A Single Warehouse

First I would get higher management involved in this process. The decisions that you make not only effect the present, but also affect the future as well for the company. I would include sales, marketing, manufacturing, and operations in the planning phase of this warehouse. Having all key personnel is essential for the process to work successfully. Also getting all of these key personnel on the same page of communication. Bad or no communication can fail a whole project. I would reconfigure the logistics network to minimize several costs, which includes: purchasing, production, inventory holding, facility, and transportation cost. Using one centralized warehouse can help me achieve this goal.

When planning to use the centralized warehouse some things have to be considered in reference to cost. Handling cost, fixed cost, and storage costs are all key elements in this process. Handling cost is the labor and utility cost proportional to the annual flow through the warehouse. Fixed costs are not proportional to the amount of material that flows through the warehouse. It deals with the capacity of the warehouse. Lastly, storage costs consist of inventory holding costs. Understanding these three things will benefit the centralization warehouse processing. The centralized warehouse will be responsible for serving the market as a whole. While using the centralized warehouse it has some advantages. Service levels will increase which means less stock-outs. The inventory levels will decrease as well as the fixed cost. In contrast, outbound transportation cost from the central warehouse to retailer will increase due to supporting all areas.

When breaking down the other warehouses into one, we will have to decide on where to place this new warehouse. When choosing the location you must consider geographical and infrastructure conditions, natural resources, public interest and local industry. Also you have to consider the customers and retailers location as well. There will have to be an analysis to determine the best solution to finding a location. In addition, capacity of the warehouse must be included in the forming stage. Cost of set-up, transportation cost, and numerous factors must be evaluated before the warehouse to be operational.

The network design determines the configuration and infrastructure of the supply chain. These decisions are based on plant and warehouse location and distribution and sourcing. The main steps needed to be used are; data collection, locations of customers, retailer placement, transport needs and rates by mode, demand for the product, cost of warehousing, order processing costs, shipment sizes and lastly customer service requirements to meet the customers approval. Like the steps that are necessary to determine the optimal network. The required information and data is required to make these steps possible and make solid decisions by management to accomplish these steps