The prime objective of most warehouses is to facilitate the movement of goods through the supply chain to the end consumer. There are many techniques used to reduce the need to hold inventory, such as flexible manufacturing systems, supply chain visibility and express delivery, and many of these have been encompassed in a range of supply chain initiatives, for example just-in-time (JIT), efficient consumer response (ECR) and collaborative planning, forecasting and replenishment (CPFR). However, as part of this movement, it is often necessary to hold inventory, particularly where the following two conditions apply: 

• The demand for the product is continual. In some industries, such as fashion, a particular style may be manufactured on a one-off basis. Under these circumstances, the goods can be ‘pushed’ through the supply chain to the stores where they are sold, and there is therefore no need to hold inventory in warehouses. However, most goods are offered for sale on a continual basis and therefore they need to be ‘pulled’ through the supply chain based on customer demand. 
• The supply lead time is greater than the demand lead time. Where goods are ‘pulled’ through the supply chain, this can only be achieved without inventory where the supply can take place within the lead time offered to the customer. For example, if goods are offered to customers on a next-day-delivery lead time, it is often the case that materials cannot be sourced, goods manufactured and transport undertaken within this timescale. In this situation, the goods must be supplied from inventory. Inventory is therefore often beneficial to smooth variations between supply and demand. 

  In addition, even when the full cost of inventory is taken into account (see Chapter 13), it may be more cost effective to build up inventory so as to reduce costs elsewhere in the supply chain. Examples of this may be to enable manufacturing economies of scale, to obtain purchasing discounts for large quantity orders, to build seasonal stock in advance, and to cover for  production shutdowns. Also, inventory may be held just in case specific undesired events occur in the future, as with humanitarian aid supplies (eg tents and blankets) and power station spares (eg steam turbine rotors).Where inventory is required, then the decision needs to be taken as to the optimum point to hold it in the supply chain. This may be related to the ‘decoupling point’ concept explained in Chapter 9, whereby strategic inventory is held to enable ‘lean’ manufacturing or supply to be undertaken upstream in the supply chain, while an ‘agile’ response may be given to volatile downstream marketplaces. Holding inventory upstream enables the form and location of goods to be postponed as long as possible, thus reducing inventories, while holding the inventory downstream is often necessary to be able to respond rapidly to customer demands.  The combination of global supply chains (which tend to have long lead times) and increasingly volatile markets has resulted in substantial strategic inventory holdings becoming necessary. This trend has been further compounded by product range proliferation, resulting in inventories of many different product lines being required. Thus, although great steps have been taken to improve supply chain management, particularly as regards the minimization of inventory, overall inventory levels have tended to remain fairly static in recent years, in such countries as the United Kingdom and the United States, in comparison to the levels of economic activity.  The holding of inventory is just one of a variety of roles that a warehouse may perform. Thus, with the increasing emphasis on the movement of goods through the supply chain, many of the roles may be related to the speed of movement as well as to inventory holding. The following list highlights some of the common roles performed: 

• Inventory holding point. This is commonly associated with the decoupling point concept and, as explained above, may involve the holding of substantial inventory. Other reasons may include the holding of critical parts in case of breakdown or acting as a repository (eg for archive records or personal effects). 
•  Consolidation centre. Customers often order a number of product lines rather than just one, and would normally prefer these to be delivered together. The warehouse may perform the function of bringing these together, either from its own inventory holdings or from elsewhere in the supply chain. 
•  Cross-dock centre. If goods are brought from elsewhere in the supply chain (eg directly from manufacturers or from other warehouses) specifically to fulfil a customer order, then they are likely to be cross-docked. This means that the goods are transferred directly from the incoming vehicle to the outgoing vehicle via the goods-in and -out bays, without being placed into storage. 
•  Sortation centre. This is basically a cross-dock centre, but this term tends to be used for parcel carrier depots, where goods are brought to the warehouse specifically for the purposes of sorting the goods to a specific region or customer. A similar operation occurs in the case of fashion goods being ‘pushed’ out to stores, whereby goods are brought to a warehouse solely for the purpose of sorting into vehicle loads. 
•  Assembly facility. This is often useful in postponing production as far as possible down the supply chain in order to minimize inventories. The warehouse may thus be used as the final assembly point for the product, involving activities such as kitting, testing, cutting and labelling. 
•  Trans-shipment point. These are particularly common to serve outlying regions of a country. In a typical scenario, orders would be picked at a national distribution centre and transported to a ‘stockless’ trans-shipment depot, where the goods are sorted to smaller vehicle loads for immediate delivery to customers. These trans-shipment depots may be small warehouses that are used just for sortation purposes, or this operation may even be performed on a concreted area by using draw-bar trailers carrying swap-bodies that have already been loaded for the local delivery vehicle route. The local vehicles would just pick up each swap-body and deliver directly to the customers.
•  Returned goods centre. The handling of returned goods is becoming increasingly important. This is being driven both by environmental legislation (eg on packaging and on the recovery of materials from electrical/electronic items) and by the growing use of internet shopping (which tends to be associated with higher percentages of returned goods than in the case of store shopping). Warehouses often fulfil a mix of these different roles, and it is important to be clear as to the precise roles being performed. There is now a wide range of names given to warehouses, and many of these names reflect the different roles that they perform. Some of these names include: supplier consolidation centre, JIT sequencing centre, customer service centre, fulfilment factory and e-fulfilment centre.