When it comes to warehousing and storage, many people think of these functions as a necessary but added cost centre that cannot be avoided. And although in most cases they are indeed essential to growing an organization’s business that is not always the case. Think of the added cost of a two-stage distribution system. Are we really achieving an advantage is such a system, or would the customers rather wait a little longer for the product, and receive discounted pricing? The answer……………… it depends. There needs to be a strategy behind how we distribute, and are the added costs of a separate storage location more than offset by the advantages the systems provides from a business growth standpoint.
But let’s assume for a minute that we do have a sound strategy, and that we do indeed need the distribution locations that currently exist in our network. The question now becomes, how efficient is this network, and are we doing all we can to maximize the value that these cost centres are providing our organization?
Operating a warehouse is really not much different, from a process perspective, than the way we think of a manufacturing facility. We are really “producing” a product, in this case being shipped SKUs, lines, or orders. Therefore, we need to think of how we can accomplish this task with minimum waste and maximum efficiency. In other works, achieving the maximum output (products shipped) for the minimum input (labour, inventory costs, space).
There are many “best practices” that will allow us to move towards this end goal of maximum efficiency, and the actual application of these best practices varies, depending on a variety of business factors such as the industry you are in or the expectations of the marketplace. In the end (like with many areas of business), it is important to understand the theory of what we are trying to accomplish, and to apply that theory in a unique and tailored way to gain competitive advantage for our organization.
In the end, it is important to understand that there should be a distribution strategy behind the design or our warehouses, as well as the processes that are used to execute on delivering to our customers, and this strategy should be closely linked to our overall business strategy. Warehouses are not simply a place to store “stuff”, but are indeed often an untapped opportunity for us to gain competitive advantage by satisfying our customers more economically, with a higher quality of service, and at a faster rate than our competitors.
