Choosing an accurate location for the warehouse is one of the most critical decisions to make. You need to have a proper plan with all the right pointers for choosing a location. This can make a difference in the efficiency of the company. The right location can fetch all the positive aspects that can make your company credible, understandable, and profitable. Purchasing a suitable warehouse for your company is one of the major decisions and choosing a warehouse location for it can effectively enhance the company’s ability to serve its customers better.
- Warehouse location Meaning
- Factors to consider while choosing a location for the warehouse
- Structure and layout of the building
- Availability of trained workers
- Customer base and zoning
- Accessibility to major linkages
- Material handling capacities
- The size of your warehouse
- Rules and regulations
- Taxes and rent rates
- Market and environmental factors of the locality
As time merges by, and the analysts determine the effective need of strategizing the warehouse whereabouts on the table of management, it suggests putting more and more time on determining the warehouse location strategy. Warehouse management systems are likely to pose a standout situation in the coming years. Nevertheless, everything comes with little complexity but other than that if the bitter taste can be dealt with, then the business organization will see the light of success in no time.
Warehouse location strategy plays an integral role in helping your supply chain run smoothly. It also helps in location, tracking movement and position of inventory within the warehouse’s premises. Warehouse location strategy helps in updating your ERP in a real-time relationship as well as assisting with the management of staff. Therefore, you will be able to keep better track of the staff, which is required to help control movement and replenishment. This, in turn, will reduce inventory considerably and at the same time create more space in the warehouse.
Warehouse location Meaning
Deciding the location for a particular warehouse is a major task that is directly proportional to the success of the organization. Warehouse location means the location that is most suited for the company that will add up to their benefit. This location is carefully chosen by taking all the required criteria in context. This is a complex process and any silly mistake while choosing the location can lead to failure of the business. Certain factors are to be kept in mind while making the monumental “warehouse location decisions”.The most suitable location are those that maintain an integral balance between its convenience and a price rate that is reasonable.
Factors to consider while choosing a location for the warehouse
There are many factors affecting warehouse location but there are certain critical pointers that one should always consider:
Structure and layout of the building
The optimal way to structure, the building is to design it according to the activities that will be taking place inside the organization. You should always keep in mind that an old building could not sustain the flow of raw materials. Whereas a newer building can maintain a smooth flow in carrying materials. Certain factors affect or restrict certain equipment accommodation. The factors are most likely related to ceiling heights or column spacing, etc. This can also harm the inward and outward flows of raw material and finish products. Therefore, it is highly advisable that before considering a particular building as your warehouse, you need to consider all these factors and then decide whether the layout and spacing of the building are completely suited for your organization’s requirements.
Availability of trained workers
Getting a building at a certain remote location will obviously come at an effective price rate but at the same finding trained workers in such a place will not only be difficult but also very challenging. On the other hand, if you think of shifting your whole bunch of workforce to the remote location it will cost a lot of money. Either way, it will lead to an unsustainable failure of the organization. Therefore, it is advisable to purchase your warehouse in a certain area that can provide you with an adequate workforce with various skills. This will help you hire workers for all kinds of activities related to your organization.
The areas that have a high density of residential apartments along with adequate availability of workforce will be an ideal choice for the warehouse location of your organization. However, if you think of setting up your warehouse in an area with an annual supply of labor, you need to keep in mind that these seasonal personnel should not hamper the businesses’ needs. Any non-seasonal workforce requirements can cost you much more than seasonal affairs.
Customer base and zoning
While considering this factor you need to determine the intensity of the operations that are going to be conducted in the organization and what future it holds. If your organization requires light assembly, then you can ahead with choosing a location with much lesser intensive use. However, some other factor that can also affect the zoning is noise levels, emissions, and outdoor storage availability. These elements also target the districts that you will consider for conducting future operations.
Moreover, if you target a bunch of audiences that lies in a certain area, you can easily set up your warehouse in that location. This helps you to serve your customers with ease and at a much faster rate. This will not only gain your customer’s loyalty but also will help you get more potential customers. You can understand your customers better. As a result, this will make your business understandable, credible, and attractive to customers that were unfamiliar with your products and services.
Read more about: Different shipping zones
Accessibility to major linkages
What means of transport is best suited for your organizational activities? After identifying the most suited means of transport for your company, you need to choose the location of your warehouse accordingly. You need to cross-check whether the location has easy access to your preferred means of transport. Transportations means are very important when it comes to business organizations. Any default, in this case, can lead to huge business losses and delays in delivery, which also leads to customer dissatisfaction. Other than transport, you should also consider another factor that is accessibility to your targeted customers. Customers are the reason why everyone does business. Without customers, there is no meaning of a business. Therefore, while choosing a location, you should also keep in mind that you are easily accessible by the customers.
