The art of selecting the right site for a storage and distribution centre

Considerations when choosing a logistics supplier for your storage and distribution

The storage and distribution site selection process is trickier than it seems at first, and is one of the most important decisions facing a  growing fulfilment company today. Those who choose a location that aligns with their strategic objectives will have a substantial advantage over those that don’t. After all, this is too expensive a prospect to ‘fudge now and fix later’.

No matter what the details of your operation, you need to address your ability to serve your customers and thStorage facilities with distribution services in the UKe projected operating cost of doing so at a given location.

Operating costs and siting a storage and distribution centre

Transportation, both inbound and outbound, can easily make up 50% (or more) of a storage and distribution centre’s ongoing costs. This is why some very expensive real estate has been chosen for distribution centres in the past. Of course, it is less expensive initially to set up well outside of town, but doubling the cost of transport every day for the duration of the storage and distribution centre’s life could make it the worse option. Remember to include labour costs and tax incentives into the equation. They can be often enough to sway a close decision.

There are, of course, a few ‘sweet spots’ – locations very near major population centres (by which most of you will mean London) but in areas of relatively low real estate prices and easy planning restrictions. They are becoming thin on the ground these days, though.

Siting a storage and distribution centre to provide good customer service

Central locations do more for a storage and distribution centre than just cut transportation costs. They cut both inbound and outbound delivery time as well. If you are basing your business plan on same or next day fulfilment or LTL shipments, then you’ll need every advantage you can get to keep your customers happy.

More companies have ended up regretting a distant location choice over the inability to get merchandise in and out quickly than over the added expense. Inexpensive (or even free) land, tax breaks and cheap labour look good on paper, but if your customers need it this morning, they’ll go with your competitor who chose the more expensive location, regardless of price.




Comments Closed

Comments are closed.

Copyright © Which Warehouse Blog