The supply chain process has received global attention with the problems created by many minor and major factors. However, when the beverage supply chain in all segments is dissected into the specific operations, one stands out because the activity is traditionally part of an overall operation—warehousing.
The term “pre-distribution” refers accurately to the handling of product from storage to staging areas for finalizing orders before loading distribution vehicles. The activities in the operation, whether manual or automated, are important and costly. That is why pre-distribution must be discreetly identified and measured cost-wise.
Before pre-distribution, in processing, start and stop points can be defined and tracked. In packaged production, start and stop points can be defined and tracked. In pure warehousing (storage, where only space is consumed), start and stop points can be defined and costs measured.
In the storage area, studies, observations and experience have revealed that warehousing costs (like carrying an inventory) have included the pre-distribution activities. Therefore, because the pre-distribution operation starts as storage ends, identity is essential to realize actions performed and costs incurred.
An example can emphasize the significance. An ordering system, manually or computerized, creates paper or paperless orders. That means product removal from storage by whatever methods might be used and transported to a staging area. Removal could involve full or partial pallets depending on product, package and order quantities. Again, removal could be accomplished manually or automated. This is step one.
Staging activity is step two. A staging area, final order verification, can require considerable valuable space governed by volume, routes, type of accounts. Order manifests can be changed and segregated in numerous ways: geographical locations, type of account and other variables such as quantity make up on full or partial pallet loads — a problem impacting vehicle loading.
Loading delivery vehicles is step three. After order verification and ready for check out from the staging or vehicle parking area when scheduled to depart. Loaded vehicles are the last step in pre-distribution — from storage to loading — final check out — ready for actual distribution.
From an operations perspective, all three steps of pre-distribution are an essential part of an effective and well executed supply chain and should be viewed as a cost saving potential. But after distribution, the returning vehicles usually contain undelivered, damaged or refused product for disposition and/or return to storage. The situation could well be called “post-distribution” because all disposition activities realistically incur a cost, which normally is included in overall warehousing expense. Here again, unless identified and monitored, this may be a “lost cost” in the warehousing scenario.
Many beverage producers/distributors might conclude that accurately defining operations they perform on a daily basis under constantly changing conditions is not necessary to identify and control costs to establish benchmarks of performance. However, such hidden costs can affect productivity, directly stall the supply chain and reflect in the bottom line. The approach to detailing costs is realistic, positive and helps answer the question: What have been your pre-distribution costs, what are they now and can you project them in the future?
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