Research and experience have revealed that for centuries various types of structures have been designed, built and/or erected for the primary purpose of storing materials either on a long- or short-term basis until products are removed for their intended use.
Over the years, warehouses of all types have been associated with the storing idea, thus the established warehouse is a storehouse. However, progress has prevailed and whatever reference is made and/or used for these warehouses, the structures deserve further clarification because even though they vary in size, they represent a very expensive multi-functional asset requiring astute management.
From an operations perspective, warehouses are in reality transition terminals. They require a stringent input/output workflow approach to analyze what happens to products during storage and “in transition.” Therefore, to ensure a successful warehouse operation, it is important to identify and specify tasks, determine needed labor/equipment, set time schedules and assess costs.
To clarify how this can be accomplished, let’s dive a little deeper into the three parts of the workflow, input function, home function and output function as described as follows:
The terminal input deals with two scenarios — the production source and the outside source. Within the production source, products usually flow directly to the terminal from packaging lines. Thus, all raw and packaging materials have been inputted to the terminal prior to packaging, then released for production. The input function also might involve marketing/advertising materials as well as other facility administrative materials.
Regardless of department, it’s important to remember that all production terminal input tasks will require labor and equipment.
The outside source normally will be called a distribution or sales center. This is the terminal receiving goods from another production facility. Other than marketing materials, the input typically would be limited to consumer packaged goods (CPGs). Even though tasks are limited, labor and equipment still are required for this scenario.
Tasks in the home function are central to terminal transition operations. Regardless of whether the materials are stacked through manual stacking, semi-automatic or automatic storage capability, the CPGs and other materials are being stored — the basic terminal function. However, storage and retrieving — the bread and butter of the beverage warehouse — dictate significant, necessary tasks. These include retrieving goods from storage, filling orders for staging, and unloading/loading vehicles. These tasks are essentially preparing for distribution, or “pre-distribution” per se, not storing or warehousing.
The pre-distribution task is finished when all scheduled vehicles are loaded, checked and leave the terminal for distribution to the market. Costing out the tasks in pre-distribution are quite different than the cost of carrying full goods inventory and is used for a different purpose. Therefore, it’s important to distinguish and separate out pre-distribution functions and costs from distribution functions and costs.
Basically, output from the transition terminal is the beginning of distribution. Different accounting systems might prefer to breakdown tasks and costs with optional methods; however, when vehicle, driver and product leave for market, that’s distribution.
There are situations where CPGs are not being produced in-house and are being delivered from a contract packager. A facility manager then can choose to set up cross docking charges and a controllable task.
It’s OK to give your warehouse a new name — they will enjoy it. But remember that what had traditionally been called “warehousing” is much more than simply storing merchandise. The evidence is real time and accurate — let’s call a spade, a spade.