How Standardizing Distribution Centers Globally Can Hurt Your Company
Often in large corporations there is a desire to standardize everything company-wide. In some cases this is not limited to say, office supplies, but also to their distribution centers across the globe.
Companies think that this standardization will work as a way to control cost and ensure that everyone is on the same page. While standardization in one country or region can be a great idea, globally there are some pitfalls that could be avoided by non-standardization.
You lose flexibility: Let’s say you standardize and pick 10 components that work across all your distribution centers around the world. And then you add more DC’s in a different region. This new region may have different products, packaging requirements, Pareto curve from all your other distribution centers.
Your distribution needs and SKU base say in the US vs. Bulgaria are very different. Therefore for maximum efficiency, standardization might not be the best idea.
Technology changes rapidly: Let’s continue with the earlier example and say you have the 10 standard components. Now some new product is released that totally revolutionizes a process.
Do you go back and add it to your list? Do even have that option or have you painted yourself into a corner? The fact is that as you build new DC’s across the world there will be new technologies that could help you. And you ignore those technologies and limit your efficiency or you embrace the new products and end up without the standardization that you wanted in the first place.
Different areas have different cost: It may be very cheap to get some parts in Europe for a DC. But how much is it to get the same parts in India? In some areas labor is cheap and plentiful and in others it’s not. If you choose components that require high labor or high automation and it is not available worldwide, or even worse, availability changes, where are you then?
Also you are limiting yourself to the lowest common denominator as far as systems are concerned. Let’s says that mobile rack will work everywhere (function and budget-wise), but it is not the best system anywhere. It is just the one that works everywhere.
Why not have the best and most cost-effective systems in each location? A highbay warehouse in Europe is ideal. But a highbay where land is cheap may not be the best solution.
Do you have thoughts on global distribution standardization? Please let us know what you think below. Also be sure to subscribe to our Visionary Automation Newsletter!
Schaefer Systems International, Inc., the North American subsidiary of the SSI SCHAEFER group of companies, established headquarters in Charlotte, North Carolina, in 1989.
SCHAEFER’s automation integrates to any existing system earning us an international reputation as the global leader in the material-handling industry for returnable packaging, static racking, and highly complex, automated distribution systems. With over 70 years of experience and a 100% commitment to quality behind every SSI Schafer system, we focus on providing our clients with unconventional picking and storage solutions delivering best value