Businesses need to understand the trade-offs between costs and customer service in order to decide how best to balance the number of warehouses or distribution centres (DC) and other supply chain operations. Most businesses benefit from more distribution facilities in order to reduce transportation costs and last mile delivery time. However, there comes a point where building too many facilities increases total costs too much.
Besides the number of facilities, other challenges include labour availability, demand variation, and increasing customer requirements. In most businesses, distribution is a human resource-intensive activity. It is growing increasingly difficult to find and train high-quality personnel for DC operations.
Demand variation is another supply chain challenge that affects distribution operations. There is a need for a robust warehouse management system (WMS), order management system (OMS), carton configurations, shipping rate and shopping tools that optimise companies’ distribution and fulfilment networks. These systems aim to provide the customer with a positive experience in the areas of shipping, in-store customer pick-ups, inventory visibility, network speed and agility, and order capture across all channels. A recap of the concepts can be found in the IBM video about order management, from earlier this week.
Businesses benefit from higher numbers of distribution facilities to reduce transportation costs and last mile delivery time. But this can get expensive!
Other than a dedicated distribution centre, how else can suppliers store their goods in geographically dispersed locations?
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