Page 231 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes Stockpiling

In the case of seasonal products, like agricultural commodities which are harvested at specific
times but consumed throughout the year, or products like sarees which are manufactured
throughout the year but sold mainly during festival seasons, such products require warehouse
stockpiling. Stockpiling provides an inventory buffer, which allows production efficiencies
within the constraints imposed by material sources and consumer behavior while at the same
time supporting marketing requirements.

Cross Docking

A cross-docking is a practice in logistics of unloading materials from an incoming truck or rail
car and loading these materials in outbound trucks or railway wagons, with little or no storage
in between. The idea is to transfer incoming shipments directly to outgoing trailers without
storing them in between. Shipments typically spend less than 24 hours at the facility, sometimes
less than an hour.
Cross-docking may be done to change type of conveyance, or to sort material intended for
different destinations, or to combine material from different origins. Simply, stated cross-docking,
means receiving goods at one door and shipping out through the other door almost immediately
without putting them in storage. Typical applications of cross docking are as follows:
 Hub and spoke arrangements, where materials are brought in to one central location and
then sorted for delivery to a variety of destinations.
 Consolidation arrangements, where a variety of smaller shipments are combined into
one larger shipment for economy of transport.
 Deconsolidation arrangements, where large shipments (e.g. railcar lots) are broken down
into smaller lots for ease of delivery.
Cross-docking may also involve offloading pre-assembled products for integration with other
core orders before onward delivery to retail outlets. The process takes place without stock going
into storage. Product categories considered suitable for cross-docking include slower-moving
lines, fast-moving bulk products, chilled and frozen food, and product lines where sales are
skewed geographically.

12.3 Warehousing Options

It is not necessary for the firm to own and operate its warehousing requirements. The different
options include owner operated, private, and public warehousing:
 An owner operated warehouse is owned or/and managed by the same enterprise that
owns the merchandise handled and stored at the facility.
 A private warehouse facility is warehousing on a contractual basis by Third Party Logistics
Providers (3PL), who provide unique and specially tailored warehousing and logistics
services to clients.
 A public warehouse, in India, is a warehouse operated by the Central Warehousing
Corporation of India or by State Warehousing Corporations.
These definitions are often confusing; especially as terminology of ‘private’ and ‘public’ in many
US learned papers are differently used. Therefore, this clarity is important.

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