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NIOS Class 10 Warehouse Principles & Inventory Management Chapter 6 Benefits and Drawbacks of Using Warehouse
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Benefits and Drawbacks of Using Warehouse
Chapter: 6
Intext Questions 6.1
(i) ………………warehousing materialises when overall logistical costs are directly reduced by utilising one or more facilities.
Ans: Economic benefits.
(ii) A ………….. receives combined customer orders from manufacturers and ships them to individual customers.
Ans: Break bulk.
(iii) The economic benefits of ………….. include full trailer movements from manufacturers to the warehouse and from the warehouse to retailers.
Ans: Cross docking.
(vi) …………….. & ……………. are the two economic benefits of warehousing.
Ans: Processing and postponement.
Intext Questions 6.2
(i) In ……………..you can store inventory at a warehouse during a specific time period and distribute it from that temporary location.
Ans: Spot stocking.
(ii) Cargo sorting is a …………………. service.
Ans: Value added.
(iii) …………….. for warehouse and factory offers coverage for damages resulting from fire, theft, and natural calamities like earthquakes, cyclones and floods.
Ans: Insurance.
(vi) Full line stocking warehouses improve service by increasing the number of suppliers that a customer must deal with (True/false).
Ans: False.
Intext Questions 6.3
(i) ………………… prompts far smaller investments on a time-sensitive scale – making it an ideal option for smaller businesses.
Ans: Contract warehousing.
(ii) Contract warehouses require less investment (True/false)
Ans: True.
(iii) Contract warehousing, the firms have more control (True/false).
Ans: False.
(iv) Knowledge of business operations, goods and the amount of storage required are the important factors for deciding the selection of type of warehouse(True/false).
Ans: True.
Intext Questions 6.4
(i) .……..……… a central technology hub that manages the relationship with Imart.
Ans: Retail link.
(ii) Imart headquarters is located in ………………
Ans: Bentonville, United States.
(iii) A large e-commerce retailer is Imart (True/false).
Ans: True.
(iv) Imart competitor is Amazon(True/false).
Ans: True.
| Terminal Exercise |
1. What is the Break bulk process?
Ans: The break bulk warehouse or terminal sorts or splits individual orders and arranges for local delivery. Because the long-distance transportation movement is a large shipment, transport costs are lower and there is less difficulty in tracking. The break Transhipment centres receive products in large quantities from suppliers and break them down into manageable quantities for onward delivery to various locations.
2. What is cross docking?
Ans: A cross-dock facility is similar to break bulk except that it involves multiple manufacturers. Retail chains make extensive use of cross-dock operations to replenish fast-moving store inventories, e.g., full trailer loads of product arrive from multiple manufacturers. As the product is received, the customer either sorts it if it is labelled or allocated to customers. If it has not been labelled, the product is then literally moved “across the dock” to be loaded into the trailer destined for the appropriate customer.
3. What is spot stocking?
Ans: Spot stocking is most often used in physical distribution. In particular, manufacturers with limited or highly seasonal product lines are partial to this service. Rather than placing inventories in warehouse facilities on a year-round basis or shipping directly from manufacturing plants, delivery time can be substantially reduced by advanced inventory commitment to strategic markets. Under this concept, a selected amount of a firm’s product line is placed or “spot stocked” in a warehouse to fill customer orders during a critical marketing period. Utilising warehouse facilities for stock spotting allows inventories to be placed in a variety of markets adjacent to key customers just prior to a maximum period of seasonal sales.
4. What are the benefits of Warehousing?
Ans: This section highlights the various benefits accruing from warehousing:
(i) Storage.
(ii) Price Stabilisation.
(iii) Risk bearing.
(iv) Financing.
(v) Grading and Packing.
(vi) Protection and Preservation of goods.
(vii) Regular flow of goods.
(viii) Continuity in production.
(ix) Easy handling.
(x) Useful for small businessmen.
(xi) Creation of employment.
(xii) Facilitates sale of goods.
(xiii) Availability of finance.
(xiv) Reduces risk of loss.
(xv) Production support.
(xvi) Opportunity to expand.
(xvii) Packing and processing.
(xviii) Spot Stocking.
