Things you should do or shouldn't do for making location decisions

Filed in archive Point of view on July 19, 2008

Two days ago I posted a video on warehousing location decisions; and I was thinking of writing a complementary piece on location decisions focusing on the things we should do and the ones that probably we shouldn't do. So here comes some of my recommendations regarding location decisions:

- If you want to design the number and locations of your warehouses and distribution centers, don't just look at the sales data or inventory numbers; try to talk to the people who are working in sales, warehousing or production in those locations. It might be the case that there is a reason behind those numbers.

- Remember that such numbers only represent the past and not the trends for the future. Look at what is happening in the broader context of industry; That certainly has an effect on the decisions.

- And at last, look at the financial situation of the company: That's an interesting point which is usually neglected. The decisions to increase number of warehouses or DCs usually need money and decisions to decrease the number usually free money. That has to be aligned with existing cash flow situation in the company or macro-policies of the firm regarding investments.