Describe a typical range of storage and retrieval facilities and stock holding scenarios you would find in the following supply chain network. You are free to use diagrams and flow charts to illustrate and underpin your analysis.
Warehousing in many guises appears at different points across supply chain networks. The main aim of the assignment is to describe a typical range of storage and retrieval facilities and stock holding scenarios in the supply chain networks. The assignment includes supply chain diagrams and flow charts. It describes the entire process of supply chain analysis from the point of production to the point of consumption. Supply chain networks are a process that describes the production of goods from the supply of raw materials to manufacturing to warehousing to consumption. Maintain a good supply chain network is essential for timely delivery of goods and services to the customers. Warehousing is one of the important parts of supply chain networks. Warehouses are the store houses where the finished goods are stored before being supplied it to the end users that are customers. It is not always necessary to that the supply chain networks and the suppliers belong to the same place or region where the good is produced. The suppliers may be close to the place of production or far from the region. Vicinity of suppliers close to the place of manufacturing helps in reducing the cost of production as it saves the transportation cost. The assignment describes the types of warehousing and the importance of warehousing at supply chain networks.
Warehouse is a place that is used to store the inventories and buffer stocks temporarily before being supplied to the clients and customers or distributors. Warehouses are used not only during the time of supplying the finished goods but are also used to store the raw materials and other products needed during the time of manufacture. The processes of warehouse management remain the same during the entire process of warehouse management and supply. Warehousing management is a process where the goods are stored, processed and dispatched it to the distributors. The main aim of the production houses is to reduce the transportation costs. Inventory management is meeting the demand of the customers by supplying the given amount of goods (Jun et al., 2015). Supply chain management is the flow of goods, services and information from the suppliers to manufacturers to retailers to consumers. It is the duty of the organization and the manager to maintain the warehouses according to the norms of the state and the organization.
Warehouses are a commercial building that is used for storage of goods. Warehouses are used for storage of goods used by the manufacturers, importers, exporters and wholesalers. There are various roles and functions that the warehouses play. It is one of the dominant parts of the urban landscape that came into existence during the time of industrial revolution. Warehousing appears in different forms in an entire supply chain network and production process of a commodity (Christopher, 2016). Supply chain network is a basic evolution of supply chain that shows inter connectivity and inter dependence of organizations for providing the goods and services to the end users that involves the customers. There are various roles that warehousing play at different point of production and distribution.
Warehousing at different points of supply chain
Warehousing plays a pivotal role in supply chain management. Its main function is to pack and ship the products stored at the store houses to the respective places where it is further processed into a finished product for consumption. First the role of warehousing is at the place where the raw materials are bought into the place of manufacturing. At that point of time the raw materials are stored and then transported to production houses. If the production houses are close to the place of storage then it is transported through cars, but if it is far then the transportation takes place through railways or ships. The main aim of any business houses is to minimize the cost of production (Faber et al., 2013). This is only possible when the warehouses or the place of storage is close to the production houses or the distribution centers. The second role of warehouses is at the point of storage of finished products before the distribution stage. This is the most important stage where the suppliers store the finished product before supplying it to the distributors.
The goods once demanded by the distributors are then supplied by the producers at the distribution centers. From the distribution houses the goods are then supplied to retailers and then the end users that are consumers. The goods that are not demanded are called inventories or stocks (Rushton et al., 2014). The next responsibility of the production houses is to manage the stock of inventories for the next season. Warehousing becomes more valuable when it is flexible and adds to the reduced cost of production. Warehousing also helps the production houses identifying the risks and the areas of waste during the distribution process. Warehousing also helps in management of inventory. It is not only used for the distribution of products but also services and information in the form of data. To avoid the risk of delays warehouse management system helps in tracking delivery and order fulfillment through data analysis. A firm can meet its long term objective and achieve competitive advantage through maintain its supply chain networks efficiently and effectively (Hussain, 2015).
Value at warehouses is provided through fulfilling the demand of consumers by storing the product to face any situation during the time of uncertainties. The customers also get a chance to consume variety of products. It also helps in assembling and manufacturing the data and products (Stadtler, 2015).
