If you can’t keep up with one warehouse, adding more over a larger geographic area seems like a bad idea. Would it multiply your problems? Not necessarily.
There are certainly pros to keeping your inventory under one roof. But with some careful analysis and the right partner, inventory distribution might be just what your business needs.
If you’re trying to fulfill national orders (direct to consumer) D2C or B2B, you could be disappointing your customers and spending more on shipping and handling than you need to. It’s no surprise that in a recent survey, 68% of consumers prefer online shopping over other methods.
Splitting inventory into multiple fulfillment centers, also known as distributed inventory, can help you combat rising shipping costs, meet customer expectations for fast delivery, and build resilience into your supply chain.
Start the process by analyzing each product’s supply chain from material sourcing to retail partners. Many cities boast of being within a day’s drive to a large percentage of the US population. Also, you may not need to mirror the same inventory at every location or in the same quantities.
Depending on the products’ shipping modes and velocity, an east and west coast fulfillment center may be enough, and an improvement over centralized fulfillment. You may find competitors store inventory in several major cities for a faster shipping response. You can avoid national rates and take advantage of local and zonal shipping fees with shorter shipping distances.
Start with your fastest-moving inventory that could benefit from quicker fulfillment. It’s likely to break down by the old 80/20 rule. That means about 80% of sales come from 20% of the top products. Items with lower demand or value could still be fulfilled from one or fewer warehouse locations. Also consider warehouse receiving and how finished products are when they arrive. For example, it may be wise to locate fastest-moving inventory near a port so they can be stocked faster.
View overlapping regions and identify the best product fulfillment centers to serve the most customers.
Identify your most common destinations, typically major metropolitan areas. Locating inventory in warehouses nearby can better reach end customers and retailers.
Shipping high-demand products faster and with lower costs improves the bottom line and gives customers a reason to return.
It’s difficult logistically to distribute inventory without a partner. The costs can be high to build multiple warehouse locations for a single organization. Work with a fulfillment partner with multiple 3PL locations. WSI owns and operates more than 13 million square feet of warehouse space throughout the United States. Distribute inventory quickly and at a lower cost. We offer fulfillment as a service, allowing businesses to avoid investment and operating expenses.
Working with a trusted 3PL to manage inventory and fulfillment in several locations supercharges your operations. If you’re wondering if it’s time to distribute inventory, consider these aspects:
Parcel, LTL and truckload carriers are raising rates, and longer hauls cost more. Putting inventory closer to common destinations can turn a three-day move into a one-day jaunt. Heavier items pay higher rates, so cutting distance or shipping zones will pay off for furniture, exercise equipment, machine tools, and other bulky items. Lower shipping costs make it easier to offer free-shipping options. Once a premium offering, free shipping is now table stakes. In fact, 62% of consumers won’t make an online purchase without the promise of free shipping.
Ecommerce customers have come to expect two-day delivery on most items (Thanks, Amazon!). Strategic locations can cut days off transit time and lower costs by fulfilling the order from the closest warehouse.
Move product closer to your top destinations and customer base without the investment. Stock regional items where it makes sense – you don’t need as much ski gear in Texas as in Vermont. For items in demand everywhere, stock items at your major hubs.
You can strategically split inventory to support seasonal sales or product promotions and introductions, for example. It’s easier to scale to handle these surges in order volume with scalable facilities and labor from a 3PL partner
A specialized, customized 3PL like WSI can help you handle products that are oversize, heavy, contain hazardous materials, require kitting or other specialized handling. You could keep standard packaged goods in a more automated warehouse situation.
When your demand is high enough to warrant splitting inventory, there’s that much more pressure on your business to deliver quickly, regardless of where the customer is. Operating in multiple sites give you a Plan B in case of a disruption like the regionally-unexpected winter storms we saw in the past couple years. Having multiple fulfillment sites (or a partner with this capability and flexibility) can prove to be a huge asset when you find yourself needing to pivot.
When you’re looking for a partner to help you manage inventory and fulfillment for multiple locations, you should consider a few things.
First, look for a partner with hands-on management rather than a provider that acts as a 4PL and outsources operations. Every WSI warehouse is managed in-house, so there’s a high level of oversight and accountability to make sure your standards are met.
With a single management team over the WSI network, you have the option to share training materials, customer success teams (remote and local) and labor flexing for peaks across multiple sites. All this will happen behind the scenes, so you benefit from the power of WSI’s network.
Second, understand the technology and software your partner brings to the table. It’s what makes seamless inventory management possible. Your partner should have a solid order and warehouse management system for complete visibility and transparency for your inventory and fulfillment.
WSI uses Manahattan Active WMS, one of the top-rated products in the market, and the Enspire OMS. With these tools, we know where every item is and where it’s going.
Inventory Management and fulfillment has never been more critical or challenging. Changing consumer expectations, supply chain disruptions, labor shortages and other ongoing obstacles require a new way of looking at how you’re serving customers.
If you’re considering distributing inventory to serve customers better with lower costs, Connect with WSI to learn about our customized services, experienced team and superior technology.Connect with WSI
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