Chapter 14: Warehousing: A Key Link in the Supply Chain

The first role of warehousing is storage, which is defined as the assignment of goods in a selected location. For example, warehousing includes:

The second role of warehousing is the implementation of flows of goods from part of the supply chain to another, resulting today in the transformation from warehouses to distribution centers. Given these two main roles, the essential issue in warehousing is the management of space and time (Mulcahy, 1993). First, investing in space in the optimal location in the supply chain is increasingly a scarce resource, and therefore when this type of investment is made the space has to be maximized efficiently. There can be significant financial implications for warehouse strategy that does not fit in with the overall business and marketing strategies of either the owner or its customers. Second, time is also an important resource to manage given that all goods need to be delivered on time, and has implications for how warehouses are designed and their systems organized. Just-in-time is a response to this challenge. Today, a warehouse management system achieves this through the uses of electronic data interchange (EDI), real-time tracking of orders and inventory, labor/activity reports, and the simultaneous direction of multiple processes with the distribution center itself (see Chapter 34).