When choosing a warehouse, the most common aspects that businesses consider are the cost of the warehouses and the storage space they can offer. While these are indeed one of the primary factors to consider while choosing warehouse premises for your business, there are some other factors that you should be considered while evaluating a warehouse and its services for your business.
Finding the right warehouse significantly impacts the speed and efficiency of your supply chain.
There is a growing demand for warehouse space driven by the growth in eCommerce and for companies to enable last-mile deliveries.
The demand for warehousing services is also rising due to consumer demand for same-day and next-day shipping. This wields immense pressure on transportation companies, distribution centres and retailers to provide efficient deliveries within short time frames.
Within the warehouse, as obvious as it may sound, stock keeping and inventory management are key to maintaining the balance between supply and demand for successful business operations. Given this is a fundamental step of the business, it is fairly important to choose storage and warehouse facilities that best fit your business needs.
The following are the selection criteria for the warehouse, whether leasing or purchasing the premises.
1. Location
Location is potentially the most important consideration when choosing a warehouse. Therefore, it is important that the warehouse facility is located in close proximity to your customer base or has the right distribution services nearby to ensure timely and cost-effective deliveries.
Checking shipping costs from the warehouse facility to the most common final customer destinations. You can gain a competitive advantage with a well-positioned warehouse and exceed your customers’ expectations by delivering their orders within hours or days.
When selecting a warehouse, location is pivotal to your business’s success, no matter what type of warehouse or eCommerce business you operate.
2. Rent & Rates
Cost is considered equally important as location. A cheap rental in a bad location will undermine your business equally as a great location with an excessively high rental. You need to explore the site for any hidden costs that could arise, and all rates should be reviewed closely.
Beyond rates, attention must also be given to state and local governmental regulations. There may be overlays on the property limiting the activities that can operate at the site. There may also be restraints on the accessibility times to the property for heavy transport.
3. Workforce Availability, Labour Skills & Costs
Workforce availability, skills, and labour costs are important considerations. They are directly associated with the local demographics of the facility. Unfortunately, not all geographical locations offer a workforce with the right skills at the right pay rates. Therefore, give careful attention to the local demographics of the suburb/state being considered.
In addition, you need to consider staffing supply and demand when evaluating workforce availability. Where there is a low workforce availability and high demand for those skills, it will drive salaries up, increasing operating costs. The opposite of this is where high levels of workforce availability exist with low demand, which will drive wages down.
Another consideration is workforce skills. If you cannot access the right skill sets, it can lead to a low quality of customer service and reduced competitiveness and productivity.
When choosing a warehouse location, it is a good idea to review the demographics and, in particular, the educational attainment, population characteristics and average income levels. Check the unemployment rates and what skills contribute to those unemployment figures. Your council and state government websites often provide this information or the bureau of statistics.
4. Size of the Warehouse
When choosing a warehouse, you need to consider the volume of inventory you are and expect to be managing through the facility in the coming five-plus years. The cost of moving can be expensive, so you need to plan for the future with room for expansion. It is best to have experts look at the warehousing facility to understand the real storage capacity of the premises. You may find considerable savings in required floor space with the right storage optimisation.
5. Warehouse Layout
Warehouse layout can contribute remarkably to your daily overheads. Therefore, evaluating whether the warehouse layout suits your operation styles and needs is important. Day-to-day operational costs can be optimised through efficient designs that make operations effortless and quick. Your expert storage solution provider can assist you with the design and layout of the facility.
6. Transport Accessibiliity
The efficiency of your business is directly affected by the accessibility of transport to roads and highways. You also need to consider local traffic density, especially if trucking is the main distribution method. Your transportation costs can impact the competitiveness of the business.
When choosing a warehouse, consider the following points:
- What is the accessibility to main roads, highways & exit ramps?
- Do the highways interconnect with other main roads?
- What is the public transportation penetration for employees?
- Are the local roads around the warehouse easily accessible for large semi-trailers?
- What is the average traffic speed and volume?
- Are the roads heavily affected by traffic during peak hour times?
- What are the road safety & conditions, and are there good road signs & signals?
You need to factor in potential problems such as congested highways, poor road surfaces, and congestion will increase fuel consumption, vehicle maintenance costs, accident rates, and time wasted.
7. Logistical Integration
If your transport requirements are to have access to airports, railway stations, or major ports to receive and ship goods to and from the warehouse, you need to be as close as possible.
If this is not possible, you need to explore facilities with direct connection to the logistical hub you need via easy access to highways and roads.
You want the business to be situated as close as possible to the point of the transportation hub or the most predominant hub you require to use. This will assist in controlling drayage costs and provide a maximum number of container movements per month.
8. Building Services Availability & Utility Costs
When choosing a warehouse, you will need to double-check the availability of services to the facility and the cost of utilities. In addition, you will need to check the availability and reliability of internet and communication services. This is often overlooked, but you must check the available speed and link type (cable or fibre etc.) and the associated costs. An important consideration is the timely installation of those services if they are not connected to the warehouse.
Electricity and water supply also need consideration. Some warehouses are more demanding/reliant on one utility over another, whilst others require both services to operate efficiently. For example, a refrigerated warehouse relies more on electricity and water than a general carton storage warehouse.
9. Local Environment Factors
Like transport, proximity to suppliers and producers or raw materials, local environmental factors must also be considered. Any new facility should be positioned as close as possible to major suppliers and producers.
This will assist in reducing lead times and potentially inventory levels and decrease transportation costs. It can also assist with responsiveness to high demand at certain trading times. Positioning near major suppliers and producers can make the supply chain network more efficient.
In addition, you need to consider local environmental factors such as weather conditions and the potential risk of exposure to natural disasters. So is the proposed facility located near a flood zone, restrictive zoning for noise pollution, or another business that causes bad odour or excessive steam or filtered fumes?
Summary
Choosing the right warehouse location for you can make all the difference in how productive, efficient, and profitable the company will be, whether purchasing or leasing a warehouse is a major decision. In addition, choosing the right location will enhance your company’s ability to compete and effectively serve customers.
If you are considering moving to a new location, please engage our design services to ascertain the true storage capacity of the facility. It is a pivotal piece of information to have when choosing a warehouse.
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