Understanding the essentials

 

A well-chosen warehouse is one of the most important elements in a supply chain, and provides businesses with advantages beyond just a storage solution. Picking the right warehouse can be a huge factor in streamlining operations, reducing delivery times and improving customer satisfaction. However, with so many variables in the warehousing equation, making the right decision isn’t always easy. Here, we list the key factors that businesses need to bear in mind when shopping for warehousing. 

 

What should I consider when choosing a warehouse? 

 

To make the best decision, it’s important to look beyond surface-level factors and evaluate how location, infrastructure and functionality will impact your entire supply chain.

 

• Proximity to customer locations 

Probably the most important aspect to consider is how close a warehouse is to your customer base. Warehouses located near high-demand areas will, of course, significantly reduce delivery times and costs, heightening customer satisfaction and retention. Geographical closeness to urban centres is particularly beneficial for businesses operating in e-commerce, or those providing same-day or next-day delivery services. Along with reducing transportation costs, a central location allows businesses to respond to customer demands with greater agility.  

 

To determine the ideal warehousing location, businesses need to analyse their customer demographics, order volumes and delivery expectations. Distribution software or heatmap analysis tools can help visualise where your customers are concentrated, so you can create a shortlist of the most strategic warehouse sites.  

 

• Real estate options and costs  

Centrally located warehouses may offer reduced delivery times, but they tend to be most expensive to rent. Why? Because a warehouse space’s availability and affordability will vary greatly based on location and market demand. If you’re considering an urban warehouse near a transportation hub, you need to make sure the logistical advantages it offers outweigh the higher rental rate. The same calculation applies to rural or suburban locations, which may be more affordable to rent but will add time and cost to transportation.  

 

Beyond a warehouse’s rental or purchase price, businesses also need to consider additional costs such as property taxes, maintenance fees and insurance. The total cost of leasing or owning a warehouse needs to be carefully balanced against the potential benefits – or disadvantages – of its location.  

 

• Nearby labour availability  

Although warehouse operations are increasingly automated, even the most advanced facilities still rely on the human element for tasks such as picking and packing, inventory management and equipment handling. It’s important, then, to assess the availability of skilled and unskilled labour in the area surrounding the warehouse. Regions with a sizable pool of available labour will help prevent staffing shortages, especially during peak seasons.  

 

Of equal importance is the cost of this labour, as some areas will be far more affordable than others. Businesses also need to find out if there are training programmes or agencies nearby that can support employee onboarding and development.  

 

• Local laws and regulations  

Compliance with local zoning laws, building codes and safety regulations is another key consideration. A warehouse located in an urban centre is likely to have different compliance requirements than one based in a remote or rural location. For example, some regions may limit the types of goods that can be stored or impose restrictions on hazardous materials. Understanding these regulations beforehand will help you avoid complications such as operational disruptions, legal disputes and potential fines.  

 

• Warehouse layout and workflow  

The internal design of a warehouse will fundamentally affect your operational efficiency, defining how smoothly goods move, their handling times and the risks of bottlenecks. Businesses need to consider aspects such as aisle width, since aisles and clearly defined pathways allow for easier movement of forklifts and other handling equipment. Shelving systems and docking areas are also important factors; modern racking systems, such as vertical storage, can maximize space and slash costs.  

 

Businesses need to understand the complete flow of goods from receipt to storage to dispatch. A logical and well-organized flow reduces unnecessary handling and accelerates order fulfillment. It’s advisable to conduct a walkthrough of a facility to identify any potential layout problems, prior to signing on the dotted line.   

 

• Proximity to major linkages  

Unless your warehouse is in an urban centre, you’ll need to pay careful attention to how close it is to major motorways, ports, rail terminals and airports. Needless to say, a warehouse with quick access to multiple linkages allows faster turnaround times for inbound and outbound shipments. It’s also important to consider the availability of parking and loading zones for lorries, since congestion in these areas can cause delays.  

