Mill inventory management may be divided into three basic approaches:
1. Mill-owned central warehouses.
2. Mill warehouses at each plant.
3. Just-In-Time shipments from merchant warehouses.

Mill-owned warehouses may be central or plant located. The bale management schemes used by many mills may be divided into one of three basic concepts. In the first, cotton is received at individual plants from multiple merchants and processed at the receiving plant regardless of its quality. In the second, cotton bales are received at a central location, also from multiple merchants, and distributed in uniform lots or mixes to individual plants. In the third, a merchant in a Just-in-Time relationship with the mill ships cotton laydowns (mixes) to each plant site directly.
The EFS® - MILLNet program includes an EDI translation program (QRNet32™) to pass 863/856 ANSI X12 documents between cotton merchants and mills. The use of the extensive information (weights, bale numbers, HVI properties, price, etc.)
contained in these documents can be used to fill in most of the needed fields in the EFS® System program used to manage a cotton department thus eliminating tedious and error prone hand keying of data. A powerful advantage of receiving EDI documents is the verification of the HVI properties of shipments before they are sent from the vendor. If there are any great differences between the current inventory HVI property averages and the coming shipments, the mill managers can prepare in advance for any changes that may be needed in mix selection.
If shipments are not strictly managed for HVI properties from the vendor, the advantage of the central warehouse is that the HVI data of each bale can be reviewed and only bales most suited for a given plant/product are shipped to a selected plant. This can be a major cost advantage to the mill. The advantage of direct shipments to each plant is that the cost associated with redistribution is eliminated. However, performance may be compromised by either cost or performance factors that might be easily dealt with in a central warehouse.
Mills that traditionally carry small cotton inventories, compared to their consumption, generally report that additional costs associated with direct shipments of cotton from merchants may be offset by the savings associated with better machine efficiencies, product quality, reduced in-house warehouse costs, and lower effective cotton costs. These savings accrue from the fact that merchants can pull laydowns from inventories that are much larger than that held by a typical mill. Large inventories make it possible to select mixes that are uniform over long periods of time, thus, ensuring improved mill stability.
Inventory size has been found to be related mainly to two factors, the first being the number of bales required to cover any delayed delivery of cotton from the mill’s suppliers. The second has been determined to be that the minimum size of an inventory should be large enough to ensure that no single replenishment can change significantly the averages and distribution (%CV’s) of the important HVI-controlled cotton properties of the on-site inventory. This degree of control can only be achieved when HVI data is available for every bale.
It is common practice in the U.S. for mills to store cotton by fiber groups in their warehouses because it places bales with very similar HVI properties together, thus making retrieval of mixes easy. HVI categories are normally set within a group based on mill and end product requirements. Almost without exception, mills find it necessary to create 3, 5, or, in some instances, 7 micronaire categories. It is difficult to overemphasize the importance of micronaire management to mill and end-product performance.
Other HVI properties that are likely to be considered for the purpose of categorizing cotton are length, length uniformity, strength, and color. Normal practice is to create 18 to 45 total categories using the EFS® System. If too few populated categories are created, the expected degree of fiber control may not be realized. If too many categories are created, then warehouse space utilization is inefficient.