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Warehouse In Supply Chain Perspective

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Warehouse In Supply Chain Perspective

Warehouse in Supply Chain Perspective - In the past, many people saw the warehouse as a cost center. A warehouse is nothing more than a place to store goods that do not provide added value. A warehouse is only a unit or division that incurs costs. Therefore, not many developments and innovations have been made in warehouse management.

In fact, the existence and function of a warehouse are very simple. Ursula Andress (born 1936), a Swiss-born film actress who starred in famous films, once said: "If I don't have room for an item, I put it in warehouses". As simple as that. The main function of a warehouse is as a storage area for various items that are needed when there is no more room to store them.

In the context of trade and distribution, the warehouse function then developed. Initially, the warehouse became a transit point (trans-shipment point) where goods were received and then sent as quickly as possible with the most efficient cost.

Over the years, in principle not much has changed from warehouse processes and activities. In the warehouse, the main activities carried out are receiving goods, inspecting goods, placing goods on shelves or storage places, receiving, and processing orders for taking goods from storage locations, fulfilling goods according to orders, and preparing for delivery of goods. This includes additional activities such as labeling, assembling, and packaging.

During the year the main activity carried out in managing such a warehouse was. Several warehouse improvements were carried out mainly in modernizing the automation process, using equipment technology, implementing ICT systems, and implementing warehouse management performance measurement systems.

Importance of supplies

The basic question is often asked: why should we store goods? This question leads to an answer to the importance of supplies. The need for supplies is what drives the need for a warehouse. Without an inventory, a warehouse is no longer needed, therefore, it is important for us to understand the reasons or considerations why we have to store goods as inventory.

In business, supplies are of many kinds. We know the raw material inventory, which is the raw material needed for the production process. In the production of bottled drinking water, for example, this raw material supply is in the form of mineral water. 

In addition to raw materials, the production process requires supporting materials such as components (spare parts), packaging, labels, and others. Companies need to prepare and store an inventory of raw materials and supporting materials to ensure the availability of raw materials in the production process.

In addition to raw material inventories, in the production process, we find work-in-process supplies. This provision is temporary. Often it does not require storage in a warehouse, because it is immediately processed into finished goods. This finished goods inventory generally requires storage in a warehouse until the product is sold and distributed to distribution channels such as distributors, wholesalers, and retailers.

Warehouse plays an important role in inventory management. In the context of the supply chain, supply is needed to anticipate uncertain and fluctuating demand patterns. In a world full of uncertainty, supplies are needed. Uncertainty in the demand for goods and the supply of goods. 

The supply of several goods is greatly influenced by weather and season, especially agricultural commodities. Likewise, the pattern of demand is largely influenced by consumer tastes, the level of competition, substitute products, complementary products, changes in people's income, and others. This parameter change determines the request pattern.

The consideration of transportation and shipping costs is often the reason many companies store large quantities of goods. There is a trade-off between transportation costs and storage costs. Companies that store large quantities of goods can reduce transportation costs because they do not need to frequently order goods from suppliers. However, a large inventory requires a large warehouse capacity, resulting in large warehouse costs.

The desire to get a discount or a reduction in the purchase price is often a consideration for companies to store goods in large quantities. Generally, the seller gives a discount on the purchase price if the purchase is made in bulk (bulk buying). Companies need to consider the trade-off between the amount of discount obtained and the cost of storing goods per unit, in addition to the risk of expiration of goods because they are stored too long.

The distance between the factory location and the consumer is a consideration in storing goods in the warehouse. How fast is the company in fulfilling purchase orders from consumers until the goods are received by consumers - in the supply chain known as lead time, is an important consideration in determining the amount of inventory. In this case, the warehouse function becomes a facility for storing goods, allowing shorter lead times.

In addition to the considerations described above, the reason for inventory storage can be caused by the company's need to anticipate a production shutdown, anticipate an increase in production or sales demand, and manage seasonality.

Even certain types of goods, such as wine, kretek cigarettes, precious stones and metals, and antique art items, are increasingly being stored over a long period of time, further increasing the value of the goods. Considerations for storing goods to increase the value of these goods are often known as investment stocks.

For organizations, companies, and public institutions, keeping documents for a certain period of time is mandatory, such as keeping invoices, tax documents, securities, and others. All of these are important considerations, why companies have to store goods or everything in a warehouse.

reference: https://supplychainindonesia.com/

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