One of the best ways to alleviate the logistic nightmares of operating multiple distribution centres is to create a central distribution centre. The organization and set-up of the stores depends upon the requirements and has to be tailor-made to meet the specific needs of the organization.
- Better control – one of the advantages of having a centralized distribution is to have better control. Organizations setup central stores which are responsible for all activities and transport their inventory as and when required to other stores which are usually attached to the production capacities located in different locations.
- Inventory management – inventory can be as minimum as material ordered based on the requirement of all other attached parties. The material can also be ruled out to and from the attached central stores. This is especially so in the case of tools, fixtures, equipment and spares.
- Reduced cost – by choosing to centralize warehousing and distribution, the need to pay rent or utility and incidental expenditures for different warehouses is reduced. The need to spend more on new equipment and technologies for each warehouse is also eliminated. With these reductions in costs, retailers can now set pricing strategies with more ease due to the more stable nature of its inventory management. This will allow for higher margins or lower prices for customers.
- Requirement of fewer personnel – Unnecessary duplication of records takes place in decentralized Stores. Centralized stores will require less personnel for management.
- Economy in storage – is possible in a centralized distribution system as goods in bulk will occupy less space.
- Accessibility – one of the biggest advantages of having all the products in one central location means getting easy access whenever needed.
- Reporting – depending on the kind of business or the kinds of products you offer to your customers, you need to keep a close eye on what you have in stock. With a central distribution center, creating these types of reports becomes incredibly easy. You only have to go to one source rather than track down multiple reports from multiple distribution centers.
- Standardization – implementing centralization would result in standardization of the processes. This guarantees lesser variations and better performance.
- Flexibility – in a crisis or an emergency, standardization of work takes just one step to revise all the activities at once. This guarantees a greater degree of flexibility in an organization than in a company with no centralized warehousing.
- Better customer service – by choosing to limit the number of warehouses or distributors, a company can focus its resources on fewer facilities. This means the facility will have highly skilled workers, the latest technology and the best equipment. With all of this in one facility, the highest quality of service can be offered to customers
Gati-KWE today is one of the most preferred Express Distribution and Supply Chain Solutions provider because of its ability to handle every distribution need of its customer.
About the Author
My Name is Taara Singh, I enjoy reading & writing articles about Logistics & Supply Chain Management Topics. My goal is to educate, support and empower everyone I work with! I will provide all the motivation and information you need to create a business plan that works for you. You can learn more about Taara and you can follow her on Google+.