Linking service level, inventory management and warehousing practices: A case-based managerial analysis

This paper aims to understand how best performing companies strive to improve their service levels, under the assumption that not only inventory management, but also warehouse management plays a key role in achieving this goal. To explore this issue, a case-based analysis was conducted on six companies from the food distribution and pharmaceutical industries. The empirical analysis shows that this assumption holds when the companies deal with a very high number of SKUs; they need to properly manage warehousing processes to guarantee fast, complete and correct deliveries to customers. This results in the adoption of best practices and in relevant investments in technology and equipment peculiar to warehousing. This empirical analysis also shows that, to further improve the accuracy and the speed of the picking and shipping processes, the companies tend to automate their activities, but only when the level of order fragmentation is low and the degree of morphological homogeneity is high.