Everything is going good in your business, and your vision is being realized, the product is achieving sales levels you always knew it would, and the projections you worked tirelessly over are coming to fruition. Then you hit the crossroads.
All of this success means you have outgrown the facilities currently being used to manage your product and it is now time to decide, do I take on additional space, outfit this space with the equipment required as well as hire more staff, or do you look for an outsourcing solution?
This is what they call “A Good Problem to Have”, albeit a problem just the same.
To expand your current space sounds appealing— “let’s keep this in-house” is your first thought, but to do so requires many known and unknown factors. The unknown factors can be daunting and will have many warehouse selection factors to consider. How much space will I need? How much space will I need in 3 years, 5 years or 10 years?
Then you have to consider staffing, technology and necessary hardware and equipment to make it all work. The other side of this equation is to consider outsourcing this work to a provider of warehouse, fulfillment, and 3PL services or moving to another provider that can handle the higher volume and demand of the growth. For the purpose of this article let’s explore the latter.
Top Warehouse Selection Factors to Consider
Like most “Good Problems to Have” it helps to identify some key factors that need to be considered in order to make an informed decision.
Once identified, you can then make a warehouse site selection list to allow you to hone down potential warehouse partners. Some of these considerations are:
- Selection criteria for warehouse location
- Warehouse design standards such as lean warehousing to maximize value and minimize waste
- Type of services you will require i.e., fulfillment, E-commerce, transloading, kitting services, customs bonded, food grade storage, short/long term storage
- Inventory management & technology
- Security features
You can use these topics as a starting point, or create your own. The goal is to create a hard list to use as a measurement for all warehouse partners you will consider during a search, to allow for a clear “Apples to Apples” comparison.
Why Warehouse Location Matters
This question can be very personal, while at the same time needing to be practical, as there are many factors affecting the location of a warehouse.
Ask yourself what matters to you and your business:
- Is it important to have the product within a reasonable drive of your business location to allow regular access to the freight?
- Does it need to be located within close proximity of a production facility to avoid excessive expenses in transportation?
- Will choosing a warehouse near the airport benefit your air freight needs?
If your product sells across the United States it may make sense to engage with a warehouse provider centrally located between your customer base. This allows you to control the freight cost by utilizing full Truck Load Services (FTL) or Full Container Load (FCL) to the warehouse and limiting the miles and shipments sent on Less Than Truckload (LTL) which can become very expensive fast.
If your business is large enough, often times engaging a warehouse provider that can offer services in multiple locations will make the most sense and ultimately lead to the most savings in transportation costs.
There is not a “One Solution Fits All” when deciding where to locate and engage a warehouse, but if measured correctly, by locating your product in the most strategic location you can reduce your overall cost significantly sending more money to the bottom line.
If you find the correct warehouse partner, they will share this goal as well.
Warehouse Design Standards to Look For
Warehouse design will play a key role in how your product is handled and priced.
If your product is palletized and stackable than a warehouse with open floor locations may be a good fit. By allowing the warehouse to stack your pallets they can occupy more product in a smaller space and will be able to reduce the monthly cost to you the customer, providing savings.
If your product is not stackable, then a warehouse partner with pallet racking might be the best fit. Modern warehouses will typically be able to rack 3 to 6 high standard size and weighted pallets, again offering you the customer a savings over single stack floor load.
If your product needs First In First Out (FIFO) requirements, then a warehouse with flow racking could be a good option to ensure FIFO is met.
For smaller items or Skue counts over 100, a location with multi-tiered bin locations and automation will ultimately add to efficiency in the warehouse and cost savings to you the customer.
Determining the needs of your product will help you find the right partner to handle the warehouse work. There are plenty of people out there that will tell you “Yeah, sure I can store your stuff” but what is needed is more than four walls, a couple of doors and yes, I can do it.
You need the correct fit to provide the most efficient and logical manner of handling your product by a professional, that will ultimately lead to the highest service levels to your customers, and improving your bottom line.
Determine What Services You Need
Knowing what services you will need before you begin a search for a warehouse provider is very important. If you are in need of full E-Commerce and Fulfillment services you will want to seek warehouses with that experience, technology, and location to handle your product.
Unfortunately, too many warehouses out there are willing to say yes to everything that comes their way when in fact, they are doing you and themselves a disservice by not acknowledging this up front.
Understanding your current services needed as well as what you may need in the near future before beginning your search will limit your time spent talking with the wrong providers.
If you require Transloading services you need a warehouse that is equipped for quick turns and the ability to temporarily hold or stage product for a quick turn.
If your product arrives from overseas it will require going through customs prior to being released to you. It is not uncommon for this process to take days and in some cases weeks. By partnering with a warehousing agent that is Customs Bonded you can move your freight off of expensive airline docks to your partners dock to save a lot of money.
Airlines and steamship lines do not want their facilities tied up with freight on hold so they charge rates that are often 20x higher than normal rates to encourage the freight to be moved. Again, offering you an opportunity to save money and improve the bottom line.
Inventory Management & Technology
Ok, this is a big one, or is it? Technology is a critical part of all of our lives and will more times than not be a major component to any outsourced warehouse operations.
When working in the E-Commerce and Fulfillment worlds working with a warehouse with a state-of-the-art Warehouse Management System (WMS) is possibly the single most important factor.
Systems need to be able to communicate downstream/upstream to you the customer, as well as all the connections with big box stores, retailers and secondary distribution points. To be able to take advantage of a warehouse providers WMS, you will need to have an ERP system like NetSuite, or on a larger scale, SAP and Oracle to handle the information flows. Without a capable system of your own, the warehouses WMS cannot provide all of its functionality that may be required to allow your company to reach the next level of sales and beyond.
On the other side, if your warehouse requirements are less technical, then prioritizing the warehouses WMS may not be that important. We see plenty of work that requires rapid moving transload services or arrives with pre-built pallets, tagged individually and leave in the same manner. These types of transactions can easily be handled in a more simplified system through spreadsheets or Google Docs, and knowing this, the pricing from the warehouse should reflect the lack of needed technology, providing savings and adding to your bottom line.
All of the above considerations do not matter if your product is not kept in a safe and secure facility. No matter how much insurance is maintained, loss through theft and negligence is a very traumatic event to go through personally as well as the effect on business flows.
A good warehouse provider will have security measures put into place to help reduce the chances of an event like this occurring. Look for warehouses with 24-hour alarm systems, video monitoring with all entrances under camera, and 30+ day retention and exterior patrols during closed hours.
If your product requires an extra layer of security, discussing these needs with potential providers will be important in determining how scalable their current systems are to meet your needs.
Including this into your selection criteria for a warehouse location will add to understanding the providers you are considering, and more specifically the ones that take you and your product serious enough to ensure the security of the product.
Bridgetown Enterprises Warehouse Services for Storage & Retail
Need warehouse storage? Order fulfillment? Great inventory accountability? No problem. We can provide solutions to your warehousing needs at our clean, secure, and cost-effective Portland and St. Louis facilities.
If it is transloading or cross docking services you need, we safely transfer your goods to and from trailers and shipping containers. At our facilities, we can even unload and separate out your shipping container items onto multiple pallets for transport if needed.
Since every warehouse project and relationship is different, please contact us to discuss your needs. Our goal is to provide solutions as the back-end resource to free you up to do what you do best, manage and grow your business!