ROI will affect the bottom line of a company, this is answerable to the shareholder or directors . When proposing a distribution center, a realistic ROI will counter check the pros and cons of the set up.
The following parameters need to be studied clearly :
a) Manpower saving in term of quality control, overtime ,reduced recruitment process and reduced manpower turnover
b) Throughput in term of simplified material flow paths, faster response time to customer, elimination of bottlenecks,reduce inspection, capacity to manage new products,improving scheduling and work flow
c) Accuracy by reduce transit costs for mis-shipments between stores and DC
d) Brick and Mortar Savings ,elimination of excessive aisle space or better space utilization
e) Safety means less handling of products , thus, avoidance of injury.
f) Inventory , good control of inventory to achieve JIT inventory practices, reduce shrinkage(due to overstock) and damage reduction (less handling)
g) Image , the company able to project a favourable perception to both customers and suppliers.
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