Page 248 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 12: Warehouse Management

2. Periodic systems require less manpower to control compared to perpetual systems. In Notes
perpetual systems, each item must be counted as it is issued or demanded. In periodic
systems, physical inventory count is taken only at the end of the period. This system is
especially good for fast moving raw materials and supplies.
3. Periodic systems require less calculating time than perpetual systems. In the event triggered
system, each issue or demand from stock must be recorded and accounted for. Systemic
costs i.e. the costs of running the system are generally less with the time triggered system.
4. Periodic systems may require more buffer stock to protect against uncertain demand and
lead time. The reorder time is often non-optimal as it is fixed either weekly or monthly,
and not based solely on economics, resulting in higher physical inventory costs.
5. Periodic systems run the risk in more stock outs when unusually high fluctuation in
demand occurs. When one or successive periods of unusually large demand occur, perpetual
systems can react more quickly, because they keep track of net inventory with each unit
demanded.
The proper choice of control systems is extremely important. In order to be effective, the material
control system should provide satisfactory answers to three questions: (a) How often should the
assessment of stock on hand be made? (b) When should a replenishment order be placed? and (c)
What should be the size of the replenishment order? The answers to these questions should
determine the system used to control materials.

Task Which are the different documents required to issue material? Explain the different
documents and their roles.

12.8 Impact of Supply Chain Collaboration on Warehouse
Management

Warehousing facilities play a vital role in the overall supply chain process. It is evident that
continuing globalization and changes/challenges occurring in such areas as reverse logistics,
environmental sustainability, information technology, and overall supply chain integration
are further evolving the strategies, roles, and responsibilities for warehouses.
In fact the term “distribution center (DC)” may be much more appropriate in representing the
broad range of activities that now occur in modern warehouses that go beyond filling customer
orders to provide an ever expanding array of value added services.
There are a number of situations where DC’s simply would add cost (and little or no value) to
the supply chain. DC’s add little or no value for products bought in bulk (e.g. raw materials,
manufactured items) with little or no time sensitivity associated with their use. Products
insensitive to transportation costs (i.e. transportation cost is a small percentage of product
value) also typically move directly to customers.

For other products, however, DC’s provide a dual value-added role making supply chains more
efficient and more effective. DC’s add efficiency by consolidating products for shipment to
customers, reducing transportation costs, and performing a broad range of value added services
(e.g. branding, labelling, assembly, packaging, kitting, reverse logistics). DC’s also make the
supply chain more effective. The strategic placement of DC’s allows the positioning of products
and services close to major markets and customers (the economic principle of place utility).

Optimization strategies are utilized to position product availability and delivery as a competitive
advantage while also optimizing the cost trade-offs associated with transportation, facilities,

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