When it comes to product distribution and order fulfillment, the three biggest factors in determining the most efficient and cost-effective method of getting products to you customer are location, location, location.
If you are shipping product to customers nationwide from a location near either coast, chances are your supply chain is slower and more expensive than necessary.
For most merchants, it geographically makes sense to distribute goods from a Midwest-based distribution center. The central states are quickly becoming distribution hubs for companies all across the country.
Missouri, Illinois, Indiana, Tennessee, and Ohio have all seen a substantial increases in warehouse and distribution center construction. Most of these states are actively courting logistics operations as a source of economic development.
It’s not just getting goods from your warehouse to customers that you need to think about. How efficient is it for you to get merchandise from vendors into your distribution center?
We find that many merchants think that because their products come in through the ports, it’s best place to store goods and fulfill from facility near the port. But this can actually be one of the more expensive alternatives depending on where most of your customers are located.
Another plus for Midwest locations: the cost of land, warehouse space, labor, and overhead tend to be considerably less expensive in the middle of the country.
Each business has unique needs, but if you trace all the costs of your supply chain from source to customer, it’s likely that a centralized location makes the most sense.
Tod Yazdi is the principal of St. Louis, MO-based third-party logistics provider TAGG Logistics