It may seem easier to monitor & manage the inventory from a single fulfilment centre however it may not be a great strategy for a business that wants to expand the consumer base across the geographies.
Storing inventory at a single location can create many risks for the business especially in a crisis like COVID19 which had a huge impact on the supply chains.
For a business, it will be challenging to re-start the operation during the crisis, if they have stored the inventory at a couple of locations. This further means an extended impact on sales or losing an opportunity to a competitor with better response capabilities.
“Distributed Inventory” not only prepares you better for uncertainties and a dramatic catalytic event like COVID19, but it also helps in achieving overall better business performance by enabling you to offer speed & flexibility to your end customers.
With rising customer expectations for faster delivery, using multiple warehousing & storage locations can significantly reduce the delivery time. By distributing your inventory at the various warehouses, a better response to the customer’s demand can be achieved.
Let us find out how you should be distributing your inventory and what are the key benefits which can create a competitive advantage for your business.
The key factors which should be considered while distributing your inventory are:
Consumption market: Distributing inventory is a great proposition for a business that would like to access the consumption market across the geographies. In the prevailing scenario where there is a huge inventory build-up, spreading it closer to the consumption market will help in a faster sale of the product.
Optimal mix: the optimal mix of inventory should be distributed at each location based on the demand / predicted demand of the product instead of storing each product at each location. Storing your high demand product makes more sense instead of stocking up the low moving product, storage of which can add to the operational cost.
Synchronized Orders: The orders in distributed inventory network should be synchronized with the destination & inventory availability at each location. This will ensure service continuity to the end customer by fulfilling their order from an alternate location in a scenario when inventory is not available at the designated location.
Outsourcing: For distributing inventory it is recommended to partner with a logistics provider who can give you access to your target consumption market. Days of building the logistics network in silos are over, using a logistics provider who can act as one window solution provider will give the flexibility to scale up or scale down the operations as per your requirement.
Technology: Managing the multi-location and multi-channel inventory without digitizing your processes will affect the visibility in the supply chain. To have real-time visibility of your inventory across the distributed network will require technology such as WMS which can provide you an integrated view of your inventory for multiple locations which will enable you to take data-driven decisions.
The key benefits you can experience with the distributed inventory are:
Efficiency: By distributing inventory at multiple locations and closer to the consumption market you can reduce the delivery times to the store or end customer. By operating from a multi-user facility of a professional logistics provider can help the new age brands to experience a similar service level or infrastructure which is available for a major or global brand.
Cost-Effectiveness: By being closer to the consumption market you not only reduce the delivery time; you also get the benefit of reducing the transportation & shipping cost. By partnering with the right logistics partner and operating from multi-user facilities will help in reducing the fixed cost and shifting to a variable cost model by selecting a pay per usage option and this will also reduce the liabilities related to the fixed assets.
Today, many organizations are suffering or may continue to suffer as they have consolidated their inventory to a limited number of facilities across the country. While the companies who have chosen to spread their inventory by keeping it closer to the consumer market are able to serve their customers by fulfilling their orders.
In a COVID19 like situation, a lot of back and forth tends to happen in the guidelines therefore the customer should consider distributing the inventory at multiple locations by partnering with the right logistics provider.
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