Linking service level, inventory management and warehousing practices: A case-based managerial analysis

Abstract

This paper aims to understand how best performing companies strive to improve their service levels, under the assumption that not only inventory management, but also warehouse management plays a key role in achieving this goal. To explore this issue, a case-based analysis was conducted on six companies from the food distribution and pharmaceutical industries. The empirical analysis shows that this assumption holds when the companies deal with a very high number of SKUs; they need to properly manage warehousing processes to guarantee fast, complete and correct deliveries to customers. This results in the adoption of best practices and in relevant investments in technology and equipment peculiar to warehousing. This empirical analysis also shows that, to further improve the accuracy and the speed of the picking and shipping processes, the companies tend to automate their activities, but only when the level of order fragmentation is low and the degree of morphological homogeneity is high.

Warehouse performance measurement: a literature review

“…Each indicator can be only assigned to a single dimension at time. These are: time (Chan and Qi 2003;Frazelle 2001;Gallmann and Belvedere 2011;Gunasekaran and Kobu 2007;Mentzer and Konrad 1991;Neely, Gregory, and Platts 1995;Spencer 1993), quality (Frazelle 2001;Gallmann and Belvedere 2011;Neely, Gregory, and Platts 1995;Stainer 1997), cost (Beamon 1999;Cai et al 2009;Chan and Qi 2003;Keebler and Plank 2009;Mentzer and Konrad 1991;Neely, Gregory, and Platts 1995) and productivity (Chan and Qi 2003;Frazelle 2001;Gallmann and Belvedere 2011;Keebler and Plank 2009;Stainer 1997). We note that some works prefer to use flexibility instead of productivity as the fourth dimension (Beamon 1999;Gunasekaran and Kobu 2007;Neely, Gregory, and Platts 1995;Stainer 1997), defining it as the 'ability to respond to a changing environment' (Beamon 1999).…”

“…Due to these differences, we present next some details on the other indicator themes without giving definitions as made for the direct indicators. Cagliano et al (2011), Gallmann and Belvedere (2011) Order processing cost a Total processing cost of all orders per number of orders Kiefer and Novack (1999), Rimiene (2008), Ramaa, Subramanya, and Rangaswamy (2012) Labour cost Cost of personnel involved in warehouse operations Cagliano et al (2011) Distribution cost The mean number of vehicles and total travel distance per day provide measures of distribution costs.…”

“…Although inventory is not a warehouse activity, we choose to include inventory as an activity in Table 11 due to its importance in warehouse management. Gallmann and Belvedere (2011) state that companies consider inventory management as a key to achieve excellent service levels. We also observe numerous metrics treating the subject (see Section 4.1).…”

Environmental Influences on the Exercise of Leadership in a Family Textiles Business in Pakistan

“…Gallmann and Belvedere argue warehouse management is as important as inventory management for service delivery. This is because it accelerates and increases the accuracy of customers' delivery [38]. However, efficiency and accuracy are guaranteed when appropriate technology is adopted and relevant warehousing equipment used.…”

A new systematic approach for warehouse management system evaluation

“…As transaction volume grows and business becomes more sophisticated, the need is created for appropriate and optimized integrated systems and information systems inside and outside the warehouses [7]. The implementation of management systems is a very complicated and costly task, and their inappropriate use may lead the firm to bankruptcy.…”