“Choosing a Warehouse Location: 7 Key Criteria to Consider
Choosing the right warehouse location can have a major impact on a company’s effectiveness, efficiency and profitability. Leasing or purchasing a warehouse is a major decision, and choosing the right location can significantly improve a company’s competitiveness and ability to serve customers effectively.
When choosing a location, it’s important to take the time to consider all of the following criteria, take some notes, and then compare your notes to all the options available. A final decision can only be made after all data has been compiled and analyzed.
Let’s review the 7 selection criteria for the best warehouse location.
1. Location
Considering the current shipping locations of the company’s suppliers, as well as the delivery locations scheduled for customers, is critical in choosing a warehouse. Where do most of these deliveries take place? Are warehouses located in the best areas to reduce and optimize costs for the company and customers?
2. Labor Availability, Labor Skills, and Costs
Labor availability, skills and labor costs are directly related to local demographics. Not every geographic location has the right skilled workforce at the right price. Note the local demographics of the state/city under consideration.
When evaluating labor availability, consider supply and demand: low labor availability and high demand will drive wages up (meaning higher operating costs). vice versa. High levels of labor availability and low demand will lead to lower wages.
In addition to the availability and cost of labor, skills are also important. The workforce skills gap will lead to poor customer service and reduced competitiveness and productivity.
3. Roads, highways and traffic flow
Road and highway accessibility and local traffic density must also be considered, especially if trucking is the primary mode of transportation.
Shipping costs are affected by some or all of these variables and can affect a company’s competitiveness or the attractiveness of a warehouse facility to customers. Consider the following points:
Accessibility to highways and exit ramps
highway interconnection
public transport penetration
average speed
Average traffic flow
rush hour
road safety and conditions
Appropriate road signs and signals
Factors such as congested highways and surface roads and poor signalling systems will increase fuel consumption, accident rates and wasted time.
4. Storage area
If a company has strict storage and fire protection requirements for hazardous or flammable materials or even food, you need to ensure that the location chosen for the warehouse appropriately fits and handles the company’s needs. As an e-commerce order fulfillment or logistics technology company, one needs to understand ways to handle products that require chemical systems, not water-based systems. These companies should also consider the environment and should know if there are any streams or bodies of water nearby.
A large number of unnecessary disasters can be avoided by proactively checking the storage requirements of warehouse locations. It is important to ask not only the owner of the warehouse storage area, but more specifically what is currently available. Does the warehouse owner anticipate that more storage space will be available in the future to accommodate the projected growth?
5. Experience
Existing warehouses are checked for build dates to ensure a good balance of age, showcasing their weathered qualities and the test of time, combined with the novelty of modern technology and additional facilities for the efficient flow of items. Stale settings can mean outdated processes, but too new can mean problems still need to be fixed, so to speak.
6. How will you pay?
If you’re a newer business, or aren’t sure how much growth potential you might have over the next few years, having a payment game plan is crucial. You don’t want to buy a warehouse outright if you’re going to surpass it in just a few years.
On the other hand, if you know you’re likely to see significant growth, it might be a good idea to find a property that you can rent out. That way, you’ll have more flexibility to change or relocate, depending on how much you actually grow.
Also, if you’re considering a location with a lot of extra space on your property, take a look at what you can do with that space. You might outgrow your current building, but it might be cheaper to build on it, rather than trying to find a whole new one. Especially if the location is perfect.
7. What are the possible risks?
This is a very important thing to consider at the warehouse location. Research the area where the building is located.
Is it in an area known for flooding? Are there trees or other things that could damage the facility if a storm hits?
These are things you want to make sure to consider. Talk to your insurance company to find out the cost of properly insuring your warehouse and limiting any future disasters.”
