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.
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1. 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.
2. 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.
3. 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.
Centralized warehouses also makes room to reduce the shipping costs. That may seem strange but the reason for that is because it makes room for shipping in bulk size wich will makes the costs lower.
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.
4. Requirement of fewer personnel
Unnecessary duplication of records takes place in decentralized Stores. centralized stores will require less personnel for management. For smaller business this can be one of the most important reasons for having decentralized distrubution systems. With not having as big financial pressure on you, you can be able to have better focus which will improve all parts of you life.
5. Economy in storage
Is possible in a centralized distribution system as goods in bulk will occupy less space. That will offer you even lower renting costs, which will make you able to spend invest more into the other thing like marketing.
One of the biggest advantages of having all the products in one central location means getting easy access whenever needed. That also makes it easier for you to handle some kinds crises. The reason for that is you know something is missing for example you can check it instantly.
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.
Implementing centralization would result in standardization of the processes. This guarantees lesser variations and better performance. It will asave from a lot of petential headache and make it easier for you to make decisions.
Because of that will you not only save money on having a centralized distrubution system. You will save something way more precious namely your time.
That will give you more time to do the things that will make you able to really grow your business like strateigizing, developing new leader etc.
Besides that can it help you establish yourself as more reliable. The reason fot that is that the shipping will always be the same and that will offer you an competetive advantage against competitiors. Look at Mr Bezos he had as his corneratone to have a fast and relieable delevery system and he is pretty succesful from what i know.
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.
10. 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
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+.