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another hot area to consider in build-to-order fulfillment is the explosion of 3D Printing
Companies.
There are at least 3 critical items that allow you to reduce costs and increase service level
in warehousing:
1.
2.
What Warehouse Metrics do you have in place to help you determine if your
processes are going well or not.
3.
You warehouse location is optimal in the first place to meet service level
commitments.
4.
Proximity to the Logistics Carrier (such as UPS World Hub or Ground Transport)
The above are important criteria and should be considered. But, to answer the question
of where, also requires a more quantitative approach that should be used in concert
with the above considerations. One common approach to identifying where to build the
next single fulfillment center location is a method called the Center of Gravity Method.
Markets
Shipping costs
This method is beneficial because its (1) Simple to compute, (2) Considers existing
facilities, (3) and Minimizes costs.
Step 2:
Then, using the equations below,
Step 3:
Once you have obtained the X and Y coordinates place that location on the map.
But, it doesnt end there. As I mention earlier, there are other factors to consider. What
this method allows is a point of departure or, literally, a starting point of where (from
the perspective of longitude and latitude) you options are for where to grow your
fulfillment or logistics network.
Given the assumptions and grid coordinates above, we get the following:
d1x= 200
d2x= 300
d3x= 100
d1y= 50
d2y= 100
d3y= 150
And,
V1= 2,500
V2= 1,300
V3= 5,000
Cx= (200 x 2,500) + (300 x 1,300) + (100 x 5,000) / (2,500 + 1,300 + 5,000) =
158
Cy= (50 x 2,500) + (100 x 1,300) + (150 x 5,000) / (2,500 + 1,300 + 5,000) = 114
If we were to plot the new suggested warehouse coordinates on the grid, we would get:
Or course the discussion doesnt end here. Once a coordinate or several are identified
given the current logistics network context, then other factors must be considered. This
is just the beginning a point of departure.