Storage and Warehousing Flashcards
What are the advantages of centralised storage?
Specialist staff are employed to maintain inventory, which improves speed of inventory handling and security.
Centralised warehouses can store a massive amount of inventory, benefiting from economies of scale.
The same procedures for issuing inventory are used across the organisation, improving consistency.
It may be cheaper to store inventory in one large warehouse than the total cost of many smaller on-site storerooms.
Easier for suppliers to deliver inventory as centralised warehouses are often located close to infrastructure e.g. motorway networks.
What are the disadvantages of centralised storage?
Inventory has to be delivered to each division or department, causing delays.
Specialist staff need to be employed to maintain inventory, increasing wage costs.
Specialist equipment needs to be purchased and maintained.
Inventory usage levels and needs are unclear as divisions need to communicate with the warehouse.
The use of centralised warehousing has declined due to more efficient inventory systems such as JIT, sourcing direct from the supplier.
What are the advantages of decentralised storage?
Inventory is always close at hand when needed for production or to sell to customers.
Smaller, more local warehouses are more responsive to local needs.
Inventory usage reflects production as it is stored in factories or retail outlets.
Smaller amounts of inventory result in no negative consequences of overstocking.
What are the disadvantages of decentralised storage?
Can lead to wastage or theft of inventory as security isn’t as good as it is in centralised storage.
Lack of specialist staff can lead to inventory control being clumsy and inefficient.
Each division may handle inventory differently, leading to inconsistency and problems being harder to pinpoint for senior management.
Smaller amounts of inventory result in negative consequences of understocking.
What are the advantages of computerised inventory control?
Databases keep balances of inventory which are automatically updated.
Can be linked to tills through EPOS, which update inventory levels which each sale.
Accurate and constant monitoring of inventory levels allows for automatic re-ordering.
Allows for decisions on slow moving inventory or best sellers to be made by managers from their computers.
Can highlight regional variations in inventory for head office.
Can highlight seasonal shifts in demand.
Is a deterrent to theft by staff as they know inventory levels are monitored closely.
What are the disadvantages of computerised inventory control?
Computerised systems will cost a lot of money to install and maintain.
Money and time need to be invested to train staff to operate the system efficiently.
Crashes and breakdowns can hold up re-orders and production.
