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Image source: https://ctcdistributing.com/consolidation-warehousing/, accessed 2 Nov 2020.
Image source: https://www.bastiansolutions.com/blog/distribution-center-layout-and-design---part-1-fundamentals/, accessed 2 Nov 2020.
Many suppliers send the goods in bulk to a consolidation warehouse. The warehouse stores the goods until end customer places an order.
The warehouse consolidates all the different products in an order and sends the goods in one shipment to the end customer.
The consolidation point is a location where handled units are identified at key material flow positions. Such a measuring point is of great importance for demonstrating the production progress in the warehouse above all in systems submitted to stochastic influences, e.g., manual work processes.
On the one hand, the destination and actual data are compared to check the consistency of the material and information flow. Here, the order status is generally updated, i.e., the status of the retrieval order. The control point sets the basis for a dynamic capacity utilization, i.e., for the utilization of the following areas according to the work load. On the other hand, decisions concerning the material flow are made, like choosing the transport targets for finished units.
[Source: Michael ten Hompel and Thorsten Schmidt (2007). Warehouse Management: Automation and Organisation of Warehouse and Order Picking Systems. Chapter 2.2.4. Germany: Springer]
Source: Singapore University of Social Sciences, LOG207 Warehousing and Material handling, Study Guide (2018).
Use of Warehousing for Consolidating Shipments
Use of Warehousing for Consolidating Shipments
A warehouse may act as a collection point to consolidate small shipments (LTL =less-than-truckload) from a number of sources into larger ones (TL = truckload) to reduce overall transport costs. See figure on the left.
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