Choosing the right warehouse location can make all the difference in how effective, efficient, and profitable e-commerce business is. Leasing or purchasing a warehouse is a major decision, and choosing the right location can significantly enhance a company’s ability to compete and effectively serve customers.
This article will cover the five most critical factors to consider when choosing a warehouse location so that your logistics company can have a better idea of how to plan its operations.
Five Critical Factors To Consider When Choosing A Warehouse Location
When it comes to selecting a location, it’s important to take the time and consider all of the following criteria, take some notes, and then compare your notes against all the available options. Only after all the data has been compiled and analysed should the final decision be made.
Forecasting
The cost will remain a key criterion when selecting the right location of a warehouse, but it must not be the only one. Hidden costs could offset any savings on cheap rental rates and therefore must be considered. The rental rate of a warehouse in the US is normally based on square feet (SF) per year or month depending on the landlord. Average prices in the US can range from as low as $2.56 SF/Year and as high as $16.50 SF/Year. See the table below for the top 6 low & high-cost markets. Floship has warehouses all over the world where it can store its products for easy order fulfillment.
Technology and Processes
When evaluating workforce availability, consider supply and demand: Low workforce availability and high demand will drive salaries up (meaning the operating costs will be higher). The opposite is also true. High levels of workforce availability and low demand will drive salaries down. Besides workforce availability and costs, skills are also critical. A workforce skill gap will result in a low quality of customer service and a reduction in both competitiveness and productivity. With Floship’s warehousing fulfillment you do need to worry.
Product Types
In this case, the main mode(s) of transportation used to receive or ship goods to and from the warehouse must be prioritized. For example, if most of the cargo is imported/exported via air, then you will want to be as close as possible to the airport. If this is not possible, you should at least explore facilities with easy access to highways and roads that offer a direct connection to the airport.
Shipping Locations and Times
Transportation costs are affected by some or all of these variables and can impact the competitiveness of the company or the attractiveness of the warehousing facility to customers. Consider the following points:
- Accessibility to highways & exit ramps
- Highway inter-connectivity
- Public transportation penetration
- Average traffic speed
- Average traffic volume
- Traffic peak hours
- Road safety & conditions
- Proper roads signs & signals
Finding the Ideal Location
Proximity to suppliers, producers, and the market(s) being served as well as local environmental factors must be also considered. Any new warehouse should be as close as possible to major suppliers, producers, and/or customers. Floship’s planning and warehouse locations help reduce lead times, decrease transportation costs, and enhance responsiveness.
The factor to consider here is who is/are the major supply chain partner(s) and how you can make the supply chain more efficient by strategically selecting the warehouse location. Also, local environmental factors such as weather conditions and the risk of exposure to natural disasters should also be considered.
Conclusion
You need to take the time to properly plan and understand the most strategic warehouse location for you and your customers. The impact of this decision is much more significant than just opening a warehouse somewhere. The location of your warehouse will have long-lasting effects on the financial, operational, and competitiveness aspects of the company. Floship is a logistics partner which has strategically placed warehouses all over and this makes the order fulfillment process easy. To know more about Floship and how it works, click here, and read on!
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