Why Warehousing and Distribution Must Be Planned Together 

In the current dynamic logistics environment, companies cannot afford to plan their warehousing and distribution separately. The demands for faster delivery, timely order fulfilment and shipment tracking are increasing day by day, especially for e-commerce and retail industries. While warehousing is all about efficient storage of the inventory, distribution takes care of its timely delivery to the customers. However, when these two functions are run separately, the chances of high logistics cost, incorrect inventory management, delivery delays and increased RTOs increase significantly. 

The need for a collaborative approach between warehousing and distribution has become imperative for effective supply chain management. With the growth in e-commerce and the increasing adoption of same-day or next-day delivery services, it has become necessary for companies to have an integrated planning process. 

In this article, the importance of planning for warehousing and distribution collectively has been discussed.  

Understanding Warehousing and Distribution 

What Is Warehousing? 

Warehousing is an activity where products are stored before their sales and distribution. Stock management, inventory management, picking, packing and shipping preparations are all activities carried out during warehousing. 

What Is Distribution? 

Distribution is the process of moving goods from the distribution centre or warehouse to the customers who have placed an order. This process comprises various activities such as transportation and last-mile delivery.  

Differences Between Warehousing and Distribution 

Even though the two concepts are closely related, there are several distinctions. First, warehousing deals with product storage and management, whereas distribution deals with the movement of goods. Warehousing deals with ensuring product availability, whereas distribution is responsible for fast delivery and efficient transportation. 

The Problem with Independent Planning 

There are many challenges faced by a company or a business when it treats these two elements separately. Given below are some targeted points for your reference.  

High Logistics Costs 

Independent planning of warehouses and distribution channels causes problems when the location of warehouses is not near or close to the high-demand zone or pin codes. It means that the transportation distance would be longer thus fuel and transportation costs would also increase. 

Longer Delivery Time 

Lack of coordinated planning of storage of products and transportation schedule makes deliveries take longer time. Even if the product is stored in the warehouse, it may be too far from the point where it is required, resulting in higher transit time, increased fuel cost and longer waiting duration for the customers.  

Imbalanced Inventories 

In case there is no integration or coordination in terms of planning, companies may struggle to meet the demands, as there can be some warehouses with abundant stocks but are located far from the site to which it is to be delivered or demanded. This can lead to delivery delays or even failures in some cases.  

Increase in Return to Origin (RTO) 

Delayed shipments, incorrect inventory information and poor carrier allocation are a few reasons why delivery failures occur and result in high RTO percentages. When customers do not receive their order in time, they cancel or refuse to accept the order. 

Benefits of Integrated Planning for Warehousing and Distribution 

Here are some of the potential benefits that can be achieved by integrating Warehousing and Distribution.  

Faster Order Fulfilment 

The integration of planning processes makes it possible for businesses to store their inventories closer to their demand locations. It results in faster order processing and faster order fulfilment. 

Improved Inventory Visibility 

Through the integration of their warehousing and distribution plans, companies can get live information about the levels of inventory stored at different locations. This also helps in storing goods that may be in demand by the customers.  

Lower Transportation Costs 

Businesses can lower costs incurred in transportation through optimised placements of warehouses and better routes for transport. When warehouse and distribution centres are located near each other and that too near a high-demand zone, this combination significantly improves efficiency and saves fuel costs.  

Better Management of Transport Capacity During Peak Seasons 

Peak seasons cause a sudden increase in demand. Integration of warehousing and distribution plans assists in managing inventories and transportation capacity during such seasons. 

Key Factors to Consider When Planning Both Together 

There are some important key factors that determine the impact and effectiveness of planning warehouse and distribution together which are mentioned hereunder. 

Planning for Warehouse Locations 

The choice of warehouse locations influences the speed of delivery and the cost of shipment. Companies need to study customer demand and choose appropriate locations. 

Inventory Allocation 

Inventories should be allocated in accordance with regional forecasted demands. It helps companies to prevent shortages. 

Integration of Technologies 

Technology integration unites inventory management, warehouse management, transportation management and customer relationship management technologies.  

Transportation and Carriers  

Planning of carriers and routes should be in coordination with warehouse operations. 

Distribution Centers in  Modern Supply Chain 

The current distribution centre plays many different roles and serves many different purposes, unlike a traditional distribution centre:  

Traditional Warehouses vs Distribution Centers 

Traditional warehouses mainly aim at storage, whereas distribution centers aim at quick product movement. Distribution centers help in fast fulfilment of orders. 

Cross-Docking for Fast Fulfilment of Orders 

Cross-docking eliminates storage by moving received products into outbound trucks right away. Cross-docking helps in lowering handling costs and faster delivery. 

