When dealing with inventory, many companies mistakenly believe that centralization will cost them more in the long run. They can't imagine that maintaining their inventory in a variety of warehouses instead of just one would really save them money in the long run.
No matter what product a firm manufacturers, one of most important parts of that process of serving customers and manufacturing products has to be logistics. Logistics includes all of the shipping and delivering involved in the production process,
When companies are interested in improving the way they do business, it often involves improved manufacturing management. Unfortunately, manufacturing management is often not fully understood by those people who are involved in decision-making.
When manufacturing was in its infancy, companies found it difficult to keep a steady supply of the materials needed to keep the machines roaring and the products rolling off the assembly line. Some companies chose to order an abundance of stock which cost them more in warehouse space and sometimes left them holding a large quantity of unused inventory