Warehouse management is challenging enough: optimising stock levels, managing the physical space and tracking orders and deliveries. However, when growing companies add additional warehouses, those challenges are multiplied.
Why add additional warehouses?
A 2013 distributive trades study found that 26% of management views warehouses and distribution centres as assets that can drive growth for the business. Given this, it’s not surprising that more than a third plan to increase the number of warehouses and distribution centres they operate.
Adding extra warehouses offers a variety of benefits:
- Reduced shipping costs: A company with customers spread over a wide area, or that has gained customers in new geographic markets, can reduce shipping costs by adding new warehouses closer to customer locations.
- Reaching a wider customer base: Adding a new warehouse can be a response to growth, as above, or it can be a strategy to stimulate growth. A company with a strong presence in one region or country can develop by duplicating its offer in new markets, including investing in warehouses to service those new customers.
- Added storage capacity: Another strategy for growth is to sell more to existing customers, either by stimulating demand through offers, and or adding new product lines, both of which approaches mean that extra warehouse space may be needed.
- Specific warehouses for specific purposes: Using multiple warehouses can simplify warehouse management. For example, some firms use a discrete warehouse to fulfil e-commerce requirements, keeping this separate from their traditional business.
- Redundancy for disaster recovery: If one warehouse is taken out of service, for example through fire, flood or transport problems, business can continue.
Challenges of managing multiple warehouse locations
Realising these benefits means overcoming a set of new warehouse management challenges, such as:
- Inventory management: Having multiple warehouses adds a layer of complexity to inventory management. You need a system that will enable you to distinguish between identical items stored in different locations, and choose the most appropriate location to receive supplies, and fulfil orders according to stock levels.
- Inventory analysis: Understanding the ebbs and flows of supply and demand and how they vary by location are critical to maintaining optimum stock levels in each warehouse. Regional variations can occur due to local preferences or to the mix of customers in a particular location. For global organisations, seasonal difference can play a part.
- Standardising procedures: Particularly difficult if warehouses have been added in a piecemeal fashion, or inherited from other organisations. Having a central view of all stock, and giving a consistent service to customers will depend on being able to rationalise different systems and approaches.
- Managing shipping of goods between warehouses: When stock is low in one location, should you ship between warehouses, which may be more cost effective, or buy in new supply, which may be quicker if it is needed to fulfil a customer order? These dilemmas are commonplace when managing multiple warehouse locations, and can only be resolved effectively if you have full visibility of your stock across all locations.
- Linking with e-commerce: Customers checking your online catalogue don’t care which warehouse the goods are stored in – they just want to know if they are available and to when they will arrive. You need a system that enables you to keep your online store up-to-date, manage stock across all your channels and meet delivery SLAs, no matter which location picks and packs the items.
We think the best way of keeping on top of the challenges of managing multiple warehouse locations is to invest in an automated solution.
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