Imagine having six different retail distribution centers, but they are all within 400 miles of each other. At some point, having a set-up like this is going to mess with your retail logistics efficiency when shipping your products wherever they need to go. Whether you are shipping them to a retail store or delivering an order to a customer, the locations of your distribution centers directly relates to how efficient you will be when it comes to getting your product out.

If we go back to the example of operating six different centers, it becomes fairly obvious that these need to be spread out in a manner that allows you to move products quickly and at a low cost. Location and logistics, when done correctly, will mean lower costs to you. However, that is certainly not the only way that location affects your distribution. Here are a few key elements of distribution center location and how it affects your efficiency.

• Moving Products: When it comes to efficiency, one of the best ways to improve it is to streamline your process: have as few steps as possible. When you have the best location for your distribution center, or when you have multiple distribution centers, you can move your products much more easily. By making sure you are close to the source of your product or by making sure you are close to end destinations, your distribution center location can become one of your most efficient tools.

• Transportation: One of the best ways to make your business more efficient and save money is to cut down on the transportation costs you have. By carefully choosing where your distribution centers are located, you can cut costs by having shorter delivery routes and having more options when it comes to how you get products out and where they come from.

• Storing Products: Inventory may just be one of the trickier parts of what you do when it comes to distribution. You have to find the balance; you can’t have too much inventory because your center will be overwhelmed. You can’t have too little because you won’t be able to fulfill orders efficiently. If that balance is found, having the right products in the right distribution center will reduce shipping costs and get orders to customers faster. Ultimately, your success will depend on your forecasting and order routing capabilities.

• Employees: The location of your distribution center affects many of your costs, among them the price of labor and the cost of living. If you operate your distribution center in a place where labor is relatively cheap and the cost of living is affordable, you can offer comparable compensation and save your company money.

The efficiency of your distribution center, while there are many factors involved, will no doubt be improved or harmed by the location or locations of your distribution centers. Before you decide where your center should be, consider your options and how they will directly impact the way you are able to distribute your products.