and the customers.
The main favorit role of a full service logistics system is to ensure that the overall inventories and the cycle times are reduced and at the same time to lower the costs. It’s also aimed at ensuring that the customer service is improved in one way or the other. It enables customers to have the right products and to ensure that these products are readily available and are at the right place. Another very important benefit of warehousing is that it increases the utility value of some goods hence making operations easy. Some of the other operations that are meant to add value are order assembly, order consolidation, cross docking and product mixing. These operations also aim at improving the overall logistics system.
Warehouses are sometimes used to act as contingency plans so that the outbound orders are fully filled. Safety stocking is very necessary in this case because it allows a business to maintain a certain number of inventories. Do you know what safety stocking means? It simply means an emergency which might include delays in transportation, shipment containing damaged or defective goods. From the outbound side, safety stocking can be described as insurance given against the out of stock items.
In summary, Warehousing is very important to any logistical management system. It’s meant to store finished good and also do packing and shipping. Warehousing should be done in an effective way so that it can provide an important economic benefit.