There are three options to consider when deciding where and how to store your products;
private warehouse, public warehouse and contract warehouse.
A private warehouse is owned by the company that manufactures or distributes their
products. While this option allows the most direct control of all aspects of warehousing;
personnel, equipment, security, etc., it is often cost prohibitive because of the large
amount of capital required to build or buy a warehouse.
In addition to the cost of the facility one must also consider the cost of required
equipment such as forklifts and storage racks. Further cost considerations are hiring and
training personnel, increased payroll, building maintenance, ongoing safety training,
liability insurance and property taxes.
Public warehouses offer a solution that circumvents the need for a large capital outlay.
Leases are usually month to month at a fixed rate per square foot. A public warehouse can
provide a cost effective solution to seasonal or unexpected increases in inventory.
Public warehouse space is usually more expensive than contract warehouse space.
Leases are usually for longer periods of time; 6 months or more, but the cost per square
foot is typically less expensive. Contract warehousing usually offers features such as
dedicated docking, racking, forklifts and 24 hour security.
Factors to consider
Duration of Storage
How long will goods be stored? Will products enter the warehouse once and stay there for
an extended period of time or will there be frequent shipping receiving at the warehouse?
How frequently will the warehouse be accessed, by who and when? How often will you require
access to you products? Will shipping and receiving be frequent and steady or only
Does the warehouse need to be near your company offices or a large primary customer? Do you
need to be close to a major transportation corridor airport or ocean freight facilities?
Do you require close proximity to rail service? What will the transportation costs be to
move products from the warehouse to your customer?
Will you require any of the following?
- Ultra clean storage
- Cold storage
- Inventory management
- Product labeling
- Order fulfillment
- Inventory reporting
It is important to evaluate cost per square foot but donít forget to factor in tax
considerations and cost of transportation. In todayís economy it is growing increasing
more important to consider the cost of moving your product from the warehouse to your
customer. Fuel cost has become a major factor.
Shopping around and asking a lot of questions will result in finding the best, cost
effective storage solution for your business. It is highly recommended that you visit a
potential warehousing facility before signing a contract, if possible. Your visit will
reveal the professionalism of the staff, facility cleanliness, condition of the facility,
ease of access and how courteous the staff is.