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

Warehousing and Transportation In high volume manufacturing operations, with high setup and changeover costs, low unit costs, low likelihood of obsolescence, and low inventory carrying rates, long production runs with associated large lot size inventory levels are well justified. That inventory must be housed somewhere, and that somewhere is a warehouse, often called a plant warehouse, due to its location contiguous to, adjacent to, or in close proximity to a plant. In our RightChain™ Inventory optimization work with Coca-Cola, we found that lot sizes were approximately half of what they should have been. The optimization led to the acquisition of a strategic warehousing footprint yielding significantly lower total supply chain costs, higher gross margins, and higher gross margin percentages.

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