Warehouses are a critical component in supply chain processes. They bridge the gap between the production of goods and their delivery to customers. Supply Chain Warehouses store goods securely, pack them efficiently and hand them over to the shipper so that the ordered product can be delivered to the customer within time and in absolute good condition.
What is a Supply Chain Warehouse?
A supply chain warehouse is a storage facility where goods or products are stored so they can later be dispatched to retailers or end customers.
Whenever a customer orders a product, the staff from the supply chain warehouse picks it up, thoroughly packages it, labels it and hands it to the shipping companies. It is then transported to the customer’s doorstep. The goods or products are arranged in a supply chain warehouse to be easily picked up and delivered to the customer.
The inventories are even tracked from time to time to avoid stockout or overstocking issues. Earlier manual methods were utilized for inventory management or carrying out various supply chain warehouse processes.
But now, most supply chain warehouses have adopted advanced technology like warehouse and inventory management systems. It is software that tracks the stocks in the warehouse automatically and avoids problems of overstocking the handout of stock issues.
Role Of Warehousing In Supply Chain Management
Warehouses play an important role in supply chain management operations. They connect suppliers with customers and are key to smoothly moving goods from one place to another.
1. Safe Storage
Businesses need to store large amounts of goods or products in a particular space. Storing them in a production facility or manufacturing site will cost more and decrease the efficiency of the supply chain. Hence, businesses store their goods and products in warehouses.
Today, most businesses install CCTV cameras or alarms to prevent products from being stolen. Thus, a supply chain warehouse ensures that products are stored securely.
2. Strategic Location
Today, businesses are having warehouses near their target markets. This reduces logistics costs, minimizes transit times and enhances customer satisfaction.
3. Order Fulfillment
Warehouses are even responsible for customer’s order fulfillment. The ordered product is picked from its respective location, packaged, labelled and handed to the shipper. All these supply chain warehousing processes require full coordination and planning to deliver orders on time.
Many businesses find it challenging to carry out such supply chain warehousing processes and ultimately take the help of a third-party logistics provider.
4. Inventory management
Inventory management is crucial for the success of any business. It tracks inventory levels and ensures that the goods are refilled on time to meet customer demands.
Now, most warehouses use inventory management systems to provide real-time visibility of the stored inventories.
5. Value Added Services
Supply chain warehouses even provide various value-added services to increase a business’s profitability. Some of the value-added services are custom packing and assembly, kitting and bundling and many more.
6. Distribution Services
Distribution warehouses distribute goods and products and ensure they are delivered within time. WMS can effectively manage all the distribution processes by updating stock levels and generating reports on inventory trends. This helps businesses make wise decisions and better meet customer demand.
Different Types of Warehouse
There are various types of warehouses, which are listed below.
1. Public Warehouse
Government entities or third parties own public warehouses. You can store inventories in public warehouses for a short period of time at affordable rates. This is suitable for startups or newly growing businesses.
Many businesses share the warehouse storage space in public warehouses. Peak seasons can lead to space overcrowding and delayed order fulfillment to customers.
2. Private Warehouse
A Company owns private warehouses. The company invests a large amount of money in building the warehouse, buying heavy equipment like forklifts and cranes, managing staff and many other things.
However, it has more control over its inventory and all other warehouse processes compared to public warehouses. This warehouse is ideal for wholesalers, manufacturers, and distributors.
3. Smart Warehouse
Here, the warehouses are automated completely. Robots and drones carry out all the order fulfillment processes. They pick up the ordered product, package it and transport it. It reduces human labour and increases efficiency in the supply chain processes.
4. Cooperative Warehouse
Multiple businesses own these warehouses. Many companies utilize the space and work close together by reducing money. Farmers and wineries mainly use cooperative warehouses.
5. Cold Storage Warehouse
Cold storage warehouses are ideal for keeping temperature-sensitive goods. They may include the entire building or part of it.
