Storage and Distribution
Storage and distribution encompasses a number of activities in an organisation, carried out by the Logistics function which can be split into the following areas:
- Order processing
- Storage/warehousing and inventory control
- Transport or delivery of supplies or finished goods to the point of consumption
Order Processing
This area can be split into the following activities:
- Customer interface
- Order fulfilment
Customer Interface
This is a key activity within distribution which requires excellent customer service and relationship management skills. It involves close liaison and communication with the customer to ensure the organisation remains fully aware of customer requirements. In many cases, a direct link is maintained via Electronic Data Interchange (EDI) or a web portal which facilitates a continuous dialogue of order requirements and supply information. The use of barcode and RFID system allows for orders to be tracked by the customer at all steps of the order process.
Order Fulfilment
This involves internal liaison and communication to ensure the customer receives exactly what was ordered at the time and place specified on the order. Interpretation of the customer order is critical to ensure all internal stakeholders fully understand the customer requirements.
Storage/Warehousing and Inventory Control
The role of the warehouse should be to securely hold inventory, make inventory available for the point of consumption and maximise throughput of goods whilst minimising costs. Most organisations use a computerised Inventory Management System which makes this function significantly more efficient. The movement of goods can be broken down into four phases:
- Goods received – goods received from suppliers and recorded
- Goods transferred to stock – goods moved to secure storage area
- Goods selected for issue/use (picking) – locating, identifying and retrieving goods for despatch
- Goods moved to despatch and loaded – goods moved to despatch area to be checked and packed before despatch to the customer
The purpose of controlling inventory is to achieve an appropriate balance between holding enough inventory to satisfy customer orders and not holding so much inventory that it negatively impacts the financial performance of the organisation.