Manufacturers needs an effective method of managing their inventory, no matter if they’re a huge multinational or a small, local retailer. Inventory management is a complicated task at the best of times, and as such more businesses are turning to the concept of a centralized warehouse where they can store all of their inventory in one place.

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Lower costs

One of the main benefits a centralized warehouse affords is a reduction in operating costs. After all, it’s extremely expensive to build, staff, secure and manage a warehouse, and those expenses are multiplied the more warehouses you have to manage. For manufacturers then, a central warehouse located on site means it’s located close to your production and distribution centers, which eliminates the need to shuttle goods between the two. As such, you can save money on these transportation costs too.

Reduced staffing

A centralized warehouse also offers an advantage with regards to staffing. For example, even if the centralized facility is much larger than the multiple warehouses located in different regions, it’s likely you can get away with employing much fewer workers. In addition, your business can realize new economies of scale because it will need to employ less managers, inventory control staff, handlers and security personnel than would be needed for multiple locations.

With a reduced amount of employees, businesses can set their standards higher and target more experienced and better qualified staff. This in turn, can lead to greater efficiency and the cost savings there can easily outweigh the higher salaries you’ll need to pay for these more competent personnel.

Simplified inventory management

Inventor management becomes more simplified in a centralized warehouse. For example, businesses will have a better idea of how long orders will take to ship and can advertise this to their customers. Inventory will also be easier to keep track of, because you won’t need to juggle with multiple inventory reports. In addition, a centralized warehouse makes it easier to institute more efficient inventory management polices, as these will not need to be coordinated at multiple sites.

Better relationships with online retailers

A centralized warehouse should result in more opportunities with online retailers. The main advantage is it’s possible to offer concentrated inventory storage and rapid deliveries.

Disadvantages

It’s not all one way. In some cases, a network of local warehouses might be preferable as it allows local managers to be more responsive to local market conditions. They can also move more quickly to provide special distribution needs that aren’t required elsewhere. Shipping times will also be reduced because customers will live closer to the distribution point. Finally, distributed warehouses give companies more options in case one facility is shut down due damage or inaccessibility.

Pall-Pack AS is a big supplier of automatic packaging machines. Please see website for more information, www.pallpack.no