Choosing The Right Warehouse Location

Choosing the right warehouse location is essential to the effectiveness, efficiency, and profitability of a company 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.

Below are 6 warehouse location selection criteria which you should consider.

1. Rental Rates

   Rental rates are different among the areas. So, you will need to balance out the rental rate value with the effectiveness of the location. Warehouse close to the city are more expensive than the warehouse in the remote area, which require more cost in transportation.

2. Workforce Availability, Labor Skills & Costs

   Workforce availability and salary rate also depending on the area. In the area with high demand for workforce, the salary may be significantly higher than the area in which there is low demand for the work force. Also, the skill may be varied from one location to another. You will need to consider the suitability of the local demographic to your business as well before selecting the warehouse.

3. Roads, Highways & Traffic Flow

   Accessibility to roads and highways, local traffic density, road condition, and traffic peaked hour which vary from one place to another, must also be considered, especially, if trucking is the main mode of transportation. Because, the transportation costs will be affected by these factors, thus, create an impact on the competitiveness of the company.

4. Proximity to Airport, Railway Stations & Ports

   You will need to consider the main modes of transportation used to receive or sending out the goods from the warehouse. If your main mode of transport is air, then, you should be as close to the airport as possible, if not, then you should check out the facility that has the direct access to the highway which connected directly to the airport.

5. Markets & Local Environment Factors

   Proximity to suppliers, producers, and the market being served as well as local environmental factors must also be considered. The warehouse should be as close as possible to major suppliers, produces or customers. This will provide the advantage on the lead times, transportation cost, and the operation efficiency.
   Also, local environmental factors such as weather conditions and risk of exposure to natural disasters should also be considered. For example, Is the warehouse in the flood zone area?

6. Building Availability & Utility Costs

   Check if the area have room to move around in case of shrinkage and expansion of business. Because, by moving in the same location you can save all the troubles of relocation and the work forces.  You will want to double-check the availability and cost of utilities such as the availability of the internet service provider, water, or electricity.