Skip to content Skip to footer

The Importance of Warehousing and Distribution in Supply Chain Management

Supply chain management is the area of business administration that directly concerns the consumers. It is essential in ensuring customer satisfaction and loyalty. This area covers several business operations such as warehousing and distribution. To succeed in supply chain management, it is important to excel in those aforementioned business operations.

A warehouse is a large, spacious and secured building intended for commerce and government use. It functions as a storage place for large quantities of goods. Warehousing is not simply about storage though. It also covers the administration and manual labor required in storage such as delivery, documentation, examination and certification.

In the business language, distribution refers to the delivery of finished goods to buying centers such as shopping centres, markets and retailer stores. Some manufacturers deliver their goods directly to their accredited retailers. This is advantageous if the retailers’ business establishments are just nearby the manufacturers’ places.

Major and minor mistakes alike in warehousing and distribution can result to high losses. Incorrect storage can damage the goods. If the damaged goods are sold, they will either be sold in a much lower price or not be sold at all. The manufacturers will not be able to get back their investments.

Failure to deliver the goods to the right destinations will cause the business to cover another round of delivery costs to do two things: to bring back the wrong goods and to deliver the right ones. Due to delays, goods can get damaged and intended recipients may not want to accept and pay for the delivery.

Another adverse effect of wrong warehousing and distribution is that it can destabilize the prices of goods. If there is not enough supply due to the incompetence of the warehousing management, the prices of goods may rise to meet the unchanged demand of the consumers.