Question

I say that Dirstribution Centers are becoming obsolete while warehousing is gaining popularity with most big companies such as Walmart and Target. Do you agree or disagree. Please explain your position - examples always help.

Answer 1

I agree with the statement that Distribution Centers are becoming obsolete while warehousing is gaining popularity.

Most of the companies have gained a fresh outlook in Supply Chain industries, they have moved from cost centric perspective to the profit making and more revenue generating, by providing varieties, fresh products, excellent customer service and easy in access, to the consumers. Thus, to being just a stocking centers, the companies have become consolidating centers to source the products, with utility portfolios, assembly facility, sorting centers etc. Hence, the increase in the supply chain business has increased the importance of defect free, speedy warehouses to handle huge transactions with variety of products in addition to the value-added services. Many companies have automated the processes with the advanced technology, in the respective warehouses.

Best example is the growth in Indian market where firms have changed perspective and view Supply Chain as the ‘profit center’ to leverage towards more revenue and maximizing the profitability. If we see in early 1990’s, the Indian market was more of cost centric with narrower view but by 2010 (onwards), the perspective has become broader in Supply Chain Management. This calls for the smart warehouses in Indian context which should be scalable, accurate, mechanization compatibility, should be responsive, and ease in transportation. Thus, increase in customer awareness, demands and volume also favors the need of warehouses. In India, federal government also supports for the same and the companies here are also started responding fast for the need. For example, operations of Amazon, Flipkart and Myntra in India.