Having multiple warehouses, or in other words, a decentralized inventory, can have some advantages over having a more centralized inventory, i.e. only one or two warehouses. But iewr you serve customers across different areas or cities, determining the ideal number of warehouses for your business is by no means an easy choice. Either way, you don’t want your choice to be limited by your online inventory system.
The Benefits of a Single Warehouse
Having a highly centralized inventory helps keep your inventory infrastructure simple, cut down costs related to warehouse management, and reduce the amount of safety stock you need. And since you won’t need multiple warehouse teams, you can also save money on employee costs. Another advantage of having one warehouse is that your inventory data will all be kept in one place, making it easier to manage, especially if you have a small inventory team, or do the inventory control yourself.
If you choose to have a single warehouse, its placement is crucial. Not only must it be as close to the bulk of your customer as possible, to lower shipping costs, but also to vendors and suppliers, so that your purchase orders can be quickly fulfilled.
The Benefits of Multiple Warehouses
Having multiple warehouses. i.e. a more decentralized inventory, makes senses if your customers are not all located in the same city or district but are spread over a wider area. The benefits of a decentralized inventory include lower shipping costs, lower vendor transportation costs, faster shipments, and the possibility to allow customers to pick up orders directly from your locations.
Another benefit of having multiple warehouses is less stock vulnerability. Should anything happen to your stock in one location, e.g. damaged caused by a fire, a leaking roof, or theft, you’ll still have stock in other locations to compensate. Having multiple warehouses also requires strategic placement.
So, Which Is Best?
There is no simple solution that works for everyone. For some businesses a centralized inventory is best, while for others a decentralized inventory is ideal. Look at your customer data to understand how spread out they are, and then determine whether your shipments are reaching them fast enough. Also consider how much you’re paying for shipments, both to customers and from suppliers. An inventory control and planning solution can help you determine that.
At the end of the day, you don’t want to have more warehouses than you can effectively manage. Sometimes one warehouse is not enough, though, which makes the creation of a second one a good decision. But to have more than three warehouses you need a very good reason, such as a large customer base, or a rapidly expanding business.
Whether you have a centralized or decentralized inventory, remember that a good inventory control and planning solution should never limit how many warehouses you can have. DataQlick comes with built-in multi store locations and warehouses support, being fully adaptable to the needs of both centralized and decentralized businesses.
