Optimize Warehouse Operations with Strategic Product Flow

Many of today’s supply chains are global, with products manufactured or purchased overseas or domestically. There are many ways products can flow in a supply chain: from their source to consumption or use by the end user.

For example, large products manufactured overseas, such as barbecues or patio furniture, will flow differently than small cube items such as nuts, bolts and other small parts produced locally. Taking into consideration the unique characteristics of products when designing a supply chain can lead to optimized speed, flexibility and lower costs throughout the supply chain.

Types of product flow

When designing a supply chain, several unique product flows should be considered. Here are several of the common product flows.

Direct import center

Many large retailers who procure products overseas tend to use import centers near the port of entry into the United States. The purpose of an import center is to consolidate and sometimes hold shipments from a number of overseas factories and consolidate shipments to regional distribution centers or direct to stores if there is enough volume going directly to a store. A direct import center can also ship direct to consumers if it is equipped to support direct to consumer shipments and can ship direct to a retail store bypassing a regional distribution center.

Mixing center

A mixing center is typically used domestically and is common in the food and beverage space. A mixing center consolidates products manufactured by a number of disparate manufacturers in a supply chain and could include internally manufactured products as well as products outsourced to a co-manufacturer. Consolidating into a mixing center allows for consolidated outbound shipments to customers, especially grocery chains and big-box retailers.

Hub and spoke

The hub and spoke model for a supply chain works well when there are many regional, customer-facing distribution centers, commonly referred to as branches or spokes, and there is a very high SKU count in the network. It is very costly to store all slow and some medium-moving SKUs in each of the spokes. A common strategy to reduce cost and warehouse space across the network is to deploy a consolidated warehouse, also referred to as a hub, to consolidate and store slow and medium-moving items in a hub and replenish the spokes when demand for these items exists. The real challenge in creating a hub and spoke network is understanding the velocity and variability in demand each SKU has by location. Many automotive, industrial and electronics distributors can benefit from a hub and spoke network.

Cross-docking

Cross-docking is the practice of bypassing product storage by unloading them from inbound trucks and loading them onto outbound trucks with little time within a facility. This process is optimal for perishable products that are prepackaged, have a high velocity, and are perishable.