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Diploma in Supply Chain Management

Warehouse Management (Individual Assignment)

Lecturer: Mr. Eddie Tan

Title: Discuss and illustrate the economic justification for establishing a warehouse.

Name: Khoo Boo Kiat

WAREHOUSING STRATEGY
Warehouse storage has always been an important aspect of economic development.
After the World War two, the management gets their attention for strategic storage. They begin the need of warehouse networks.
Production planning become more dependable as disruption and time delay during manufacturing decreased.
Seasonal production and consumption still required warehousing. The storage to support stable manufacturing and consumption was reduced.
Strategic warehousing offered a way to reduce holding or dwell time of materials and parts.
Warehousing adapt to Just-In-Time (JIT) and stockless production strategies.

An important goal in warehousing is maximize flexibility.
Flexibility is facilitated by information technology.
It is able to respond customer demand in terms of product assortment.
Technology create new and better ways to perform storage and handling in warehouse operation.
Information technology facilitates flexibility by allowing the operators to react quickly on changing customer requirements.

Strategic warehousing serves to satisfy requirements related to local presence.
The local presence benefit may not be as obvious as other service benefit.
Strategic warehousing is classified as economic and service.

ECONOMIC BENEFITS OF WAREHOUSING
Warehouses offer many economic benefits for companies.
There are five basic economic benefits: consolidation and break – bulk, assortment, postponement, stockpiling and reverse logistics.

(1) Consolidation and Break – Bulk
It is to reduce transportation cost by using warehouse capability to group shipments.

The consolidation of warehouse receives materials from number of sources

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