How can utilizing large warehouses help reduce inventory?
Let’s use a large consumer products company as an example. By keeping all of its lines of product (shampoo, laundry detergent, deodorant, etc.) in one facility, it can maximize full truckload shipments, which greatly reduces transportation costs. Inventory is capital. By reducing inventory a company reduces its capital costs. By housing full product lines under one roof, a company effectively and efficiently reduces inventory. Efficiency is achieved by having all product lines in one building and full trucks can be on the road within hours. If the inventory is spread across the country the truck must wait for the orders to come together from the various locations before it can reach the customer. Also, it is important to note that large retailers — the Wal-Marts, the Costcos — will not accept LTL (less than truckload) shipments from large companies. They want all of their products on one truck at one time. LTL shipments increase transportation costs and paperwork. How can transportatio