Warehousing plays an important role in management of supply chain and distribution of goods and services from the producers to consumers. Warehouses act as central location for receiving, storing and distributing products. As the goods are transported to warehouses the function is to locate, distribute, store, identify and dispatch the product to the place concerned that is temporary in nature. Before the shipment of the product to the final destination the data and products is retrieved, grouped and packaged for dispatching it to new destination. The other objective is to reduce the delivery time and the stock of inventories by reducing the cost of transportation and distribution. The utility and customer service for the product increases as warehouses helps in supplying the right product to right customers at right time and place (Davarzani & Norrman, 2015). Warehouses has to play various roles as that of cross docking, product mixing, order assembly and order consolidation that adds to the overall value to the logistics management.
Warehouses provide economies of scale by effectively managing the resources through efficient operation, storage, capacity and central location. Consolidation helps in minimizing the cost by cutting down the delivery costs and operations. Since warehouses involves shipment of bulk orders it helps in reducing cost as the production houses need not supply small shipments. Warehouses acts as buffer houses that helps in maintaining demand and supply at all seasons for the long term storage. This helps in increasing the economic benefit and profitability as the product can be supplied even at the time of low production and lean season when the products are not available. Accumulation of goods is profitable as it can help solve the problem during uncertainties (Morton et al., 2015). Warehouses also help in improving services and its benefits as it ensures that the orders are transferred full on time. There are various methods that the production houses can use that helps in determining and maintaining inventory items at warehouses. Safety stocking is one of the tools that can be used for management of stocks and inventories. It manages both the inbound and outbound sales and distribution (Wisner et al., 2014).
The three main roles are taken into considerable interests that are shared space environment, secondary packaging and cross docking. Cross docking is a system where the products are directly being shipped from the producers to consumers with no handling of stocks of inventory in order to reduce the cost of providing (Xuefeng & Hongyu, 2013). This method is being used specially to reduce cost and improve the service. It is used to meet the requirements of end users while making deliveries. Secondary packaging is a method that includes assembling of parts. Warehousing is especially useful in case of seasonal and promotional fluctuations to manage the challenges. The 3 PLs that describes the role of warehousing are conveyed with a force of skilled labors that helps in maintaining the peak performance (Richards, 2014).
Supply chain network is management of supply chain management and logistics. The network shows the connectivity between the raw material suppliers, producers, manufacturers, distributors, retailers and the end users that is consumers. The goods are transferred from manufacturers and suppliers to consumers through the process of distribution. Warehouses in this entire process of supply and distribution have an important role to play. It appears at many guises during the entire process of supply chain networks. First it acts as the storage for raw materials, then it acts as storage house for the finished products then it acts as storage for stocks of inventories. The main aim of the warehouses is to package, assemble, identify and deliver the right product to right person at right place on right time through transportation and logistics management. It is not only used to transfer products but also services and data (De Backer & Miroudot, 2014).
Point of consumption at motor vehicle manufacturing plant:
Consumption occurs at last stage of the entire process of supply chain networks. The finished product reaches the consumers after passing through many stages of supply chain process. The first stage is raw material manufacturer where the supplier supplies the unfinished product to the car manufacturer. It is then the duty of the car manufacturer to assemble all the parts that the supplier has supplied and then supply the finished product to the national distributors. The national distributor then supplies the finished product to the dealers and then to the end users that is the consumers. It is essential for the production houses to find the suppliers of raw materials that are close to the place of manufacture to avoid transportation cost and delay. This will lead to efficient provision of goods at low cost (Richards & Grinsted, 2016). After the consumption the role of the warehouses is to manage the stock of inventories that is the left over stocks that is not demanded by the consumers. The stock of inventories that is left over is then utilized for the next season when the production does not take place.
Raw material suppliers may vary in number. It is not necessary that all the parts used in assembling and manufacturing the cars are supplied just by one single supplier. For example the paints used to decorate the car may be supplied by supplier one and the tyres may be supplied by supplier two. Hence the raw material supplier can vary in number. They may also be located at different regions. It is not necessary that the manufacturing industry uses all the supply of one region only (Ross, 2015). For example, suppose the manufacturing takes place in Singapore then the tyres may be supplied from Malaysia while paints from local region or area itself. It would be beneficial for the industry to find the suppliers of raw material close to the vicinity in order to avoid transportation cost and delay in service (Toth & Vigo, 2014). The raw material suppliers also have theory own supply chain network that is given as follows:
If the supplier at tier one is situated at a distance of 1.5 miles away from the car manufacturer then the cost of production will be lowest and the goods will reach the production site on time. This will ensure efficient production and supply of commodities. The finished goods that will be supplied to consumers will be available at low prices due to which the demand of the product will high. The stock of inventories will be less that in turn will reduce the cost of warehousing. Hence the profitability of firm will increase (Ross, 2013).
