Product distribution is a key concern for modern businesses. The rise of eCommerce giants like Amazon has raised consumer fulfillment expectations to unimaginable heights. As a result, companies must put as much care as possible into setting up their distribution infrastructure. That begins with the selection of the right distribution warehouse. Here are the five most important considerations when choosing one.
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1. Proximity to Customers
The most important consideration when choosing a distribution warehouse is its proximity to your customer base. For local or regional businesses, this is a straightforward selection criterion. However, things grow more complicated if your company has a widely distributed customer base. In those cases, there are two ways to proceed. One is to select multiple distribution warehouses to serve as regional hubs. The other is to choose a warehouse that minimizes fulfillment costs to the most significant proportion of your customers.
2. Proximity to Suppliers
Your next consideration is how hard it might be to supply a warehouse. That calls for working with your suppliers to gauge the impact of choosing one warehouse versus another. If your business works with a long list of suppliers, your warehouse location might not matter very much. If you work with just a handful, locating your warehouse near them may be worthwhile.
3. Warehouse Security
Since you’ll be keeping your business’s inventory in your distribution warehouse, the next thing to assess is security. If any warehouse you’re considering has a poor reputation for security, you should move on. You may also ask prospective warehouse selections if they can customize their security procedures and measures to meet your needs. With so many warehouses to choose from, there will always be one that will be more than happy to work with you.
4. Lease Costs
The cost per square foot for the warehouses you consider is also an important consideration. Obviously, a warehouse that’s perfect for your business might stretch or break your budget. So, narrowing your potential selections is necessary by eliminating any that would go above your business’s means. As you do, look for other places within your distribution functions where you might save costs. You may find that a more costly warehouse will fit into your budget afterward.
5. Warehouse Expansion Possibilities
Finally, it doesn’t hurt to do a little bit of forward-thinking when selecting a distribution warehouse. To that end, it’s crucial to understand what, if any, expansion possibilities a potential warehouse selection could offer. If your business needs to expand its operations, it’s almost always cheaper to do so in place rather than through relocation. That’s only possible, however, if you select a warehouse with room to grow from the beginning.
Effective Distribution Is King
The bottom line is that your business must select a warehouse that can handle the demands of its distribution process. By considering the foregoing traits, doing so shouldn’t be hard. And it’s helpful to remember that your business needn’t be constrained by the warehouse choice it makes today. There’s always the possibility of shifting distribution strategies later, including moving product storage elsewhere. In other words, don’t overthink things, and you’ll reach the proper selection!