Location of stores can follow a centralised or decentralised or a mixed concept. In a decentralised concept, the stores are located near to the scene of work, while a centralised store may cater to many projects or work sites. Sometimes, further decentralisation may be done at site based on areas of operations. For example, there may be an electric department store and a mechanical department store separately. However, depending on the organisation size and complexity of work a mixed concept to determine location of stores could be evolved.
The decision of adopting centralised or decentralised location of stores depends on the following factors :
- Fast moving - If the items are fast moving, it is preferable to locate them near the sites. Hence, a decenrralised method would be preferred.
- Cost of item - If the item is expensive, required at many sites and not so fast moving, it is preferable to centralist them to prevent inventory pileup.
- Special storage facilities - Items requiring special storage facilities require a central storage to prevent high storage costs.
- Comnality of requirement of item at many projects - If items are commonly required, it is easier to store at one licensed place to monitor its usage.
- Transport costs - If an item is expensive to transport like special storage vessels etc., it is easier and cheaper to take their deliveries at the site of usage and store. it there.
- Costs aspects - Balance between the cost of investment, cost of transporting and supplying the materials, cost of storage across a time period should be made before arriving at the decision to have a decentralised, centralised or mixed option.
- Life of the item - A short life item is best to be stored at the site of usage to prevent delays in transit.
However, actual decision making is not so simple. Many contradicting variables come into play and this has to be dealt on a case-to-case basis.
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