Use of Regional Distribution Centers in E-commerce 

Regional distribution centers enable companies to stock their products closer to the end-users. The process helps in quicker deliveries and meeting needs of e-commerce warehousing. 

Omnichannel Fulfilment 

Modern customers purchase products from different channels like websites, marketplaces and retail stores. Omnichannel warehousing and distribution help in achieving omnichannel fulfilment. 

Benefits that E-commerce Brands Get through Integration of Warehousing and Distribution 

Businessess get benefited in several ways by integrating the two together. Some of the major advantages are given below. 

Fast Delivery 

Properly positioned warehouses and distribution centers provide faster shipments and higher delivery performance. 

Lower Shipping Costs 

Effective transportation management and optimization of inventory minimize the cost of logistics. 

Reduced RTO and Returns 

Inventory and efficient delivery process can result in fewer failed deliveries and returns. 

Better Customer Satisfaction 

Faster and proper delivery of products increases customer satisfaction. 

Efficient Performance During Peak Seasons 

Integration of warehousing and distribution assists E-commerce businesses in processing orders during holidays and promotional seasons. 

Mistakes Made by Businesses 

There are some common mistakes businesses make that lead to increased operational costs and failed deliveries which are as follows: 

Selecting Warehouse Locations Based on Low Rental Rates 

Selecting warehouse locations based on low rental rates can lead to high transportation costs and long shipping times. Businesses look for cheap spaces to cut down on rental expenses but little do they know that it adds up to an increased transportation cost if the warehouse is not close to the customers.  

Failure to Consider Transportation Costs 

Companies do not give due importance to the effect of transportation costs while selecting warehouse locations, leading to an extra expense of transportation and longer time duration of delivery.  

Operating with a disconnected system 

Using disconnected inventory and transportation systems leads to inefficiencies in decision making. 

Lack of Forecast for Demand Variations 

Failure to forecast changes in demand could lead to either excess or inadequate stock. If a company does not have any idea of the demand, it could fail to prepare itself and its inventory to meet the order demand when it is placed.  

Neglecting Technology 

The reluctance to use new technologies in business operations can cause inefficiencies and inaccurate information. Companies that do not adopt cutting-edge technology become outdated with their traditional methods of performing business tasks.  

Best Practices for Building an Integrated Warehouse and Distribution Strategy 

• Design warehouses based on the demand cluster of customers. 

• Utilize centralized systems for controlling inventories. 

• Employ real-time tracking and transportation management systems. 

• Carry out analyses of shipment data frequently. 

• Coordinate effectively with logistics service providers and carriers. 

• Make provision for contingency operations during peak demand seasons. 

Future Trends in Warehousing and Distribution 

The future for logistics is very promising, and with technology taking over many industries, logistics will be no exception. Here are some future trends that will dominate or influence warehousing and distribution in the future:  

AI-Powered Demand Forecasting 

AI technology is facilitating the prediction of future demand for organizations, thereby assisting with efficient distribution and allocation of resources. 

Warehousing Automation and Robots 

Automation is aiding organizations in ensuring higher accuracy in the picking process, cutting down cost and improving efficiency. 

Fulfilment Centers Near Urban Hubs 

There is an emerging trend of using fulfilment centers located near urban hubs to facilitate faster deliveries such as on-demand and next day. 

Predictive Logistics and Real Time Visibility 

Predictive technologies provide proactive insights into inventory levels, logistics performance and risks. This can help in several business functions and make things easier and more efficient.  

Environmental Practices in Warehousing 

There is a shift towards environmentally sustainable practices in warehousing operations. Since the growing concern about the environment is gaining importance, businesses are also aligning their activities to saving environment by sustainable business practices. 

Key takeaways 

• When warehousing and distribution are planned together, they provide for an efficient and cost-effective supply chain. 

• Greater visibility of inventory and effective management result in better order fulfilment and decreased stock problems. 

• Effective logistical activities will lower costs associated with transportation, late delivery and RTO rates. 

• Integration of the system leads to higher customer satisfaction due to faster deliveries and reliability at peak time. 

Conclusion 

Warehousing and distribution are no longer distinct activities. They are related elements in an efficient approach. Companies that manage both activities together have an opportunity to optimise their order fulfilment, minimise logistics costs, optimise inventory management and provide a superior customer experience. 

As a result of the development of e-commerce and the growing requirements of deliveries, warehousing and distribution integration will become more important. Those companies which use technologies effectively and make correct decisions about locations of their warehouses will have competitive advantages in the future. 

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