Objectives of Warehousing & Distribution
You’ve got a great product, customers want it and you’re able to make it at a cost that lets you generate a profit. That’s a good start for any business, but storing and distributing your product are just as important to your company's success. The larger you get, the more important logistics becomes. Understanding the basic objectives of storing and shipping your product will help you maximize your chances of remaining competitive.
For many small-business owners, the main objective for building a warehouse or renting warehouse space is simply to store inventory. Your garage, spare bedroom or basement might serve as your “warehouse” when you first open your doors, but you’ll need space to store your inventory safely, at affordable cost and with easy access as you grow.
Warehouse and distribution facilities need to provide easy access to your inventory. The quicker you can locate, load and ship your product, the quicker you can service your customers and receive revenue. Having an effective inventory tracking system should be a core objective of your inventory storage process. This includes tracking inventory once it’s left your warehouse. Consider adding global positioning system, or GPS, tracking to your trucks to help you know exactly where your inventory is until it’s in the customer’s hands.
The longer inventory sits, the more it costs you because of the interest you’re paying on credit used to make the product and the revenue you could be generating from the cash you spent storing idle inventory. Businesses create warehousing and distribution methods -- such as the first-in, first-out, or FIFO, model or just in time, or JIT, method -- to better manage inventory turnover. FIFO helps keep inventory from becoming obsolete, while JIT reduces the amount of time inventory sits.
Knowing your inventory levels at all times and matching them to your customers’ needs can help you avoid slowdowns caused by large orders. For example, if you have a customer who buys large quantities from you during the summer, you can create inventory to fill those orders during the rest of the year and store them until you need them, decreasing your need for overtime labor costs and reducing production bottlenecks.
Make regular inventory audits an important objective to help you spot theft, damage, incorrectly shipped orders and missing stock that can damage your profits. Adding surveillance cameras, employee pass-protected doors and security alarms can help reduce theft.
The more warehouse space you have, inventory you store and people you employ, the greater the probability of a workplace accident. Meet with your insurance provider, local fire marshal, a security expert and an occupational safety inspector to ensure your warehouse and distribution facility is safe and secure.