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ERP – Accounts Payable and Receivable
Accounts payable and Accounts receivable modules are two important execution modules under finance segment of an ERP system. Financial relationship with vendors who are providing input to the organization in the form of goods and services are maintained in Accounts Payable (AP) module. On the flip side, the financial connection with customers who use output […]
Ecommerce and Internet Enabled Supply Chains
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Customs Department – An Introduction
International Trade is facilitated and controlled by Countries with the help of Foreign Policy, Export Import Regulations, Schedule and Tariff of Import and Export Duties as well as Trade Laws and Regulations. Customs Department is the Federal Government Agency that is invested with Authority to conduct Customs Valuation and collect Import as well as Export […]
Spare Parts Supply Chain
When you buy any Computer or Electronics Hardware or equipment, normally one of the questions asked to the sales person is “What is the Service Support” provided by the company. Today the brand image or market demand rides not only the quality of the product but on the quality of service support too. Service support […]
3PL Logistics Service Providers are many in the market. There are players from Multi National background, regional players, local companies and individually managed business organizations.
Warehousing business, on the other hand, can flow through warehouses, consolidation and merging centers, finished goods stocking points, forward locations, raw material warehouses, JIT/VMI operations, Bonded warehouses, in plant warehouses, etc. depending upon the business requirement.
In this section of the article, we proposed to cover pricing mechanism aspects of a small warehouse like a consolidation center or finished goods flow through warehouse that need not be dedicated to the buyer alone and can be a shared facility.
Normally the bigger operations involving inventory management etc. are considered stand alone facilities and costing is worked out for the entire project, and this part of discussion is not covered under the scope of this article.
Normally in the Finished goods supply chain or raw material supply chains, there would be a need for a warehouse facility en route to the plant or the markets. These warehouses can be consolidation centers or merging centers in case of finished goods where different components of the order or finished goods are brought in from various locations, merged and dispatched to the next leg of the network. In case of raw material supplies, there can be a consolidation center at a country level where all shipments from several buyers are consolidated and shipped out as a container load.
Such kinds of warehousing requirements may not call for dedicated facilities. Normally the 3PL service provider who manages the freight will have warehouses that are used as shared or common facilities. In few cases public warehouses are also used by the buyers as the case may be.
General cargo warehouses or shared facilities and public warehouses are warehouses that house cargo of various clients. Depending upon the clients requirements, materials can be stored per day, week or month, etc. Inventory held of each customer may not be very high.
Storage and space options provided by the 3PL in such cases can vary with the client’s nature of the business. In a country consolidation center, where multiple shipments are stored and consolidated, the buyer may contract a fixed space on square foot basis with specified number of locations.
In another case of a merging center, the buyer may not contract fixed space and pay on transaction basis.
Public warehouses normally rent out space in terms of per pallet storage.
Even in Fixed Fee model, there are many variations in pricing models.
Normally in transactional pricing model, the buyer’s requirement will be minimum and does not call for any specific or dedicated investments. The 3PL provider normally uses his general or public facility and recovers his total cost of investment and operations on the volume or transactions.
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