, 1.1"The spectrum of location decisions might influence warehouse ownership." Justify this
statement, using examples from the case study.
The decision of where to locate a warehouse is crucial as it can have a significant impact on
the ownership structure of the warehouse. The spectrum of location decisions might
influence warehouse ownership, and these decisions range from locating warehouses close
to production facilities to choosing the best location for meeting customer demands. The
ownership structure can range from owning the warehouse outright to leasing or renting it.
In the case of Siyalungisa, the company uses public warehouses to store bulk quantities of
shoes, and it also makes use of its own trucks to deliver shoes to different branches and to
different customer locations. The company's use of public warehouses suggests that they do
not own these warehouses outright. It could be because the company is not in a position to
build or purchase their warehouses due to the high costs involved. By using public
warehouses, the company can save on initial capital costs, but it may have to pay higher
warehousing and storage costs in the long run.On the other hand, the company's use of its
own trucks to deliver shoes suggests that they own their fleet. Owning their vehicles enables
the company to have more control over the logistics process and reduce transportation costs.
However, owning a fleet also comes with additional costs such as maintenance and repair
costs, insurance, and fuel costs.
Therefore, the location decisions made by Siyalungisa have influenced their ownership
structure for warehouses and transportation. It is essential to consider these factors when
making location decisions for warehouses, as it can impact the company's finances and
overall logistics operations.
In addition to the above, it is important to consider the cost of owning and operating a
warehouse. Owning a warehouse comes with costs such as property taxes, maintenance, and
utilities, while leasing a warehouse may require paying rent, but may not involve these
additional costs. Siyalungisa can consider the different cost implications of owning versus
leasing a warehouse, and use this information to determine which option is more feasible
and cost-effective for their organization.
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