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No Long-Term Parking

Keep it moving! Your products belong on the shelves, not in a warehouse--and retailers won't have it any other way.

This story appears in the January 2002 issue of Entrepreneur. Subscribe »

Manufacturers' warehouses used to be sleepy places where finished goods waited around in dusty cartons. But no more. Today's distribution centers are beehives of activity where factory-fresh products may alight for only hours before shuttling off via high-speed conveyors to trucks headed directly for sales floors.

Driving this change are the twin trends of lean retailing and product proliferation. You can see product proliferation everywhere from grocery stores, which typically stock more than 49,000 items-three times as many as 20 years ago-to online super-retailers such as Amazon.com and Buy.com that offer more than 1 million stock-keeping units apiece. The other trend, lean retailing, is retailers' effort to shift onto manufacturers an increasing share of the burden of product tracking and storage. Another development is too recent and, perhaps, too transitory to call it a trend. As increasing border inspections aimed at keeping terrorists out of the United States add serious delays for goods crossing the borders, it's even more difficult for entrepreneurs who import materials to meet inventory requirements. Add them up, and the old way of managing manufacturing is becoming unaffordable for an increasing number of manufacturers large and small.

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