Warehousing has always been essential to successful shopping, whether you're an online or offline retailer. When you first start a business, one of your first and most important concerns is where and how you'll store your products. If you get this right, your products will arrive swiftly with affordable carrier rates, resulting in increased customer satisfaction. Within this piece we will go through the advantages of a decentralised warehouse network strategy so you can decide what is best for you and how a worldwide fulfilment provider such as Trident can assist you!
The Warehouse Network design, also known as warehouse configurations, is the foundation of a successful supply chain model. It can be centralised, in which all products are shipped from a single location, or decentralised, in which several smaller warehouses are spread out to better serve different markets or stocking different kinds of products. Each method has its own advantages and disadvantages. While centralised warehousing produces lower operational costs and better customer service, it also has the disadvantages of higher transportation costs and a lack of agile response. Decentralised warehousing, on the other hand, is based on increased speed to the consumer. As a result, faster deliveries and a beneficial impact on sales are possible.
When choosing a supply chain model that is best for your business, these are few important questions to ask yourself:
- What do your consumers expect from you?
- Where are you located?
- Is it critical for your customers to have quick shipment times?
- What is the extent of your budget's flexibility?
- Are there any local suppliers in your potential node regions who could help you save money on inbound costs?
- Will your current suppliers be willing to cooperate with you to supply a decentralised network?
- Do you have the necessary infrastructure (for example, IT systems) to connect a decentralised network?
The Covid-19 pandemic caught the centralised warehousing model off-guard by demonstrating that it is to a degree incapable of dealing with emergency situations. The crisis has also led to the recognition of warehouses as critical components of business models, and warehouse workers, like delivery and retail workers, as vital employees. Such occurrences would tip the supply chain balance in favour of decentralised warehousing. When you as a company adopt a decentralised distribution model, the product is moved away from major stakeholders in the "central" location and closer to the end user. While self-owned warehouses and logistics can do this, a managed decentralised logistics network is significantly more adaptable.
Let us look at the advantages of a decentralised warehouse network:
Meet your client’s needs: To best serve the client base, each node of the supply chain can be tailored to those specific areas needed. Based on the volume of orders in a certain area, product levels can be dispersed around the country. Reduces expenses at local level: One of the main advantages of a decentralised supply chain is that it may dramatically reduce local logistical expenses. Because operations are located close to the end client, shipping expenses are reduced significantly. Nodes that have access to local suppliers may be able to reduce inbound expenses as well. Increased flexibility: Decentralised nodes can function in a more flexible manner than centralised hubs. They have the semi-autonomy to move into a local market and maybe test new items if there is an opportunity. If a company is already skilled at controlling its supply chain from afar, it may be easier to expand its presence into new markets where it has no existing node, especially if it takes advantage of outsourcing opportunities. Building trust and improving speed: Decentralised enterprises can aim to provide better customer service in two areas: shipment times and trust. Organisations can give those speedier shipping times that people expect by locating their activities near the end customer. They can also advertise that they are a local firm or that they have local customer service representatives, which may assist in developing trust within the community. Product testing can be done on a smaller scale: Nodes are ideal for putting new items to the test. Decentralised facilities can test new items with a captive test audience, examine the data, and report back to HQ on the success or failure with a limited audience that the local proprietors are intimately familiar with. Possibility of stocking larger quantities of inventory: With enough warehouses spread out around the region (or world), chances are the company can make and/or stock a greater amount of inventory than were it confined to fewer premises. This could enhance its ability to deliver products to its customers even if one warehouse happens to, for example, suffer a stockout due to unpredicted demand. If one warehouse runs out, there are more available. Reduced risk of disaster: Companies that stock their items across multiple places can mitigate some of the risk of disaster, which is an added benefit to our previous point. If one node is broken or otherwise rendered inoperable, its peers can intervene to minimise the impact on customers and, as a result, profitability.
What technology are you going to need to run a decentralised supply chain?
Modern inventory management software designed for decentralised supply chains is critical. You will need a software platform that can be plugged into each of your various facilities which allows them to communicate with one another in real time. Additionally, this software should be able to communicate with the rest of your common systems to track inventory levels and client purchasing patterns. Consider how you might incorporate automation into your new inventory management system. This is a computer algorithm that would monitor your entire business, including all data coming in and out of each node, and make decisions depending on specified criteria.
Companies are learning that cost-cutting techniques that once worked effectively are now preventing them from being the agile supply chain that their consumers expect. The ability to quickly adjust to market needs is one of the main reasons why decentralisation is preferable to centralisation.
We are empowering our customers to grow their businesses, connecting suppliers to customers through the application of cutting-edge technology and experience. Trident believes that anyone should be able to manage all their business logistics from anywhere. Now, harnessing the power of data and artificial intelligence, this is a reality. We understand that keeping up with consumer demand can be tough, but growth should not be painful. Our network of smart warehouses across Europe allow you to scale flexibly and cost-effectively. Combined with our efficient global delivery services and managed marketplace partnerships – we are able to offer you the complete end-to-end logistics solution.