Centralized warehousing is a system where a retailer or its supplier maintains a single, central warehouse versus several facilities spread out to cover a territory. One of the best ways to alleviate the logistic nightmares of operating multiple distribution centers is to utilize a central distribution center. From a single distribution center, businesses are able to access all of their products and ship them where they need to go in a timelier manner. A centrally located distribution center allows companies to focus more on the important aspects of business rather than trying to figure out how to get the products to customers.
One of the key advantages of a centralized warehouse is the savings it offers a business. Constructing, staffing, securing and managing a warehouse is a major expense, and multiple warehouses multiply this expense. If you run a manufacturing business, an on-site central warehouse can make use of existing land and put your production facility close to your inventory and distribution center, removing the need to transport goods from one to the other. A single warehouse can represent major savings, especially if you choose a location where land or existing warehouse space is inexpensive and one that is central to your customers for faster and easier shipping.
Centralized warehouses simplify inventory management. Customers will know how long orders take to ship regardless of what they order. Company-wide inventory is also easier to track, with a single facility to examine rather than multiple inventory reports that you must compile, compounding the chance for error. Finally, you’ll be able to implement new inventory management policies at the centralized warehouse without coordinating efforts throughout multiple warehouses in your supply chain.
With centralized warehousing, a distributor has its best people, equipment and inventory systems concentrated in fewer places. This is beneficial to customer or retail store service in that the warehouse can more actively focus on the needs of its customers. Service reps concentrate on meeting the needs of retailers, as opposed to just coordinating shipment of inventory as directed by retail buyers or facility managers.
Another benefit of centralized warehousing is the expansion of opportunities for relationships with online retailers. Distributors can appeal to online storefronts by offering concentrated inventory storage and fast delivery on order fulfillment. Other online retailers operate their own distribution centers and can more efficiently and affordably manage warehousing and distribution through centralization. This helps online retailers to keep costs low to attract customers online with better pricing.
While there are many factors to consider when it comes to making the decision to move to a consolidated and centralized distribution center and what works for one business may not work for another, there are definitely some important pros to moving to a consolidated warehouse space.