log401mod2ca

Running head: MARKETING Changes in Distribution Center Location Name: University: Course: Tutor: Date: Changes in Distribution Center Location With the increasing costs that are associated with the transportation of goods to customers, distributors are now repositioning to a lower-cost inland supply bases. Shippers who own warehouses are now relocating nearer to their markets in order to achieve a competitive edge. With prime markets being the major target for distributors, the emerging trend in the industry is that second-tier markets are now becoming popular for their reliable infrastructure that facilitates access. This essay focuses on the changes in distribution center location to explain why these supply centers are relocating to second level interior cities (Sowinski, 2007). An assessment is carried out on the advantages and disadvantages these interior cities have relative to access to U.S. markets and to international supply chains. Why Distribution centers are relocating to second tier interior cities To minimize the costs of transporting goods and services, many distribution centers are relocating to second tier interior cities. This level of distribution is affordable mainly characterized by wholesalers who mainly deal with the purchase of goods from the distributors and then vend and dispense these products to stores. Choice factors such as ease of market access and comparative costs are the major reasons for the existence of these levels of distribution (Sowinski, 2007). At the same time, it is argued that the cost of labor is relatively low in second tier markets and labor is readily available and this further reduces the cost of distribution for the distributors. Second tier markets are defined by the economic structure rather than on their size because of their accessibility to customers. Although these markets are neither metropolitans nor city suburbs, they have highly specialized activities and have trade-oriented industries that have a high growth potential. Because of the intermodal centers and roadways that are less congested, the distribution of products is very timely, improving the performance of the business enterprise (Mills, 2006). In addition, these centers also act as the link to highly populated areas which are the potential markets for goods and services. Examples of second tier markets include Eastern Pennsylvania to serve the East cost whereas Louisville and KY serve the Midwest. Industrial and regional policies have been adopted to govern second tier markets and hence the widespread popularity of the market. Assessme...