Merits Or Advantages Of Decentralized Stores
The main advantages of decentralized stores can be expressed as follows:
1. Lower Cost
Stores are maintained near to the production area which helps to eliminate internal transportation cost and also minimizes material handling cost.
2. Less Risk
In centralized store, there is a risk of loss by fire, rain, earthquake etc. because of large volume of materials in single warehouse. But in centralized store, less volume of stock are kept according to the requirement of the single production unit which lowers the risk of loss.
3. Avoidance Of Undue Delay
In this storing system, purchasing, storing and supplying of materials are done by each production unit. So, delay in material supply can be avoided which eliminates disruption in the production process.
4. Better Control And Supervision
Each and every production center and department has separate store. It ensures better control, supervision and handling of goods.
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5, Suitability
Decentralized stores are suitable for large sized manufacturing companies with large production capacity, several branches, and departments.
2. Higher Cost
Demerits Or Disadvantages Of Decentralized Stores
The main drawbacks, limitations or disadvantages of decentralized stores can be expressed as follows:
1. High Investment
It requires separate space for each and every production units and departments. So, more initial investment is required to set up these types of stores.
More staffing cost, administrative costs and supervision costs are required to manage decentralized stores. So, it is more costlier than centralized store.
3. Not Suitable
Decentralized store is not suitable for small business firms with less investment and less production capacity.
Pros And Cons Of Decentralized Stores In Short
Pros:
- It lowers material handling costs
- It becomes easy to store and control materials
- It is suitable for large manufacturing firms
- It avoids delay in supply of materials
- It eliminates internal transportation cost
Cons:
- It is not appropriate for small companies
- It requires more staffing, administrative and controlling costs than centralized stores
- More initial investment is required to set up decentralized stores