Regional distribution centre

From CEOpedia | Management online

A regional distribution centre is an intermediate warehouse, in a specific geographic region, that consolidates goods from a variety of suppliers and redistributes them to a different range of customers. The regional distribution centre is managed to ensure products are received, stored, and shipped in a timely and efficient manner. The regional distribution centre also seeks to minimise inventory costs, improve customer service, and reduce transportation costs by minimising the distance between the supplier and customer.

Example of regional distribution centre

  • Amazon Fulfillment Centre: Amazon Fulfillment Centres are regional distribution centres located in various U.S. territories and countries around the world. These centres are responsible for receiving, storing, and shipping customer orders in a timely and efficient manner. Amazon Fulfillment Centres also manage inventory and customer service, as well as other logistics operations.
  • Walmart Distribution Centre: Walmart Distribution Centres are regional distribution centres located in various U.S. territories and countries around the world. These centres are responsible for managing and distributing Walmart's inventory, both in-store and online, in a timely and efficient manner. Walmart Distribution Centres also manage inventory, customer service, and other logistics operations.
  • Target Distribution Centre: Target Distribution Centres are regional distribution centres located in various U.S. territories and countries around the world. These centres are responsible for receiving, storing, and shipping Target's inventory, both in-store and online, in a timely and efficient manner. Target Distribution Centres also manage inventory, customer service, and other logistics operations.

When to use regional distribution centre

A regional distribution centre can be an effective way to streamline the logistics process and improve customer service. It can be used in a variety of scenarios, including:

  • When companies need to reduce long-distance shipping costs and improve delivery times.
  • When companies need to restock stores or warehouses in multiple regions or countries.
  • When companies need to manage seasonal demand or variable order sizes.
  • When companies need to expand their geographical reach or product offerings.
  • When companies need to store and manage multiple product lines or inventory levels.
  • When companies need to reduce shipping and inventory costs by consolidating multiple suppliers and customers in a single region.

Types of regional distribution centre

A regional distribution centre is an intermediate warehouse, in a specific geographic region, that consolidates goods from a variety of suppliers and redistributes them to a different range of customers. There are several types of regional distribution centres, each serving different purposes:

  • Cross Docking Centres are warehouses that act as a transit hub, receiving goods from one supplier and immediately redistributing them to another. Cross docking centres improve supply chain efficiency by reducing the amount of time goods spend in the warehouse before being shipped to the customer.
  • Consolidation Centres are warehouses that are used to combine multiple shipments from different suppliers into one large shipment. This reduces the number of shipments sent to the customer and can reduce transportation costs.
  • Reverse Logistics Centres are warehouses that are used for the purpose of receiving goods that are being returned from customers. These goods are inspected, refurbished, and then redistributed to other customers.
  • Distribution Centres are warehouses that are used to store goods for a certain period of time before distributing them to customers. This allows for more efficient inventory management and reduces the need to constantly restock the warehouse.

Steps of regional distribution centre

A regional distribution centre is an intermediate warehouse, in a specific geographic region, that consolidates goods from a variety of suppliers and redistributes them to a different range of customers. The following are the steps involved in the process of a regional distribution centre:

  • Receiving: The regional distribution centre receives goods from a variety of suppliers. This involves tracking the incoming goods, verifying the accuracy of the order and ensuring that the goods are stored in the correct location.
  • Storing: The goods are stored in the warehouse until they are ready to be shipped. This involves ensuring the goods are stored in a safe and secure manner, as well as ensuring they are easily accessible when they are needed.
  • Order Fulfillment: Once the goods have been received and stored, they are ready to be fulfilled. This involves picking the correct goods for each order, packing them for shipment, and ensuring that the customer receives the correct goods in a timely manner.
  • Shipping: The regional distribution centre will then ship the goods to the customer. This involves working with carriers to ensure that the goods arrive at the customer’s destination in a timely manner.
  • Returns: The regional distribution centre also handles returns from customers. This involves ensuring that the returned goods are processed in a timely manner and that the customer is provided with a satisfactory resolution.

Advantages of regional distribution centre

A regional distribution centre offers many advantages, including cost savings, improved customer service, and reduced transportation costs.

  • Cost savings: Companies can reduce inventory costs by consolidating goods from multiple suppliers and redistributing them to customers in the same region. This reduces the need for extra storage space and minimises the cost of shipping products around the country.
  • Improved customer service: The regional distribution centre ensures that customers receive the products they need quickly and efficiently. It also allows for a faster turnaround time since products can be shipped directly to customers without having to go through multiple distribution channels.
  • Reduced transportation costs: By minimising the distance between the supplier and customer, the regional distribution centre can reduce the cost of shipping products. This can help companies cut costs and increase their profits.

Limitations of regional distribution centre

Regional distribution centres can provide a number of benefits to businesses, however there are also several limitations associated with their use. These include:

  • Limited control over supply chain: Regional distribution centres are only able to control the flow of products within their own geographic region. This means that any delays or problems encountered in a different region, such as from suppliers or customers, may impact the regional distribution centre’s ability to meet customer demand.
  • High operational costs: Establishing and running a regional distribution centre requires significant investments in infrastructure and personnel. This can increase operational costs for businesses, particularly if their customer base is limited to a smaller geographical area.
  • Inefficient routing: Regional distribution centres may be located in areas that are not optimally positioned for efficient routing of goods. This can result in longer delivery times and higher transportation costs.
  • Limited capacity: Regional distribution centres are typically smaller than other types of warehouses and therefore have more limited storage capacity. This can lead to reduced inventory levels, increased stockouts, and ultimately dissatisfied customers.

Other approaches related to regional distribution centre

A regional distribution centre is an intermediate warehouse, in a specific geographic region, that consolidates goods from a variety of suppliers and redistributes them to a different range of customers. Other approaches related to regional distribution centre include:

  • Cross-docking: This approach involves goods being unloaded from the supplier’s truck and immediately loaded onto another truck bound for the customer. This eliminates the need for storage and reduces the amount of time between the supplier and customer.
  • Just-in-time distribution: This approach is designed to reduce inventory costs by ensuring the customer receives their goods only when they need them. This reduces the need for storage and minimises the risk of unsold products.
  • Vendor-managed inventory: This involves the supplier providing the regional distribution centre with real-time data on their inventory. This allows the regional distribution centre to adjust their inventory levels to meet customer demand and reduce the risk of overstocking.

In summary, a regional distribution centre is an intermediate warehouse that consolidates goods from suppliers and redistributes them to customers. Other approaches related to regional distribution centre include cross-docking, just-in-time distribution, and vendor-managed inventory, all of which are designed to reduce inventory costs and improve customer service.


Regional distribution centre — recommended articles
Last mile — Outbound logistics — Last mile delivery — Role of transportation — Direct delivery — Two-tier inventory control — Logistics service providers — Distribution network — Logistics and transportation

References

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