What is the purpose of a warehouse?

Answer 1

Our primary aim for our warehouses and distribution centres is to facilitate the movement of goods from our suppliers to our customers and, by doing so, meet our customers' demand in a timely and cost-effective manner. In order to achieve this efficiently we may have to hold stock, but this is not the main role of our warehouses. We may hold stock for contingencies, or to give a rapid customer service, or in preparation for a new product launch. But in their purest form our warehouses, like passenger terminals, should be transhipment areas from where we despatch all the goods we receive as effectively and efficiently as possible. If we could achieve this we would not incur costs in holding goods (or people) unnecessarily. However, the overriding factor is that we must meet our customers' demand and expectations. For this reason we must hold some stock, but we should minimise this so that we avoid stockholding costs. Our basic aim must be to minimise the total cost of the operation while providing the desired level of service. Some valid reasons for holding stock include the following. * As a buffer/consolidation point between two production processes

* To cover demand during suppliers' lead-time

* To enable savings to be made through bulk purchases or discounts

* To cope with seasonal fluctuations

* To provide a variety of product in a centralised location

* The build up/holding of anticipation stocks (for example, before a new product launch)

* The build-up and holding of investment stocks

In addition we may also use warehouses to break bulk stocks down into smaller orders, to tranship goods, to consolidate and complete order activities for our various dependent locations. We should view a warehouse as a place to tranship goods to customers. This may involve some temporary storage but, essentially, it is a place where we undertake customer order completion, combining individual items from various locations and possibly splitting bulk products. Our primary aim for our warehouses and distribution centres is to facilitate the movement of goods from our suppliers to our customers and, by doing so, meet our customers' demand in a timely and cost-effective manner. In order to achieve this efficiently we may have to hold stock, but this is not the main role of our warehouses. We may hold stock for contingencies, or to give a rapid customer service, or in preparation for a new product launch. But in their purest form our warehouses, like passenger terminals, should be transhipment areas from where we despatch all the goods we receive as effectively and efficiently as possible. If we could achieve this we would not incur costs in holding goods (or people) unnecessarily. However, the overriding factor is that we must meet our customers' demand and expectations. For this reason we must hold some stock, but we should minimise this so that we avoid stockholding costs. Our basic aim must be to minimise the total cost of the operation while providing the desired level of service. Some valid reasons for holding stock include the following. * As a buffer/consolidation point between two production processes

* To cover demand during suppliers' lead-time

* To enable savings to be made through bulk purchases or discounts

* To cope with seasonal fluctuations

* To provide a variety of product in a centralised location

* The build up/holding of anticipation stocks (for example, before a new product launch)

* The build-up and holding of investment stocks

In addition we may also use warehouses to break bulk stocks down into smaller orders, to tranship goods, to consolidate and complete order activities for our various dependent locations. We should view a warehouse as a place to tranship goods to customers. This may involve some temporary storage but, essentially, it is a place where we undertake customer order completion, combining individual items from various locations and possibly splitting bulk products.