Distribution and warehousing operations are closely related to the continued increase in production and distribution levels. Warehouses are used in modern society as storage points that ensure the safekeeping of raw materials and other supplies before being transported to various destinations. The economies of scale associated with both transportation and manufacturing of products provide a typical explanation of the existence of warehouses and distribution centers. In the distribution centers, products from different manufacturers are sorted and arranged into shipments that contain specific quantities. The goods are then distributed to customers based on their needs. It is worth mentioning that towards the end of the twentieth century, distribution centers and warehouses were not part of downstream or upstream activities as is the case in today’s supply chain.
Currently, there are quite a number of integral parts within the supply chain that assist in linking different inputs with their corresponding products as required by consumers. Over the past few decades, increased research especially on managing inventory has made it easier for manufacturers and business firms to identify appropriate inventory strategies that can help the firms to address variations in both market and demand characteristics. The research studies have also helped production firms and large businesses to reduce wastage of products alongside avoiding loss of revenue as a result of having excess inventory at distribution centers and warehouses. Even with the establishment of such strategies, there has been a continued increase in warehouse distribution channel challenges. This paper seeks to identify some of the challenges associated with distribution channels. The paper also presents various ways of overcoming such challenges.
Warehouse-Distribution Channel Challenges
There are several challenges associated with warehouse distribution channels. These include the inability to maintain effective inventory management and challenges associated with the identification of effective distribution networks as well as appropriate warehouse locations. Inventory management challenges are usually caused by the desire for warehouse distribution channels that cater to organizations that produce in large quantities. Such a challenge may also be posed by mass customization practices among certain organizations. This makes it rather complex for warehouses to handle such changes.
The challenges are witnessed frequently because the needs of consumers are not always similar. Different customers demand various types of products and services. This makes it extremely difficult to forecast customers’ demand. This problem is further complicated in circumstances where there is a need to deliver customized products to consumers. Due to the fact that businesses attach a lot of significance to the time factor as a basis for competing, the supply chain management is required to take appropriate strategies to ensure that the customer’s demands are met in a regular, faster, and reliable way. This implies that it is important for warehouse distribution channels to ensure that the increasing inbound schedules are taken into consideration. Having practical intensive training on inventory management and warehouse management can go a long way in addressing the inventory management challenge. This type of training should be set in a manner that facilitates the incorporation of new and unique concepts within the warehousing field. This would make it easier for distribution channels to respond effectively to the frequent changes in operational demands that result from global market changes. Undertaking the management of inventory helps the distribution channels to maintain the desired level of inventory and at the same time be in a position to meet or satisfy the increasing demand (Wang & Adams n.d, p.6).
Moreover, another major challenge witnessed in a warehouse distribution channel is the identification of an effective distribution network and an appropriate warehouse location. This is a major challenge bearing in mind that the distribution and warehouse centers cannot function separately. The functions of distribution networks and warehouses are linked in the sense that one cannot work well in the absence of the other. Several organizations have continued to experience this challenge due to their inability to identify an appropriate location that has a collective coverage of the market. In terms of the identification of an appropriate distribution network, problems arise when firms fail to understand the real demands from customers destined in different locations. This mostly happens because a good number of distribution centers often rely on the existing conditions of the market. In addition, warehouse and distribution channels are largely influenced by the area where specific customers are located, and the continuous variation in a population that injects a lot of disparities within the distribution network (Wang & Adams n.d, p.14).
Ways of addressing Warehouse-Distribution Channel Challenges
There are myriads of available models that can be used to manage inventory. For example, organizations or firms that own warehouses can address this problem by practicing the just-in-time strategy commonly known as the JIT strategy. By using this strategy, it implies that the companies should request inventory supply only at a time when there is demand for that specific supply. Companies (such as Toyota Motor Corporation and Ford Motor Company) have successfully applied this strategy and consequently managed to achieve the desired levels of inventory management. The JIT strategy mostly applies to organizations that deal with heavy products whose costs of distribution are very low, and those that require large storage space.
In order for this strategy to be implemented successfully, there is a great need for suppliers to demonstrate high levels of responsiveness and cooperation. This means that suppliers should be in a position to supply material only when such materials are needed. The materials should also be incorrect quantities and delivered at the right time. Failing to observe the latter may likely complicate the warehouse distribution channels and also make it difficult for an organization to maintain exemplary management of its inventory. However, it should be noted that this strategy is not completely reliable since a shift in the mode of supply can cause significant effects on the standards and demand of the consumers. Under such circumstances, the warehouses may end up being congested and eventually making it difficult to control the inventory. In order to avert this problem, suppliers should ensure that the supplied inventory is of high quality. Apart from enhancing good inventory management, the JIT strategy plays a vital role in reducing or eliminating the costs associated with the distribution or storage of inventory (Wang & Adams nd, p.7).
The challenge that relates to the inability to identify an effective distribution network and an appropriate warehouse location can be addressed using the following ways. To start with, a distribution channel should ensure that the right measures are put in place in such a way that each customer can easily access the products. For example, consumer goods should be availed to the targeted market through retail outlets. While this is being done, the quantity supplied should be in accordance with the proportion of sales, or the ability of that particular retailer to distribute products to consumers in a convenient way. On the same note, organizations involved in high levels of production (such as manufacturing industries) should also undertake the process by putting into account the demand for such products. This helps in eliminating instances of overproduction that may compel such organizations to find alternative ways of storing excess products. This challenge can also be technically addressed by strengthening the relationship that exists between retailers, suppliers, and distributors. This relationship can be easily achieved through different methods such as partnerships, data sharing, and digitalization. Such techniques enable manufactures to link with their distributors or wholesalers in such a way that they can easily monitor both the movement and distribution of products. By so doing, the distributors are able to control the level of inventory in the warehouses and at the same time undertake effective inventory management (Aberdeen Group 2006, p.14).
From the above discussion, it is clearly evident that distribution channels form an important factor when establishing the total cost of supplying a given product to the consumers. These channels also play a vital role, especially when determining the revenue realized from the sale of products. It should be understood that the development of a competitive and appropriate channel of distribution is a form of investment that enables firms or organizations to build and develop strong relationships with their customers. This implies that the existence of an effective and appropriate warehouse distribution channel does not merely help the firms or organizations. It is also significant to consumers. Streamlining this process will therefore go a long way in ensuring that there is no congestion in warehouses.
Aberdeen Group. 2006, The Warehouse Productivity Benchmark Report: A Guide to Improved Warehouse and Distribution Center Performance, Web.
Wang, BX & Adams, TM. N.d., Warehousing and Distribution Centers, Chapter 12 of international transportation: moving freight in a global economy, 2013. Web.