Virtual warehouse

The term virtual warehouse is derived from an electronic exchange system that allows an organization to expand its warehouse beyond the physical inventory to that of other electronic retailers.

The concept of virtual warehousing

In a typical mail order and catalog business , the company owns all of the products and stores them in a local warehouse. With the virtual concept, the company can offer a much wider range of products without having to bear the costs of acquisition and administration.

Part of the challenges of warehouse operations is managing inventory based on the fact that the company needs to offer customers the widest possible range of products while also having excellent delivery times. This means that you need a very efficient warehouse management system or JIT system and processes. The introduction of a virtual warehouse module in a company can greatly reduce this process and increase the return on investment.

In today's Internet world, a customer demands a good price and immediate availability, whatever the product, from the provider's product range. This is a major challenge that can hardly be mastered without the help of a virtual warehouse.

history

Virtual warehouse appeared in the late 1990s and has steadily grown in popularity ever since. In the beginning, virtual warehousing simply meant facilitating communication between the seller and the manufacturer. However, the system has been refined to the present day, in which it requires very complex processes.

advantages

The virtual warehouse enables the retailer to have a large number of suppliers at his disposal, so that he can be sure that the goods can be delivered directly to the customer at any time. At the same time, the price can remain competitive.

The administration process can be completely automated. The transaction costs for forwarding the order are very low, the processing is taken over directly by the external suppliers. The delivery is made directly from the manufacturer to the customer, but the name of the original dealer appears on the invoice and delivery documents.

A larger range of products that exceeds the capacity of a normal dealer can be offered to customers. In addition, special customer requests can be better fulfilled if more partnerships are concluded with suppliers.

The sequence

The dealer loads the dealer's product offers onto the local website or into the ERP / SCM system. When a customer orders a product which is marked for this processing, an electronic exchange of data begins between the system of the retailer and the supplier.

The electronic exchange is typically sent to a virtual machining center , which is then converted into the supplier's messaging format (XML, cXML, EDI, CSV etc.). The order is then processed by the supplier if he is able to deliver the goods within the time specified in the contract. It is possible that there are rules in the virtual hub to optimize the processes, but these rules can also be set directly by the dealer.

As soon as the order has been received by the supplier, the supplier sends back update messages (order confirmation / outgoing notification / invoice) so that the virtual processing center can forward them to the dealer. A virtual warehouse center usually also contains add-on modules such as product content management systems in order to be able to offer the customer good product information and attributes. The information available to the supplier is made available to the dealer via the virtual center.