Supply Chain Management: Determination of Warehouse Location

Supply Chain Strategy Proposal
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Determination of Warehouse Location
Process
The first step is to identify the significant factors that will impact the decision. Second, the factors will be graded from 0 to 5, 0 being the lowest and 5 being the highest, depending on the gravity of its impact on the decision. Next, the manager shall assign a score to the factors of the various prospect locations. Fourth, the weighted score for each factor and location shall be computed by multiplying the assigned weight to the corresponding score. And last, the sum of the weighted average scores shall be computed. The highest score is deemed as the most suitable location (Kalinowski, 2016).
Factors to be Considered
There are three primary factors to be considered in choosing a warehouse location, namely, supply, demand, and labor factors. Supply factors include land, energy, and transportation costs, and community factors. Demand factors include the convenience of consumers, site suitability, and potential for expansion. Last, the labor factors include the potential of the location concerning workforce and labor costs (Kalinowski, 2016).
Among these, the most important is the availability of the workforce, traffic flow, and the proximity of other modes of transport. Low workforce availability results in increases in salary rate. Hence, operational costs will also increase and vice-versa. The skills of the laborers are also critical in choosing a warehouse location since this is a major factor in productivity and competitiveness. On the other hand, traffic flow and the proximity of the modes of transport will affect the efficiency of the delivery of the goods to the customers. The lower the scores for these two, the higher the possibility of losing customers secondary to unmet demands and increasing operational costs (Kalinowski, 2016).
Private Fleet Versus Fleet Outsourcing
A private fleet allows the company to regulate the outsourcing of raw materials, production, and the delivery of the products. Its primary advantage is that it provides a guaranteed capacity at all times. Moreover, it is more flexible and acts as a form of advertising. However, operating a private fleet has many disadvantages such as higher costs, difficulty in maintenance procedures and driver recruitment, and the requirement of having an excellent logistics and technology (Winnesota Regional Transportation, 2020).
By contrast, fleet outsourcing has lower costs, reduced maintenance requirement, and convenience by providing employees for the company. However, the downside of this strategy involves the inability of the company to control the factors that influence the partner courier. Furthermore, it can also distract the core business needs (Winnesota Regional Transportation, 2020).
Accuracy of Inventory
Raw material inventory relates to the overall cost of individual parts that the company has in stock but are not yet used to produce goods. These can be categorized into direct and indirect materials (Bose, 2006).
To regulate the utilization of raw materials and production, the company should invest in smart raw materials inventory management technology. This way, it i...