Centralisation vs de‐centralisation of warehousing: A small and medium‐sized enterprise perspective

Abstract

Purpose

The purpose of this paper is to explore the major drivers behind the choice of centralising versus decentralising warehousing locations from a small‐ and medium‐sized enterprise (SME) perspective. Previous literature has investigated this solely from a large company perspective.

Design/methodology/approach

An in‐depth literature review was carried out and, in addition, a single case study was conducted in order to investigate the issue at hand. A Danish medium‐sized do‐it‐yourself (DIY) retailer was chosen, as this company faced the challenge of deciding between centralisation vs decentralisation of its warehousing structure.

Findings

The paper has two findings: existing literature does not deal with the difference between SMEs and large companies when speaking of centralised vs decentralised warehousing; and the difference between SMEs and large companies with regard to centralised vs decentralised warehousing lies in the fact that SMEs generally have scarcity in competences and fewer resources, have fewer advantages of economies of scale in a centralised setting, and, finally, have fewer management resources to carry out a centralisation project.

Research limitations/implications

It is a limitation of this research that a statistical generalisation is not possible. Therefore, the findings in this paper might not be applicable for all SMEs.

Practical implications

When speaking of centralising vs decentralising warehousing, SMEs should be aware that different drivers are at play when compared with larger companies.

Originality/value

Research in supply chain management and logistics has not addressed the consequences of warehousing structure from an SME perspective.

Citation

Graungaard Pedersen, S., Zachariassen, F. and Stentoft Arlbjørn, J. (2012), "Centralisation vs de‐centralisation of warehousing: A small and medium‐sized enterprise perspective", Journal of Small Business and Enterprise Development, Vol. 19 No. 2, pp. 352-369. https://doi.org/10.1108/14626001211223946