Multiple Inventories: When you have just one distribution center, even if it is centrally located, you only have one inventory. By spreading your inventory out over multiple distribution centers, it seems as if you actually have multiple inventories, which will serve as a sort of back-up system for when one location runs out of a particular product that you need to ship.
Minimize risk: There are many catastrophes and occurrences in nature that prevent shipping carriers from making it to the fulfillment center or cause delays while in transit. At some point, a winter storm, flood, wildfire, earthquake, or other force will likely impact some of your orders. When you split your inventory across geographic areas, you will have backup inventory in other locations. From preventing delays or lost stock, it can be better to be safe than sorry.
Faster delivery: With multiple points of distribution, delivery time can be cut down pretty dramatically. Instead of customers waiting for products to arrive from one central distribution center, orders will be shipped quickly from various centers to nearby addresses, meaning products arrive quickly.
Lower shipping costs: Since products will be spread out over a larger area when you use multiple distribution centers, the cost of delivering an order can significantly decrease. With a unified infrastructure across your supply chain and multiple locations, transit times are cut down as you ship from the location closest to your buyer and ultimately putting more money in your pocket.
Competitive advantage: Many ecommerce customers expect free or reduced shipping rates these days and providing services from multi-locations allows companies to reduce costs and gain a competitive advantage. You will have technology upgrades as well across your network. Parcel systems could choose what location would be best for the cheapest parcel costs, along with inventory accuracy benefits. Certain systems and 3PL setups will allow zone skipping, which is another way to cut shipping costs.
Focus on growth: Lastly, companies can focus on growing their business and letting your warehouse partner take care of the other challenges, such as space, hiring and training new employees, and managing additional volumes and SKUs. These details can hinder future growth if not handled correctly. With the right partner, this will be a seamless transition across all fulfillment locations.
When you have multiple distribution centers, there are clear advantages that will help your business in the long run. From saving on shipping costs to making customers happy, the use of multiple distribution centers just makes sense.