Distributed inventory is a term that rarely used to be found outside Amazon Seller forums or white papers targeting large retailers and manufacturers but now increasingly applies to small and medium businesses looking to improve cost effectiveness and maintain competitiveness in a tight and ever-changing market.
What is distributed inventory?
Distributed inventory simply means that you store and ship your goods from multiple distribution centers strategically located near your customers so that you can cost effectively broaden your delivery footprint, reduce delivery time and increase customer satisfaction.
These might be your own warehouses or you can contract a third party logistics company that has a multi-warehouse network with fulfillment centers located where your customers are.
For example, if you have customers in Hawaii, Five Star is a professional transportation and logistics company with an advanced 3pl warehouse distribution network throughout the state that allows businesses to fill and deliver orders on the very island where their customer is located.
Is distributed inventory right for your company?
To determine whether your company would benefit from split inventory across multiple distribution centers, you’d have to assess whether distributed inventory can help your company do one or more of the following things:
- Lower Transportation Costs
Depending on the distribution of your customers, it can be much more cost effective to transport bulk inventory to a warehouse in close proximity to your customers rather than shipping each order individually from a single location.
This is especially true if you have customers in Hawaii. Five Star can receive your goods from any port of entry in the state of Hawaii, store your goods in a secure and climate-controlled warehouse, fill your orders and deliver them to your customers on-island.
- Meet Customer Expectations
Offering your customers 2-day delivery or not may be the difference between making a sale or not. By distributing your inventory across strategically located fulfillment centers, you can reduce delivery time and offer faster shipping even without increasing the cost to the customer.
At Five Star, we can even deliver your orders the same day the customer places the order!
- Expand to New Markets
An often overlooked benefit of expanding your 3PL network is the opportunity it provides to reach new markets. Perhaps there are places and customers you don’t ship to because of high cost of shipping from your current location. Distributed inventory can not only allow you to cost effectively expand to new markets, but could also give you a competitive edge that others haven’t adopted yet.
If you’ve avoided shipping to Hawaii because of the high cost, consider taking advantage of our 3PL services. We tailor our services to our customer’s needs to help you succeed.
If your company is ready to benefit from distributed inventory in another location, check out our post on the best 3PL companies in the USA by region to help you find a provider where you need one.