What is a central warehouse?

A central warehouse is a central storage location that consolidates the goods of a company or organization and from which they are distributed to various locations, branches, or end customers.

As a rule, a central warehouse is strategically located so that it functions as a central hub for the entire supply chain in order to make logistics processes efficient. The central warehouse is thus a central hub from which the flow of goods is coordinated and controlled.

Functions and tasks of the central warehouse

• Bundling of goods: A central warehouse serves to store all of a company's goods in one place. This eliminates the need to maintain inventories at different locations, minimizing costs and administrative effort.
• Inventory management: In the central warehouse, inventories are centrally managed, monitored, and replenished as needed. Centralized warehousing enables better control of the flow of goods and minimizes overstocking or bottlenecks.
• Distribution: Goods are distributed from the central warehouse to various locations such as retail stores, regional warehouses, or directly to customers. The warehouse serves as a collection and distribution point for all outgoing goods flows.
• Supply chain optimization: By bundling and centrally controlling the movement of goods, a central warehouse enables logistics processes to be designed more efficiently and cost-effectively, as delivery routes can be shortened and transports bundled.
• Packaging and order picking: In many central warehouses, additional logistics services such as order picking (compiling goods) and packaging are carried out before shipping.

Centralized vs. decentralized warehouse
While a central warehouse bundles all goods in one central location, a decentralized warehouse concept distributes inventory across multiple locations. A decentralized warehouse concept usually enables faster delivery times to end customers or branches in different regions, but requires more complex warehousing and higher storage costs.