Chapter 9: Multisite Operations

Overview

Many small to midsize businesses involved in manufacturing and distribution have multiple locations with inventory. Operations with multiple locations serve different purposes. A location may reflect proximity to suppliers or customers, transportation or production cost considerations, or availability of raw materials and human resources. There may be political, technological, or competitive considerations for multiple locations, or a location may represent an acquisition.

There are wide variations in the system requirements to support a multisite operation. The basic variations reflect requirements for material coordination between locations and how locations are grouped into companies (or financial entities). One company may have multiple locations, for example, or the locations may be grouped into different financial entities. The locations within a company may operate autonomously with no coordination requirements, or they may represent a vertically integrated supply chain with coordinated material flows between sites. Coordination typically requires transfer orders to communicate needed shipments (at the transfer-from location) and expected receipts (at the transfer-to location). Examples of multisite operations with higher coordination requirements include a distribution network, a remote warehouse, space within a contract warehouse, a customer location (for stocking material prior to customer usage), a subcontract vendor location (for stocking supplied components and/or the completed parent), a customer service center, and delivery vans. A separate service parts inventory (with separate replenishment policies) within a manufacturing company also represents a separate inventory location with coordination requirements.

This chapter covers how to handle the major variations in multisite operations, starting with the definition of location information. It reviews how transfer orders coordinate material movement between locations. Finally, it covers several scenarios that illustrate variations in multisite operations.