Now, there can be cases where the manufactures of the products act as raw material suppliers. The definition of raw material is often categorized as unfinished goods. The car manufacturer can act as raw material supplier. This will happen in the case where the assembling of cars takes place at different regions. Suppose the fixing of tyres and assembling of motors is done at one production house while the final touch up that is painting and quality check is done at another place then in this case the car manufacturer will act as raw material supplier as it supplies unfinished product (Dyckhoff et al., 2013). If the same manufacturer acting as tier two suppliers to vehicle manufacturer is based 180 miles away from the manufacturing house, then the main difference of finished products will be in terms of storage and supply. Warehouses will act as storage houses to store the unfinished product before being supplied to car manufacturers. This adds on to the cost of production. The main difference is that the goods that are stored will not be directly supplied to distributors but will be supplied to car manufacturers. The storage house is close to the manufacturing house hence the transportation cost is less (Thomé et al., 2014).
The third case is of supplier that is located six thousand and five hundred miles away from the tier one supplier. There are various transport strategies that the supplier will use to deliver the goods at different points of supply chain networks. To avoid the transportation cost the manufacturer will find the raw material supplier close to its vicinity. This will reduce the transportation cost by reducing the cost of fuel and others. In order to effectively manage the supply chain network it is essential for the manufacturer to understand the actual demands of the customers. A proper strategy should be formed in order to manage the supply chain effectively (Dekker et al., 2013).
Topic two:
Firms hold types and quantities of stocks throughout the supply network. This includes the stock in transit. It is essential for the firms to keep in mind the requirements of consumers to mitigate the number of unnecessary stocks that accumulates due to lack of demand. A balance must be achieved between the demand and supply of goods. There are various ways to manage the accumulation of stocks and avoid unnecessary inventories. Stock in classical position acts as a medium to fulfill the demand of consumers at time of unforeseen event. Stocks are buffers between the demand and supply (Sankar, 2014).
Stocks can be balanced using various ways such as demand forecasting, storage and ease of stock accuracy. The main reason for accumulation of stocks is mismatch between the demand and supply of products. When the demand is less then that is supply then the goods are left unsold that adds to the accumulation of stocks and inventories. Forecasting demand helps the firms know how much of their produced goods are going to be sold out in the market. Hence it is essential for the firms to hire a team of experts that looks into the process of demand forecasting. This helps in matching the demand and supply that in turn reduces the risk of accumulation of stocks and inventories (DeCroix, 2013). The main reasons for keeping the stocks and inventories are time lag between the supply and demand, seasonal demand and season where the demand for the products is low, economies of scale, uncertainties such as natural disaster and appreciation in value. Proper storing of commodities at warehouses also helps in managing the stocks. It so happens that some of the stocks are not seen by the suppliers and is kept at warehouses for years. This happens in the case where the warehouse is big and no proper stock list is maintained. So in order to avoid this it is essential for the firms and warehouses to maintain the record of stock and keep a timely record of the goods are bought in and out of the warehouse. Stocks accuracy is another tool that can be used to maintain and manage stocks (Kelly & Attia, 2015).
Technologies and data’s of the past plays an essential role in the analysis of the stocks and current scenarios. The data’s of the past scenarios such as aggregate demand, gross domestic product and income of the people of a particular helps in forecasting demand for the future as demand mainly depends on price, income and other economic factors. Technologies also play an important role as it helps in maintaining ten lists of stocks and item that are kept in warehouses and is ready to be sold in the next season. Technologies are used to store the data that is used for future use (Jarke et al., 2013).
Conclusion
Warehouse management is an essential part of supply chain network that occurs in many appearances in an entire supply chain process. Proper management of supply chain management is essential for effective business. Warehouses should be managed in such a way that it helps in minimizing the cost of production and is flexible in nature. Balancing stocks and inventories is also essential. There are various ways and techniques that can be used by firms to balance and manage the stocks. Forecasting data by use of proper data helps in reducing the accumulation o stocks and inventories.
References
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