1. Order Processing:
It is concerned with all those activities which occur in between the arrival of the order and despatch of goods to customers. After an order is received, it may go to the accounts department to see if there is any outstanding amount against the customer or to verify credit limit.
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If everything is okay, then it goes to sales section in the marketing, who prepares an invoice and a challan for the stores or warehousing department, which packs the goods for shipments to be made by in-house or external transport arrangement. The recording is made by the accounts section in the buyer’s account.
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With the pace of technological development, now the entire work is computerised, whereby at one place all paperwork can be completed. The job of packaging is done by robotics. But, in India, in small businesses, order processing is yet to be put in proper perspective.
2. Material Handling and warehousing:
Material handling is concerned with the movement of goods into, within, and out of godowns or warehouses. When goods enter the warehouse their identification switch regard to quality and damaged goods be possible. Goods must be sorted and labelled. Then they are to be staked. Once the challan for dispatch is received, there must be space and arrangement for packaging and shipment. It is important to note that the handling should be minimised to avoid any damage. Modern Bin Card system keeps complete record of goods received and goods despatched.
There is a need for storing the goods so as to make them- available to buyers as and when required. The marketer will have to decide as to how many warehouses are needed and what will be their locations. The need for a warehouse arises due to the time gap between production and consumption of products.
Warehousing or storage refers to the holding and preservation of goods until they are despatched to the consumers. By bridging this gap, storage creates time utility. Warehouses enable the businessmen to carry on production throughout the year and sell their products, whenever there is adequate demand. Need for warehousing arises also because some goods are produced only in a particular season but are demanded throughout the year. Similarly, certain products are produced throughout the year but demanded only during a particular season.
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Warehouse may either be centralised or decentralised. The decision depends upon the geographical spread of the customers, frequency of orders, and the speed with which goods are to be delivered. Warehouses may be company owned or owned by others, including Warehousing Corporations and Customs.
3. Transportation:
Movement of goods requires decisions about the mode of transportation to deliver the goods to intermediaries and from intermediaries to customers. In case of export of goods from Delhi through Nhava Sheva Port, the alternatives available are to use trucks up to Delhi station and load in railway wagon for Mumbai. From there again to hire a truck and deliver at the port and from port either use container or load in open on board to use seaways.
Another option is to hire a container at your warehouse, stuff it and let it go by rail or road to Mumbai and then using a ship. Third option is let a truck be hired and fill up the truck in your warehouse and let it go straight to Nhava Sheva port and unload goods for further loading into the ship. If the goods are light in weight and urgent delivery is required then the goods have to be sent by air. In case of crude dor refineries, pipelines may be used. Different modes differ in terms of dependability (delivery of goods safely and in time).
4. Inventory Control:
Inventory control in simple terms means keeping the overall costs associated with having inventory as low as possible without creating problems for profitable operations. It is sometimes also called stock control. Proper management of inventory (control) is to create a fine balance at all times between having too much and too little in order to maximize profits.
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The costs associated with holding stock, running out of stock, and placing orders must all be looked at and compared in order to find the right formula for a particular business. Inventory control is a continuous process and is based upon experience, expertise, and practice. Inventory control can break a business if it is executed poorly, because either cost will be too high or customers will get tired of dealing with shortages and find another place to spend their money.
In economic terms the inventory control is concerned with reducing overhead cost without hurting sales, and from the loss prevention perspective it is concerned with introducing technical barriers to shoplifting.
It answers the 3 basic questions of any supply chain:
1. When?
2. Where?
3. How much?
No business can afford to have an unlimited supply on hand, because no business would block money in keeping excessive inventories. At the same time no business can afford to have not enough stock on hand, because it causes loss of profitability due to non-availability of inventories for customers to buy. It means a marketer must always have a minimum level of stock.