The Importance of a Well-Structured Warehouse in the Logistics Process


Logistics was born and transformed as a discipline with the aim of satisfying customer needs. In this definition, therefore, the two elements that are central to the study of this discipline are:

  • The flows of materials
  • The flows of information

We could represent the supply chain as per the below, for instance:

The physical flow and information flow tend to be in opposite directions – the first proceeds along the supplier-customer direction, while the second follows the customer-supplier direction. As can also be observed, it is no coincidence that the warehouse is at the center of these flows. The warehouse acts as a physical intermediary between the manufacturer and the distributor. Its role is of primary importance in the supply chain, having a significant impact in terms of cost if it is not correctly sized or fails to optimally perform all of its functions.

Nowadays, as the storage of materials presents particular difficulties due to the variety of goods to be stored, the quick turnaround of products, and the request for a high level of service in terms of delivery time and quality of goods delivered, the whole process is more and more reliant on the experience of specialized companies that have acquired the know-how required to guarantee top-level performance.

The trend we are witnessing, especially as it pertains to large companies, is the increasingly substantial use of automatic warehouses served by stacker cranes which, despite the high costs (we are considering an investment that is sometimes 2000% higher per pallet slot compared to storage with traditional double-sided shelving), guarantees the level of service now required by the customer.

Here’s an overview of the function and role of the warehouse:

The “logistics channel” consists of a distribution network that performs:

  • Concentration of goods coming from multiple suppliers
  • Selection and sorting of goods
  • Transportation of goods to their final destinations

The hubs of the distribution network are the warehouses, while the transport systems connect the different nodes. The warehouses perform a dual function within the logistics network – they are the “containers” of the goods kept in stock and the “transformers” of the incoming flows into the outgoing flows. The transformation function concerns both the temporal trends of the flows as well as the composition of the load units. The warehouses for raw materials and finished products can be defined as terminal warehouses as they are located at the ends of the manufacturer’s logistics chain. Inter-operational warehouses are normally used to decouple the different phases of the production process.

A warehouse is generally represented as an integrated set of functional areas:

  • Receipt and control
    • Unloading of goods
    • Verification of correspondence of goods with Purchasing Orders
    • Quality control
    • Use and identification
  • Product storage
  • Picking up loading units
  • Fractional picking
  • Preparation of orders including consolidation, checks, final packaging
  • Shipping, grouping and loading of vehicles

Transactions that take place in a warehouse:

  • Receipt from supplier
  • Receipt from production
  • Returns from customer
  • Returns from production
  • Movements from other warehouses
  • Shipping to customer
  • Production withdrawal
  • Movement to other warehouses
  • Send to destruction

The choice of the most appropriate configuration for the warehouse as a whole and for each operating area in particular must allow on the one hand for the achievement of the required performance in terms of reliability and prompt response to requests from the downstream distribution system and on the other, the minimization of operating costs. In regards to the overall layout of the warehouse, the prevailing trend is to adopt an arrangement of the operating areas consistent with the flow of materials, so as to minimize handling costs.

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Michele Marinelli
Michele was born and raised in Italy and spent most of his early years in Bologna, a nice and vibrant city in northern Italy. He graduated from the University of Bologna with a master’s degree in industrial Engineering with a specialization in Logistics and Production in 2007.  Michele worked for a French-based Corporation in Bologna for almost 6 years as Project Manager. In January 2014, Michele moved to the U.S. for a fresh start in New York, and worked for 3 years for one of the major Steam Ship Lines as an Export Commercial Liner, in North European trade. He started at MTS Logistics in January 2017 as Sales Executive. Michele is currently covering and developing several areas: Texas, New York/New Jersey, Georgia, South Carolina, and North Carolina. His first priority is to create strong relationships based on trust, competence, and honesty. Michele loves to travel and does so for at least twice monthly to meet his customers/prospects in person to hear face-to-face how he can help them by providing the best service possible. Fun Fact: Michele, despite being Italian, loves basketball (watching and playing) instead of soccer and the NBA is his secret passion.