How to Find the Right Warehouse

Being at the right place at the right time for seamless supply chain and logistics operations.

Selecting the right warehouse location is one of the most important decisions you will make for your business. Your next warehouse location can impact your company’s efficiency, effectiveness, and profitability. It is not a mere leasing or purchasing decision; it is about strategically positioning your warehouse in a way that the operations are unhampered, the to and fro transportation is efficient, and you are placed to serve your customers better.

While planning this step, it is important consider some crucial factors so that they can help transform the new warehouse into a valuable asset.

Lease Rent, Taxes and Other Costs

The most obvious factor in selecting a warehouse location is cost.

Cost of a new warehouse is not limited to just rental rates. It comprises certain hidden costs, which might offset apparent savings. Hence, these must be meticulously examined.
It is important to study the governmental taxes applicable and also the tax incentives and regulations that pertain to your business use case, including the inventory taxes, franchise taxes, and personal taxes affecting employees.

Beyond that, your warehouse needs supporting utilities and amenities for the smooth functioning of your facilities, which is yet another cost to consider.

Pro tip: Entrusting your facility management to an industrial and logistic warehouse park developer is a great way to concentrate on your core business activities, allowing them to adeptly manage the ancillary aspects on your behalf.

Accessibility and Connectivity

When selecting a warehouse location, the accessibility and transport routes play a pivotal role because transportation costs can be easily affected by factors like highway connectivity, public transportation, traffic speed, volume, peak hours, and road conditions. They also impact your business competitiveness and supply chain efficiency.

It is wise to optimise location based on the predominant transportation mode; for instance, proximity to the airport if air transport is key or considering local traffic density and proximity to roads and highways, if trucking is the primary transportation mode. For certain use cases, proximity and accessibility to consumers could also be a critical factor.
Certain other factors that influence transportation costs are driver’s wages, gas prices, shipment complexity, and decomposability of goods.

Pro tip: Choose a location with good transport infrastructure, keeping in mind customer accessibility and multimodal connectivity.

Availability of Workforce

When choosing a warehouse location, research the workforce availability, skills, and labour costs for the local demography. Evaluate the supply and demand dynamics because low availability and high demand can increase salaries and operating costs, while the opposite can help lower costs.

Skills are equally vital as availability of labour because a skill gap will impact your business’ customer service quality, competitiveness, and productivity. Analyse the location for unemployment rates, workers in comparable occupations, average wages, and benefits considering the past five years, current market, and future forecasts. Their transportation and habitation might also require innovative solutions making it an additional cost. For some use cases where the operations are straightforward, you might prefer a rural location but in other cases where you need high availability of skilled labour especially with sound technical know-how, you might find an urban setting more profitable.

Pro tip: See if you can leverage nearby universities and trade schools to build a talent pipeline via apprenticeships, internships, and direct hires for your warehouse.

Local Environment and Market

By considering the proximity of a potential warehouse to your suppliers, producers, and target markets can help you reduce lead times, lower transportation costs, and enhance responsiveness. Evaluate major supply chain partners and strategically position the warehouse for efficient operations.

Apart from the market presence, the local environmental factors such as weather conditions and the risk of natural disasters also become factors to consider. Areas prone to natural disasters, such as earthquakes, floods or hurricanes, will guide the specific building requirements that your warehouse would need. Similarly, the warehouse’s impact on its local environment in terms of noise levels, emissions, and outdoor storage space may pose certain limitations for where you can locate your warehouse.

Pro tip: Engaging an EPC firm can help support you to review the topography, geotechnical conditions, and environmental history for any red flags.

Scalability and Utilities

When choosing a warehouse location, you want to consider scalability of the space for potential business growth or contraction and aim to minimise disruptions in case of relocation. If you can move base within the same area, you can retain your workforce, utilities, and avoid plenty of frustrations for your carriers, truckers, and customers. This is why, it is a good idea to check the space availability at your potential location.

Both while setting up and expanding, don’t forget to consider any specific needs you have like unhampered electricity and water for cold storage warehouses. The most underrated utility is internet and communication services. Do check the availability, speed, and associated costs.

Pro tip: Some Grade A warehouse developers such as Horizon Industrial Parks offer options to accommodate future growth, exploring options such as vertical or horizontal expansion, additional storage space, flexible structures for future retrofitting and nearby land for a second facility.

In Conclusion

There are a lot of factors that determine if a location is going to be a hit or a miss. However, the idea is to not get deterred by these challenges, but to focus on the bigger picture during the site selection process, anticipate the business needs and proactively address any future logistical challenges today.

As India’s fastest growing industrial and logistics real estate developer, we make it our job to keep all these determinants at the forefront as we expand our footprint across India. Our dedicated strategy team consistently studies market supply and demand patterns to identify the locations that our customers would benefit from, to add it to our land bank. Which is why most our customers easily rely on us to be there for their business, wherever it might be.