No of warehouses/DC post GST« Back to Questions List

What is right no of warehouses a business should have post-GST?
Posted by rahulsdogar
Asked on August 16, 2018 6:32 am

Well, It depends on the business.

What GST implementation has made possible is to be able to design & plan warehousing network from the perspective of Logistics
Optimization vis a vis pre GST area where the Warehousing Network was governed more by tax optimization considerations.

Earlier a business selling across India typically was having one warehouse in each state as the VAT Credit Input was more than
compensating for the additional warehousing costs. Now it’s possible to club all those warehouses into one single large facility
optimizing the warehousing cost by bringing in the efficiency of scales without any corresponding negative tax implications.

The actual number most suited for the business would turn out to somewhere in between 1 to 15 depending upon the business specific
dynamics like Type Of Business, Required speed to market, Number of SKU ’s, Transportation costs , Inventory Carrying Costs ,
Growth Projections , Competitive Landscape etc.

Some logical consolidation would universally make sense e.g. businesses having 3 warehouses in Gurgaon , Delhi and Noida , all
3 being large consumption markets in the pre GST era , should be able to merge them into 1 single facility post GST , bringing in efficiency
of scale without any negative impact on Logistics effectiveness.

Posted by Naveen
Answered On August 21, 2018 9:49 am

Pre GST our supply chain and warehousing decision was driven majorly by the idea of tax saving. Even if the business requirement did not require warehouses in different states we were forced to open one to save a CST of 2 %. There was a major discussion and hype created that post GSt we can consolidate the warhouses and take bigger ones to save money. But the reality is suddenly when we started drawing the strategy post GST we realised that as manufacturers we need to be faster to market or else the competitor will kill us. Today our supply chain is driven by business need. The plan is to have 5 major warehouses which can feed all lications in India within 48 hours looking at the topography of India. And have small transit warehouse which can hold stock for 7 days to feed market. Today the more you can have warehouse on wheel the more agile you are.

Posted by Nihar
Answered On August 21, 2018 7:43 am