Purpose

When relocating warehouses, goods are moved from the old warehouses to the new. This transfer of goods is extended over time and is performed in parallel with daily business running as usual. The transfer logic, i.e., the sequence in which products are moved, has substantial effect on many activities in the supply chain, connected to e.g., transports, warehouses, stores, and purchasing. A proper choice of transfer logic therefore has big effect on the total costs for the product transfer.

The purpose of this paper is to investigate the total cost effects of selecting a suitable logic for goods transfer connected to a warehouse relocation.

Design/methodology/approach

The research is built on an in-depth case study on a major Swedish retail company in the process of establishing a new distribution warehouse. The specific sub-project for the product transfer was followed using an interactive research approach, combined with interviews with some of the stakeholders. 

Findings

The systematic total cost approach applied in this case showed that big cost savings can be made by choosing an appropriate goods transfer logic. The study also gives strong support that contextual knowledge of operations is needed to make well-informed strategic decisions.

Research limitations

The findings are built from a single case study in the retail sector. Although we believe the findings to be applicable to other cases at a general level, we acknowledge that the actual outcome will be context specific. 

Practical implications

Companies planning to relocate their warehouses will gain from the findings. The systematic total cost approach followed in the case may serve as a guideline for selecting a suitable goods transfer logic.

Originality

Total cost considerations connected to centralisation and restructuring of distribution have been discussed in research for many years. However, the relocation of warehouses has so far not been in focus. Hence, the application of total cost analysis on goods transfer connected to warehouse relocation is novel.