Page 228 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 12: Warehouse Management

 Spot stock, Notes
 Assortment,
 Mixing,

 Product support, and
 Market presence.

Spot Stock: Utilizing warehouse facilities for stock spotting takes place when a selected amount
of a firm’s product line is placed or “spot stocked” in a warehouse to fill customer orders during
a critical marketing period in a variety of markets, allows manufacturers with limited or highly
seasonal product lines substantially reduce delivery times to strategic markets. For example,
stock spotting is commonly used in physical distribution for agricultural products to farmers
during the growing season. At the end of the season, the remaining inventory is withdrawn to
a central warehouse.

Distribution Assortment: A distribution warehouse is used to stock product combinations in
anticipation of customer orders. It may represent multiple products from the manufacturer or
special assortments of products as specified by customers.

Example: A manufacturer supplying JIT components would stock products so that it
could be offered to the customer as and when required.

Distribution warehouses improve service by have inventory at hand to supply the principal and
also allow larger shipment quantities, which in turn reduce transportation cost.

Figure 12.1: Distribution Assortment Warehouse

Customer A Manufacturer A
Distribution
Customer B Center Manufacturer B

Customer C Manufacturer C

Mixing: Warehouse mixing is similar to the consolidation process. In mixing, full truckloads of
products are shipped from manufacturing plants to warehouses. Upon arrival at the mixing
warehouse, the shipments are unloaded and the desired combination of each product for each
customer or market is selected. In-transit mixing brings economies when plants are
geographically separated, reducing overall transportation charges and warehouse requirements.
From the service point of view, warehouses that provide in-transit mixing have the net effect of
reducing overall product storage and customer service is improved as the inventory is sorted to
precise customer specifications.
Production Support: Production support warehousing meets actual requirements of raw material,
part, sub-assemblies and assemblies required for production in an efficient manner. It provides
for safety stocks on items purchased from outside vendors protecting against long lead times or
significant variations in usage. The different types of warehousing could be Raw Materials
Stores, Processed or Semi-Finishing Materials Store, Finished Goods Store, Yard Store and so on.
The economics is reflected in the ability of providing the most economical total-cost solution by
supplying or ‘feeding’ processed materials, components, and subassemblies into the assembly
plant in an efficient and timely manner.

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