After solving some of the possible exam questions that we have in an e-mail. One of them has caught my attention because I actually do not know what the real benefits of a centralized distribution network are. So I decided to look for them and write a little explanation of what I have learned in order to help the rest of the class.
With this purpose I think that before knowing the benefits it is important to understand what a centralized distribution network is. When the information is coming just from one point or node it is considering like a centralized distribution network, like, for example, TV. Every point or node just can communicate with the others thought the central one.
Later understanding this centralized distribution network, we can find some advantages versus other distribution networks:
- Reduced costs: it is necessary to have just one warehouse as center instead of having lots of warehouse which reduce the costs.
Equipment: less stuff, materials and furniture in one warehouse than in more than one
Simplicity: having a centralized distribution network simplifies the inventory management. Easy to control the inventory and correct the possible mistakes.
Finally it is possible to say that is one of the most preferred distribution network because of its ability to handle every distribution need of its customer.