Wisdom for Warehousing | The Optimal Role of Warehousing in Supply Chains and Business

The Role of Warehousing in Supply Chain Logistics

When the total cost of raw materials and key components is a major portion of the total supply chain cost, when the unit costs of those materials are low, when overall demand is high, when significant discounts are offered for large procurement lots, when there is low likelihood of obsolescence, and when inventory carrying rates are low, large procurement buys with associated large lot size inventory levels may be well justified. That inventory must be housed somewhere, and that somewhere is a warehouse, sometimes called a raw materials warehouse.

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