Use of Location Information for a Company with Multiple Sites

A location must be defined for each physical facility in which the company stocks inventory. In addition, the use of transfer orders requires definition of in-transit locations and a transportation lead-time matrix. The use of location codes has several system implications for a multisite company. Chapter 2 summarized the implications for a single-site company.

In-Transit Locations for Transfer Orders Additional in-transit locations must be defined to support transfer orders. A transfer order involves moving material into and out of an in-transit location. When defining a location for this purpose, it must be specifically flagged as an in-transit location. Bin locations and other warehouse management policies do not apply to an in-transit location. Most firms define two in-transit locations ”one for internal logistics and one for external logistics ”to help differentiate the transportation provider.

Transportation Lead-Time Matrix and Transfer Routes Each combination of transfer-from and transfer-to locations requires definition of a transfer route in order to support transfer orders. A Transfer Route window provides a matrix of possible combinations. Each matrix cell defines a unique transfer route consisting of three characteristics: the in-transit site, default shipping agent, and service. Transportation lead-time reflects the lead-time assigned to a shipping agent s service (such as FedEx second day delivery). In this sense, the Transfer Route window defines a transportation lead-time matrix.

System Implications for a Multisite Company

The use of multiple locations has several system implications for setup, item master information, customer and sales order information, vendor and purchase order information, and forecasts.

• Setup Information . An inventory setup policy designates that a location code must be specified for all item- related transactions. A transportation lead-time matrix must be defined for handling transfers between locations.

• Item Master Information. The item master defines company-wide information and location-specific information, as previously explained in Chapters 2 and 3.

• Customer and Sales Order Information . The preferred ship-from location can be designated for each customer and customer ship-to address; a blank indicates no preference. The preferred ship-from location acts as a default on all sales documents. Each sales order line item, for example, can then designate the desired ship-from location.

• Vendor and Purchase Order Information . The preferred ship-to location can be designated for each vendor and vendor ship-from address; a blank indicates no preference. The preferred ship-to location acts as a default on all purchase documents. Each purchase order line item, for example, can designate the desired ship-to location.

• Forecasts . A setup policy designates that forecasts must be location-specific. Forecasts can then be entered by location, and a set of forecast data includes estimated demands for multiple locations.