 

• Material handling capabilities  

Does your potential warehouse have the necessary resources and capabilities needed to handle your specific products? This includes having the right equipment and infrastructure to accommodate weight, size and potential fragility. Assess a warehouse’s loading docks, pallet jacks and conveyor systems to ensure they meet your requirements – and confirm that the warehouse’s staff is trained and equipped to manage any products that require specialist handling.  

 

• Warehouse size

Although the size of a warehouse may sound like an obvious factor, what’s important here is its ability to meet your future storage needs as well as your current needs. While a smaller facility might save costs in the short term, it can become a bottleneck as your business grows. Conversely, an oversized warehouse may result in wasted space and unnecessary expenses – so it’s important to get this right.

 

Calculate your space requirements based on inventory turnover, storage methods and seasonal demand. Look for flexibility in the lease terms to expand or reduce the space as needed, and consider modular or multi-tenant warehouses (these tend to offer more scalable solutions).  

 

• Security  

Keeping your inventory moving is one thing – keeping it safe is another. Be sure to evaluate a warehouse’s security measures, such as surveillance cameras, access control systems and perimeter fencing. In high-risk areas, additional measures like on-site security personnel or alarm systems may also be necessary. Proper lighting, secured entry points and fire suppression systems will keep your goods safe and also reduce your insurance premiums.  

 

• Environmental risks  

Natural and environmental risks shouldn’t be ignored. Extreme weather and flooding is an increasingly common news story, so businesses should always factor in whether a warehouse is located in an area that’s prone to these events. Selecting a warehouse with proper infrastructure to reduce these risks – such as elevated construction in flood-prone areas – can protect your inventory and reduce downtime during emergencies.  

 

How can I save money on warehousing?

 

Warehousing can be a major expense, but with a little strategic planning and a few operational adjustments, businesses can achieve some meaningful savings.  

 

Optimise space   

First of all, businesses need to efficiently organise the warehouse layout to maximise storage space. They should use vertical storage units and clear labeling systems to reduce unnecessary movement and improve inventory access.  

 

Streamline inventory management

Investing in inventory management systems help businesses track stock levels and reduce overstocking or understocking issues. Alongside this, accurate forecasting means you won’t have to pay for unused space, and also maintains optimal stock rotation.  

 

Heighten operational efficiency  

Streamline operations by using technologies such as warehouse management systems (WMS) or automated guided vehicles (AGVs). Although they may require some capital investment, they’ll improve operational efficiency and ultimately reduce manual labour costs.  

 

Reduce energy costs

Implementing energy-saving measures such as effective insulation, energy-efficient lighting and motion-sensor lighting systems will lower your electricity use and operational expenses. 

 

Rent out extra space

If your warehouse has unused capacity, think about renting it out to other businesses. This will help offset costs and maximise the utility of your resources.  

 

Explore shared warehousing  

For businesses with smaller storage needs, renting sections of larger warehouses instead of entire facilities can be a cost-effective way forward, reducing your overheads while still providing access to modern facilities.  

 

What is the minimum term for warehouse storage?

 

This will depend on the type of agreement and the warehouse provider’s policies. As a rough guide, though, short-term storage typically refers to agreements lasting less than a year. While these arrangements are ideal for businesses with seasonal inventory spikes or one-off storage needs, not all warehouses offer short-term options, as longer commitments are generally more profitable for providers.  

 

Minimum pallet requirements  

Businesses should also be aware that many warehouses enforce minimum pallet storage requirements. This can present a challenge to small businesses or those with limited inventory, since these thresholds may exceed their storage needs. Businesses with smaller requirements may need to explore shared warehousing options or flexible storage providers.

 

 

Find flexible warehousing solutions that work for your business with X2 (UK)

 

Whether you need short-term flexibility or a long-term partnership, our extensive network of warehousing providers offers a comprehensive range of locations and functionality. We deliver cost-effective storage solutions tailored to specific business needs, helping keep supply chains efficient, dependable and affordable. 

 

Get in touch with X2 (UK) today and find the warehouse that’s right for you.