Selecting the appropriate warehouse site may make or break a firm’s effectiveness, efficiency, and profitability. Leasing or acquiring a warehouse is a huge choice, and selecting the proper location may considerably improve a firm’s capacity to compete and service consumers successfully.
When it comes to choosing a place, it’s critical to evaluate all of the below factors, make some observations, and then contrast your note cards to all of the accessible possibilities. The final choice should be made just after all of the information has been gathered and examined.
Let’s go over the seven factors for choosing the finest warehouse site.
Rents and Taxes
Expense would continue to be an important factor in determining the best location for a warehouse, however it should not be the only one. Concealed costs may counteract any savings from low rental rates and should thus be examined.
Aside from rates, local authority rules, taxation system, and tax incentives should all be considered. You may also profit from unique local government programmes designed to boost your business sector, so keep this in mind.
Accessibility of labour, labour skills, and labour costs
Regional demographics have a direct impact on workforce recruitment, abilities, and labour prices. Not all geographical area has a staff with the necessary abilities at an affordable price. Take note of the local demography of the state/city under consideration.
Combine supply and demand when assessing labour accessibility: Salaries would rise due to a lack of available labour and a high demand (meaning operating cost will be higher). The inverse is also valid. Salaries would be pushed down due to a surplus of workers and a lack of demand.
Aside from personnel accessibility and pricing, skills are also important. A skills gap in the staff will lead in poor customer support and a decrease in both competitiveness as well as profitability.
Highways, Roads, and Traffic Flow
Connectivity to roads and highways, and also local traffic congestion, must also be taken into account, particularly if trucking is the primary form of transit.
Transportation expenses are influenced by some or all of these elements, which can have an effect on the firm’s profitability or the appeal of the warehouse unit to consumers. Take into account the following:
- Highway and exit ramp accessibility
- Interconnection of highways
- Permeation of public transportation
- Traffic velocity on average
- The average volume of traffic
- Peak traffic hours
- Highway safety and road characteristics
- Correct road signs and signals
Crowded highways as well as surface roads, and also ineffective signalling systems, would raise fuel usage, injury rates, as well as time lost.
Distance to airports, train stations, and ports
The primary mode(s) of transportation utilised to collect or send items to and from the warehouse should be prioritised in this situation. For instance, if the majority of the goods is imported/exported by air, you’ll want to be as near to the airport as feasible. If this is not feasible, you must look for locations that have convenient accessibility to highways and roads as well as provide a direct link to the airport.
To control drayage expenses and also have the highest feasible velocity level – the largest number of vessels per month – you need to be as near to the site of the most prevalent transport system as feasible.
The accompanying infographic uses information from the Department of Transportation to show cargo weights by means of transportation in 2013 and the predicted volume in 2040.
Determinants Influencing Markets and the Local Environment
Accessibility to suppliers, producers, as well as the market(s) being addressed, and also regional environmental variables, must all be taken into account.
Any modern warehouse must be located as near to significant suppliers, manufacturers, and/or consumers as practicable. This will assist to shorten lead times, save shipping costs, and improve reactivity.
The important thing to examine here is who the key supply chain partner(s) is (are) and how you may create the supply chain better effective by carefully picking the warehouse site.
Regional environmental concerns, including weather conditions and the danger of vulnerability to natural catastrophes, should also be taken into account.
Is the warehouse susceptible to storms, tornadoes, or earthquakes? Is it in a flood plain? The warehouse must fulfil certain building criteria for any of these concerns.
Additional regional environmental issues to consider are closeness to neighbours (warehouses may be noisy; prevent squabbles), traffic congestion, as well as high traffic hours. Analyze how these variables could effect day-to-day operations.
Technology availability and application
Warehouse operations, in general, rely significantly on technology.
It is also critical that the region in which you construct your warehouse enables for the most effective use of this technologies.
First and foremost, it is critical not to take the existence of even ordinary technologies for granted. You don’t need to presume that buildings are in place to offer things like power, plumbing, and internet connectivity to a certain spot.
And you absolutely want to make sure that structures can support your utilisation levels currently and in the future.
You would like to ensure that any equipment or technologies your warehouse employs can perform to their full potential.