Expert Eye

Find out the most important factors to consider when making the decision

Selecting a warehouse that suits your needs can be a frustrating experience especially when there is strong demand. Here are 10 factors to consider;

Location is a prime consideration. Take into account the location of not only your distribution points but also your suppliers. Are you importing and exporting goods and materials? If so, you should be close to a port that can reliably and safely handle your goods. The essential question is whether your chosen location will cost you money. If so, how much?

Ease of accessibility is also a consideration. How close will you be to major transport routes? How easy will it be for vehicles to gain access to your facility? If you need to receive or dispatch containerized merchandise, will access inhibit your ability to receive or move merchandise in larger quantities? What about area? Can you expand? What type of expansion do you need when contemplating a five year lease with a five year option? Will the facility inhibit your ability to expand cost efficiently?

“The success of your business may depend largely on the amount of due diligence that you conduct on your part”

Is the configuration of the space appropriate? Simple items such as number and location of doors, office facilities, columns and fire hoses have a big effect on the systems required to operate. Do you have sufficient docking and staging space? Can your space be easily partitioned into functional areas such as inwards inspection, storage, picking, packaging and dispatch? Do you have special requirements with regard to power supply? Are there suitable amenities for your staff? Is there adequate parking for visitors and staff?

Do you need to engage a warehouse and logistics management consultant who can advise on the most efficient utilization of intended floor space? Space planning is a science which can save you unnecessary costs associated with inefficient space utilization.

Is there an existing warehouse management system provided? Can your requirements for processing orders and managing your supply chain utilize the existing system? If not, can the system be modified? Is there an “off-the-shelf” system which can meet your needs? What type of handling equipment are they utilizing? Is the equipment suitable for the goods that you will be providing, or do you have special requirements due to the nature of your merchandise?

Do you need an external services provider to manage your warehousing? Then you need to perform an in depth credential check to determine its level of experience, resources and capability. You need to prepare a scope of work to provide guidance as to where its responsibilities start and end. You may require complete door-to-door logistics, or just warehouse management. This will require much thought, chief being cost benefit analyses.

Is your landlord or his property management representatives experienced in the industry? How many other facilities do they provide and do they have a good reputation for responding quickly to clients’ needs? Does the facility meet all legal requirements and standards? The last thing you need is a landlord who takes a month to fix a hole or has provided a facility that cannot be operated legally!

Have you considered a lease vs. buy analysis? Owning a warehouse may make sense if you need to invest heavily in making a rented facility deliver the type of business capability that you require. Some companies negotiate the inclusion of a purchase option at some stage in the lease. This can be advantageous if business growth exceeds that which was estimated.

Finally, consider the need for professional assistance to ensure you negotiate the best deal. Commercial lease agreements can be quite intricate, particularly where the landlord has committed to assist in modifying the premises, a third party is engaged to manage the ware house and the terms of a buy-out option and a valuation methodology are negotiated and agreed upon.



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