Welcome to Chapter 1 of our moving warehouses guide. In this chapter, we’ll focus on what to consider when searching for the best warehouse location, why it’s important, and what you should have near your warehouse.
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Why Is Location Important for a New Warehouse? 5 Reasons
When planning to relocate your warehouse, location should outrank any other determining factors. More so than other features you may be looking for.
1. Cost (Biggest Reason)
Location is vital because a bad warehouse location can be expensive. If a warehouse is far from vendors and customers, it will cost more to ship to and directly impact profitability and your business’s survival.
On top of that, customers are used to speedy delivery options. If delivery is slow, they can get frustrated and prefer to return the item, harming your ability to retain revenue.
If renting, the cost of the warehouse lease is also important. Some areas are cheaper than others, and warehouse leases can vary drastically across the US.
However, some locations may be cheaper because there is little demand—they may be remote and impractical for your business.
Pricier areas often have a higher demand because they have excellent access to customers and suppliers.
So, it is important to balance price and practicality. Sometimes, it’s better to pay more.
Lastly, it’s crucial to point out when investigating warehousing costs if there has been a decline, it may be too good to be true, and you should find out why. It may be the case that the location is in decline and is not suitable for your business.
2. Workers
A poor warehouse location can also make finding workers difficult. It may also be that you are struggling to find workers with specific skill sets.
If order volume is growing and your current staff is struggling to handle incoming orders, you may want to relocate to hire more workers, or you may want to relocate to access cheaper labor.
Workforce supply and demand can impact salaries. High demand and low supply can drive up salaries, and the opposite is also true.
If salaries are exceptionally high, your business could become overly reliant on temporary workers who need training, which can impact your operational efficiency.
If your warehouse is based in an area with many warehouses, it can drive up the cost of labor as companies compete over access to workers.
3. Tax and Incentives
Local and state taxes could be high where your current warehouse is located, and moving elsewhere could reduce operating costs.
Alternatively, certain locations may offer incentives to relocate your business. Depending on the industry, there may be special government programs that you can take advantage of.
Taxes and incentives can have a significant impact on costs.
4. Zoning Laws
Your current warehouse may be in an area with certain rules regarding when trucks can pick up and deliver (this can even be the case in industrial zones).
You may wish to relocate to an area where such rules won’t disrupt your business, and pick-up and delivery times will not be affected.
5. Environmental Factors
If your current warehouse is located in an area susceptible to extreme weather conditions and natural disasters (such as fires and flooding), you may want to relocate away from such uncertainties.
Such environmental factors put your warehouse and inventory at risk and disrupt the supply chain.
Your business may have already been subjected to such conditions before, which could have seriously harmed your operations. Damaged warehouses can be expensive to repair.
What Infrastructure Should I Have Near My New Warehouse?
Access to major transport infrastructure is a significant advantage when looking for a new warehouse location, especially if your business relies heavily on trucking.
Nearby highways should be practical to access and have good entry and exit ramps. It’s no good if access is miles away.
Highway access is especially useful if it connects your business to nearby cities and other road networks connecting it to other states and across the country.
Checking Google Maps is not enough—you can’t always tell how wide streets are, how busy they are, and how easy they are to navigate, enter and exit. To be thorough, you should drive on those streets yourself.
However, highway connections are only half the battle. Suppose a well-connected road is often congested with heavy traffic. Not only does this slow delivery times, it wastes fuel and increases the likelihood of accidents.
Investigate when the roads are most busy and the impact of rush hour traffic.
Another thing to look into is whether the roads are regularly maintained and whether any upcoming infrastructure projects could soon improve highway access in the area.
You may also want access to transport hubs, planes, trains, and shipping partners.
Additionally, it is good to be close to where goods land in the US when receiving orders from overseas. For example, if you rely on importing most of your goods by air cargo, a location close to an airport is ideal.
What Is Good to Have Near a Warehouse?
Aside from transport connections, you will want many other things close to your new warehouse.
Suppliers and Vendor Warehouses
Being close to suppliers and manufacturers is a significant advantage, and it is often one of the first things businesses look for when relocating their warehouses.
It is cheaper and more convenient for them to ship to you as they will spend less on fuel costs, labor, and vehicle wear and tear.
Furthermore, being situated closer to vendor warehouses makes smaller orders more convenient. This enables your business to respond more to changing circumstances, such as a sudden demand increase.
It also decreases the possibility of over-ordering from vendors, makes dropshipping and cross-docking more practical, and decreases the possibility of suppliers encountering transportation disruptions.
However, before deciding to move your warehouse closer to suppliers, ensure you have properly researched them beforehand, particularly if you haven’t worked with them for long.
It would be an enormous gamble to move close to a supplier only to discover that they are unreliable and financially unstable. Be sure that the suppliers you want to move closer to will likely survive in the long term.
Fulfillment Centers and 3PLs
Fulfillment centers and 3PL (Third-Party Logistics) companies are a great way to outsource inventory storage, order fulfillment, and handle complaints and customer inquiries (depending on the services they offer).
Supposedly, up to 73% of Amazon Sellers sell through FBA (Fulfilled By Amazon). E-commerce sellers also use WFS (Walmart Fulfillment Services) for Walmart orders and various other fulfillment center services.
However, if your business has decided to start working with a fulfillment center, it still needs to send inventory to its warehouses, so it is beneficial to have them nearby.
3PLs are also highly useful when you want to fulfill orders from outside Amazon, as it can be a hassle to fulfill non-Amazon orders through FBA.
Close Enough to Retain Employees
Bear in mind that relocating your warehouse far from its current location could mean some of your employees will no longer be able to work for you.
Ideally, you want to retain as many of your current employees as possible and avoid sourcing for new employees and training them all over again.
Excellent Internet
Ideally, your new warehouse should be located in an area with a reliable, high-speed internet connection. However, this can be difficult to find if your business is located in a remote area.
If you use a WMS (Warehouse Management System), a poor internet connection will disrupt your business’s ability to pick and sort orders from the warehouse floor, as scanning devices will struggle to send and receive information.
Why Is It Useful to Have a Yard?
An important thing not to overlook when moving your warehouse is the available space around it. The space around a warehouse has many uses:
- Storage for forklifts, pallets, and other equipment.
- If you deliver yourself, you need space for parking company vehicles.
- There must be space to maneuver if you have several deliveries coming in and out simultaneously.
- Employee parking—employee vehicles shouldn’t be getting in the way.
Additionally, space around a warehouse can be used to expand the warehouse for more space or specific purposes.
If your business is growing rapidly, it would be inconvenient if you ran out of available space very soon and needed to move to a new location again.
You may have found an excellent warehouse in a great location, but it doesn’t have space to expand. For example, it might not have space to add a second ramp for shipping customers’ orders.
Key Points
Now you know just how crucial location is to moving your warehouse. Remember these key points.
- Location is one of the most important things to consider when planning to move your warehouse because it directly affects costs, most notably shipping costs from vendors and to customers.
- A good location should also provide access to workers, not cost an arm and leg in tax, have favorable zoning laws, and have a safe and stable environment.
- One of the most important things to look for is access to good infrastructure near your warehouse that can make deliveries faster and cheaper.
- Having a warehouse close to your suppliers and any fulfillment centers you work with is also highly beneficial.
- The available space around your warehouse is also important because it can be used for storage, vehicle maneuvering, parking, and expansion.
In the next chapter, we’ll explain all there is to know about zoning warehouses.