Keeping operations costs to a minimum is a top priority for most business owners as they strategize to reach maximum profit margins. The speed of modern shipping methods may make the elimination of large warehousing centers seem like a good idea. However, warehousing remains a critically important part of the business supply chain. Consider the benefits of warehousing before reducing this component of your company’s logistics.
A centralized location is important to business operations. Centralized locations make it easy to receive, prepare and ship products to consumers. For one company, a warehouse near the shipping docs is imperative for receiving goods from suppliers. For another company, a centralized location is a central hub in the middle of the city, where deliveries are made promptly to any part of the city and outlying communities. Business owners have to consider the costs of central locations and may decide to adjust the location to save money while remaining as close to the desired hub location as possible.
Better Service Implementation
When your buyers put in an order, they aren’t concerned with your potential fulfillment issues. They want the product to arrive in the desired time frame. Warehousing ensures you can do this with “security stocking.” Having enough stock to handle the normal supply needs for this month and next month means you can fulfill orders even if your suppliers are delayed or incoming inventories are lost or damaged. You still need to address the issue with your supplier but not at the expense of losing a sale or a long-term client because you couldn’t fulfill the order.
Value-Added Delivery Component
Maintaining inventory in the warehouse adds value to the customer experience. Warehouse staff can check product stock and let customers know what is immediately available. If orders contain components that require shipment assembly, the process is much quicker when inventory is on hand, meaning the customer gets the products faster. This is a major benefit to the company. Think about a home improvement store that doesn’t have an adequate stock of materials. The store loses customers to the one that has the inventory.
Scaled or Seasonal Growth
Warehousing allows for economies of scale, which means the business can scale operations up without a significant increase in costs. Business owners can monitor buyer trends and stock up on inventories for certain buying cycles such as peak holiday season. The ability to scale operations as needed without increasing costs by much allows the business to take advantage of sales cycles and new opportunities in new markets.
This article was first published in: http://smallbusiness.chron.com