Key Functions In Supply Chain Warehouses
1. Storage
The main function of a supply chain warehouse is to store goods and products before they are dispatched either to the retailer or the customer.
2. Inventory Fulfillment
It maintains accurate stock levels to avoid problems like overstocking and out-of-stock issues.
3. Reverse Logistics
Sometimes, customers do not like the product they ordered and request a return. The returned item is thoroughly inspected and kept on the warehouse shelf. It even manages the recycling and disposal of defective products. The return process should be smooth and effective.
How do Warehouses improve Supply Chain Efficiency?
1. Reduces Cost
A business can store a large volume of inventories in the supply chain warehouse. It eliminates the need to order products repeatedly and thus reduces the company’s warehousing cost.
2. Speed Up Deliveries
Warehouses are located closer to the target markets, and this leads to faster order delivery to customers.
3. Enhances Inventory Control
Warehouses are leveraged with technology like WMS, OMS, and TMS, which track stock levels and avoid problems like overstocking and out-of-stock issues. Warehouses even implement FIFO and LIFO strategies for effective inventory rotation.
The Impact of Technology on Supply Chain Warehousing
Technology has revolutionized the supply chain warehouse, improving efficiency and accuracy.
For example, if we talk about AI, it analyzes historical data and market trends more accurately and effectively forecasts product demand. It even determines the most effective route for goods transportation based on factors like traffic, distance and more.
The warehouse management system can provide real-time stock visibility in the warehouse. It seamlessly integrates with Enterprise resource planning and Transport management systems to streamline various supply chain processes.
Automated guided vehicles transport goods from one place to another in the warehouse without human effort. Thus, they reduce businesses’ labor costs. Robots can also speed up the picking and packaging warehouse processes.
Blockchain keeps records of every inventory movement and reduces fraudulent activities. It even automates payments and order verification.
Simultaneously, IOT sensors can monitor the temperature and humidity of perishable goods.
Challenges In Supply Chain Warehousing And How To Overcome Them
1. Space Constraint
There can be space problems while storing bulk products in a supply chain warehouse. Arranging goods in an improper way can lead to inefficiency and dissatisfied customers.
Solution: You need to adopt warehouse management system technology. This technology utilizes warehouse space in the best possible way. Simultaneously, vertical storage solutions like racks can be used to maximize space inside the supply chain warehouse.
2. Labor Shortages
Hiring skilled labourers inside the warehouse may be difficult. Labour costs can even go high with time, increasing the company’s operational costs.
Solution: To decrease labour costs, you should invest in warehouse automation like robots or drones.
3. Demand Fluctuations
Seasonal demand spikes can decrease the efficiency of the entire warehouse operations.
Solution: You can adopt on-demand warehousing or public warehousing during the peak seasons.
Supply Chain Warehouse versus Traditional Warehouse
SupplyChain Warehouse manages numerous things, such as order fulfillment, inventory management, and distribution. It utilizes advanced technology like a warehouse management system or adopts warehouse automation to increase the efficiency of the supply chain process.
However, traditional warehouses are meant to store goods and products for short-term or long-term storage. These warehouses utilize pen-and-paper methods for inventory management.
Warehouse Location Strategy: How It Affects Your Supply Chain
1. Proximity Near Target Markets
Warehouses located closer to target markets can decrease shipping costs and do faster order fulfillment.
2. Well Connectivity
Warehouses should have well-connected roads to facilitate goods transportation. Simultaneously, airports and railway lines should be closer to the warehouse to transport valuable or bulk goods.
Conclusion
The Indian warehousing industry has witnessed remarkable growth because of the increase in e-commerce industries. Now, most warehouses are adopting advanced technology to reduce errors and increase the efficiency of their operations.
Simultaneously, the location of a warehouse plays an important role in the success of any business. It should be well connected to rails, roads and airports to make goods transportation easier.
AAJ Supply Chain Management
