Choosing a distribution centre location can be a complex decision, but one that can have a major impact on your operations and bottom line.
Here, we’ll introduce you to some of the key factors you need to consider when choosing a distribution centre location.
What should you consider when choosing a distribution centre location?
Find ideal distribution centre locations by calculating the following variables:
1) Local market demand
You need to know how much demand there will be for your product within a defined area, and which products are likely to sell most frequently.
This will determine the size of distribution centre you require, and whether you need capacity to grow. It will also tell you whether you need storage for hazardous, flammable or perishable products.
Use Periscope® to:
- Calculate sales records to discover how much of each product you need in each area
- Find out where potential customers are and plot their locations accurately
- Analyse social media sentiment to gain qualitative insight into local perceptions of your brand
2) How customers purchase
Whether your customers typically purchase at your retail location, online with click-and-collect, or online with delivery will also impact your decision.
Your aim is to minimise transportation time and cost from this centre to the customer. Therefore, depending on their preferred purchasing method, this may require your distribution centre to be close to your retail locations, or to postal network entry points.
Use Periscope® to:
- Track sales records and assess what ratio of purchases is made via each method
- Plot customer locations accurately to establish the most convenient, central distribution centre locations
- Calculate distance to your retail locations, or postal network entry points
3) Position within your network
You are aiming to identify distribution centre locations optimally placed within your network for you to access:
- Your retail locations/customers
- Manufacturers/importers
- Relevant transport infrastructure
- A dedicated workforce
The centre you choose should be a relatively equal distance from the retail locations you intend to serve.
It should also offer easy access to the road and rail networks, ports or airports you use to receive products from manufacturers, and distribute them to customers.
Ideally, you need a distribution centre with transloading/rail siding capacity to optimise your operations. You also need to confirm that no natural features (such as streams or hills) will impede your processes.
Last, but by no means least, you need to position the centre in an area that is accessible to warehouse employees.
You could position the distribution centre in a location that is easily accessible from where your current employees are based. Or, you can identify new areas with local residents who match your preferred employee demographics.
Also, consider the shift pattern you intend to operate. If most workers rely on public transport rather than cars in a particular area, you might find it difficult to operate on a round-the-clock basis.
Use Periscope® to:
- Plot all customers, retail locations, competitors, importers, manufacturers and employees on a single map
- See how all distribution centre locations you consider fit with these variables, and with wider geographical factors
- Automatically identify new locations with the same attributes as your current distribution centres
Remember these factors when choosing a distribution centre location to streamline your operations and reduce costs associated with moving stock.
Calculate all these factors and more with Periscope® to ensure you’re choosing a distribution centre in an optimal location. Request a 10-minute demo today.