will explain the process of the public or private warehousing
cycle. There are two major functions in the Warehousing Process:
Receiving merchandise from the
manufacturer to the warehouse.
Transferring merchandise from the
warehouse to the retailer.
The process is
very simple; the public warehouse works as a "middle man" in the
logistics process. The manufacturer produces product and ships
the product to the public warehouse. The public warehouse stores
the product until the manufacturer requests that they ship the
product to another company (usually to a grocery retailer).
public warehouses are changing their market niche from being
just warehouses of product, to being repositories of product and
information on the movement of product. In this new role of the
"information warehouse," the warehouses provide manufacturers
with important information on product movement.
discussion is geared toward the traditional warehousing
functions. This document will conclude with the ‘future trends’
in warehousing as public warehouses move to the "information
Receiving Merchandise from the Manufacturer at the Warehouse
warehouse receives product from a manufacturer and holds the
product until the manufacturer specifies to ship the goods. The
first step in this process is to maintain product in the
warehouse. To do this, the manufacturer will send shipment
notification to the warehouse to specify that an order is to
arrive. In EDI, this stock transfer is either an EDI 943
(Warehouse Stock Transfer) or Advanced Shipment Notification
(EDI 856) document. Once the product arrives at the warehouse,
the warehouse will confirm the notification of product arrival
to the manufacturer sending back an EDI 944 (Warehouse Stock
Receipt) document. The information sent back and forth contains
the following information:
Identification and Dates
Identification (UPC, Vendor Number, Retailer SKU)
of this process is extremely important to warehouses, as an
automated process for the receipt and notification of goods is
an essential method for reducing costs. Prior to automation,
paper based systems were expensive to maintain. In addition,
delays in information greatly reduced processing efficiency. For
example, if an order is received but the warehouse inventory
systems are not updated quickly, the product can not be sold.
Transferring Merchandise from the Warehouse to
function that a public warehouse must facilitate, is to receive
requests from the manufacturer, to ship product to a retailer
and to confirm the shipment of product to the manufacturer. This
is accomplished in EDI by the manufacturer sending the warehouse
an EDI 940 (Warehouse Shipping Order) and the warehouse
confirming the shipment of the order by an EDI 945 (Warehouse
Shipping Order Confirmation). In this cycle, the following
information is passed:
and Retailer Information
Identification and instructions
Identification (UPC, Vendor Number, Retailer SKU)
As with the
stock transfer from the manufacturer to the warehouse, the
automation of the shipment process has significantly reduced
costs and improved the flow and speed of information.
As the public
warehouse business becomes more competitive, many warehouses are
trying to expand their traditional "product processing" business
into the "information processing" business. The warehouses are
looking at the following trends:
Sales Order processing:
inventory is being managed by the retailer or by the
manufacturer. The newest trend is to have the warehouse
managed inventory at a retailer site. The warehouse already
has accurate information on product sales transfers to the
retailer. If the retailer can send back accurate sales
information (normally using an EDI 852 (Product Sales
Activity Report) document, then the warehouse would have the
ability to manage the inventory. See
Appendix A for a description
of the Sales Order process and Vendor Managed Inventory).
are providing many functions to manufacturers including
pricing, packaging, shipping merchandise in specific formats
and advanced notification of orders to meet retailers'
needs. For further details, please review
Appendix B Logistics Process.
warehouses are becoming more involved in supply chain
management, the management of transportation is being looked
upon as a natural extension to their business. For further
details, please refer to Appendix
C - Transportation Process.
Promotional Announcement process:
warehouses are much closer to product than the manufacturer,
they have the ability to determine if product is becoming
dated product (i.e., the expiry date on a carton of milk is
close to being reached). In this scenario, warehouses have
traditionally sent Inventory reports to the manufacturer
notifying them that the product is reaching its "best
before" date. The manufacturers are looking to move the
management and selling of this product to the warehouses.
Continue to: Appendix A - Order Process...
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