For example, if the majority of your products are exported through the overseas means and the remaining lot is delivered via land, then you must have access to comfortable highway and railway means of transport. You should always remember than almost 20 percent of your finances come from transportations. Moreover, factors like incremented driver’s wages and an increase in gas prices can nudge your decisions in choosing rail transport instead of doing shipments through trucks. If the goods are less decomposable and the shipments are not that complex, then opting for railways can be an ideal choice. It can save money and effort considerably.
Material handling capacities
Another Selection criteria for warehouse location that you need to consider is the material handling capacity of the location that is the availability of staging capacities and handling equipment. For instance, if a truck is a primary model, then you need to make sure that you have the depressing docks. You need to identify whether there is a need for internal docks. The highly intensive distribution will certainly require cross-docks. You need to determine whether the building has enough storage facility. This will help you identify the material handling capacity of your warehouse.
The size of your warehouse
The size of the warehouse is a definite criterion that you will have to consider no matter what. The whole inventory stock and the flow of the raw materials depends upon this. With these, you can determine what and how much your inventory you can accommodate in the building. This is also linked with the material handling capacity. The material handling capacity to some extent depends upon the size of the warehouse. Your warehouse should be capable enough to accommodate the required equipment and inventories according to your business needs. For every startup business or company, it is very essential to determine whether there is enough space for further expansion in the future. This will save you all the time and money when your business at a high peak of success. You do not have to worry about the space then if you already have enough room, to begin with.
Rules and regulations
Before you go on buying the warehouse, you should be aware of all the rules and regulations along with the legal aspects which prevalent in that particular area. Many areas do not allow the storage of certain items. It is always recommended to avoid the goods that are not allowed to avoid any future problems. You should abide by the rules and regulations of the area if you want to conduct a hassle-free and successful business in that particular area.
Taxes and rent rates
The cost has to be a critical criterion when it comes to selecting an accurate location for the warehouse of the organization. There is a certain hidden cost that negatively influences the cheap lease rates and therefore the factors relating to cost should always be considered in any aspect of the business. In the United States, the rental rates are measured by square feet per month or year based upon the property owner’s requirements. In the United States, the average cost of the land ranges from the low price of $2.56 SF per year to a higher price that leads up to $ 16.50 SF per year. Along with the rates, governmental taxes should also be considered equivalently. Factors like tax incentives, governmental regulations, and tax structures should be considered. Your business can also be benefited from the special programs held by the government to promote your industrial segments.
Market and environmental factors of the locality
Proximity to market, producers, and suppliers that are being served along with environmental factors of the area should be considered. Any new warehouse that is set up should be close to important customers, suppliers, and producers. This will decrease the transportation costs, reduce the lead times considerably, enhance responsiveness, etc. the main factor is to determine who are the important supply chain personnel and to make the particular supply chain efficient for Warehouse location planning.
Along with these factors, environmental factors such as the climatic changes, risks of possible natural disasters, seasonal fluctuations, weather conditions, etc. should be considered. The natural disasters like earthquakes, floods, landslides, etc. can affect the business on an imminent rate and can lead to huge scale losses that might not be possible to recover. You need to consider these factors before setting up your business. Any default to such can lead to hazardous circumstances. Other environmental factors are not so fatal but have to be considered. Factors like good terms with the neighbors (as warehouses can be very noisy it can lead to disputes with the neighbors), traffic congestion, busiest hours of traffic, etc. Consider all these variables and check how this can affect regular business activities.
When you are up for doing business in a certain area, you should keep in mind that you should respect the area’s values and norms. You should see that your business activities should not hamper the livelihood of the regular people living in that area. You should also focus on the environmental factors of that area that can affect your business while choosing a warehouse location. Certain business activities can lead to huge scale pollution in the area that can be harmful to the people staying in the area. You should keep in mind the environmental factors before getting started with the manufacturing processes.
Choosing a warehouse location is a very important aspect of any business. The warehouse is the integral part where the flow business is determined. When you are selecting the location, you need to make sure that you are considering all the critical aspects of the location that are mentioned above. The location can make a huge difference in your business. It can make your business the most successful as well as can drive it towards failure. If the warehouse is not sufficient or suited enough then the business may not see the light of success. As the warehouse is the most critical aspect of every business venture, it is important to decide upon its elements carefully and with full consideration of all its plausible factors. Choosing the most suited location for the warehouse cannot guarantee success, but it can go as far as to reduce the chances of failures.