5. What are the drawbacks of warehousing?
Ans: The drawbacks of warehousing are:
(i) Determining the need for the type of Warehouse: Determining the type of warehouse needed is not an easy task. Knowledge of business operations, goods and the amount of storage required are the important factors for deciding the selection of a type of warehouse. Picking the wrong option could result in drawbacks. In general contract warehouses require less investment.
(ii) Less Control: In case of contract warehousing, the firms have less control. Choosing the right provider, clearly defining needs and understanding the services offered can help businesses attain greater control.
6. Examine the latest technologies used in effective warehousing.
Ans: Following are the latest technologies used in effective warehousing:
(i) Delivering to the Imart Warehouse: Imart distribution centres are known for being some of the most efficient delivery destinations in the country. Highly automated and operating 24 hours per day, these warehouses see hundreds of trucks per hour. And because of the massive inbound volume of products, Imart’s compliance rules are some of the strictest of any retailer.
(ii) Be on time: The importance of being on time goes without saying in logistics, but for Imart warehouses, being on time for your delivery appointment is an absolute requirement. If a carrier of Imart products is late to an appointment, the driver will wait — without exception — until the next available delivery appointment. This means your carrier could have a product waiting on a truck at the Imart warehouse for several days or weeks. In addition, if you miss the allotted appointment window (usually 1-5 days), you will pay up to several thousand dollars in fines to Imart.
(iii) Imart warehouse technology: Imart wants its suppliers to be successful. If Imart has shippers it can count on, Imart customers are happy. Imart is also competing with Xzon, so it’s essential to maintain innovative and shipper-first practices to keep suppliers around. One of the ways Imart Inc. empowers shipping partners is by providing access to RetailLink, a central technology hub that manages the relationship with Imart.
7. What are the advantages and disadvantages of warehousing?
Ans: This section highlights the various advantages accruing from warehousing:
(i) Storage.
(ii) Price Stabilisation.
(iii) Risk bearing.
(iv) Financing.
(v) Grading and Packing.
(vi) Protection and Preservation of goods.
(vii) Regular flow of goods.
(viii) Continuity in production.
(ix) Easy handling.
(x) Useful for small businessmen.
(xi) Creation of employment.
(xii) Facilitates sale of goods.
(xiii) Availability of finance.
(xiv) Reduces risk of loss.
(xv) Production support.
(xvi) Opportunity to expand
(xvii) Packing and processing.
(xviii) Spot Stocking.
The disadvantages of warehousing are:
(i) Determining the need for the type of Warehouse: Determining the type of warehouse needed is not an easy task. Knowledge of business operations, goods and the amount of storage required are the important factors for deciding the selection of a type of warehouse. Picking the wrong option could result in drawbacks. In general contract warehouses require less investment.
(ii) Less Control: In case of contract warehousing, the firms have less control. Choosing the right provider, clearly defining needs and understanding the services offered can help businesses attain greater control.
8. What are the service benefits of warehousing?
Ans: The service benefits are following:
(i) Spot-stocking: Spot stocking is most often used in physical distribution. In particular, manufacturers with limited or highly seasonal product lines are partial to this service. Rather than placing inventories in warehouse facilities on a year-round basis or shipping directly from manufacturing plants, delivery time can be substantially reduced by advanced inventory commitment to strategic markets.
(ii) Assortment: An assortment warehouse is one which may be utilised by a manufacturer, wholesaler, or retailer-stocks product combination in anticipation of customer orders. The assortments may represent multiple products from different manufacturers or special assortments as specified by customers.
(iii) Mixing: Warehouse mixing is similar to the break bulk process except that several different manufacturer shipments may be involved. When plants are geographically separated, overall transportation charges and warehouse requirements can be reduced by in-transit mixing.
(iv) Product support: The economics of manufacturing may justify relatively long production runs of specific components. Production support warehousing provides a steady supply of components and materials to assembly plants. Safety stocks on items purchased from outside vendors may be justified because of long lead times or significant variations in usage.
(v) Market presence: While a market presence benefit may not be as obvious as other service benefits, it is often cited by marketing managers as a major advantage of local warehouses. The market presence factor is based on the perception or belief that local warehouses (and presumably local inventory) can be more responsive to customer needs and offer quicker delivery than more distant warehouses.
