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Oct 15, 2020 10:23:43 AM

Site Selection for Warehouses and Distribution Centers

Posted by Isolde Decker-Lucke

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‘Location is everything’ is a saying we’ve all heard before, but for the logistics industry that couldn’t be more true. When considering a location for a warehouse or distribution center, logistics companies need to look at many different factors to make sure the new location they choose will positively affect their supply chain. Location analytics can help these logistics businesses make informed decisions based on local customer base, access to resources, and transportation access.

Considerations for Site Selection for Warehouses and Distribution Centers 

Logistics refers to a complex operation involving people, facilities, supplies, and delivery. Any company that is creating and transporting physical products needs to understand their logistics path. Companies looking to expand their warehouse or distribution centers have many factors to consider when looking at different locations, depending on the product they are creating. 

Current Route Performance

When choosing a new location for a warehouse or distribution center, one of the most important steps is to first look at the current performance of your supply chain. Is it working efficiently? Is there a section of a route where there are consistent delays in deliveries? Location trackers for trucks and pallets that leverage a hybrid positioning system can provide a very precise look at where trucks continually stop for long periods of time, how overall production is functioning, and can even help find lost materials. This cuts down on both unnecessary time and cost. 

Customer Locations

Companies need to first understand where their customers are located, especially frequent repeat buyers. If a company making farm equipment were to place their warehouse in Manhattan, they would have a difficult time justifying it being an efficient path to their target customer base. While traditionally distribution centers are located in metropolitan areas, businesses can instead use location intelligence to look at their customer base and choose a location that is best situated to deliver to them in the fastest and most efficient way possible. 

Raw Materials

Access to raw materials is another important part of warehouse and distribution site selection. If a warehouse is receiving shipments from another country for example, access to an international airport would be a consideration that needs to be factored in. By selecting a warehouse location that is close to a large amount of both customers and necessary materials, the overall supply chain becomes more efficient as the miles that need to be traveled by trucks decreases. With location tracking for the supply chain, businesses can see where trucks are picking up raw materials and how long they are spending on the road from point A to point B in the supply chain to see if there is a place that makes sense to build a warehouse to cut down travel time and make the process more efficient

Transportation Access and Timing

Companies that transport by trucks should also look at access to highways, and then the traffic patterns of those highways. Location intelligence can provide a look at how traffic congregates throughout the day in those area and identify peak times during the day. This helps optimize routes for products or materials that are time sensitive leaving a warehouse and ensures timely deliveries overall

Competitor Locations

Competitor proximity is important to understand as well. If you are fighting over access to the same types of supplies and materials as your competitors, you don’t want to be in a location where you are limited to the same supplier. By analyzing where competitors are located, and foot traffic at their locations, if applicable, businesses can better choose a location for a warehouse or distribution center. If you are a supplier, you can evaluate location compared to competitors and factor in how far away you want to be from those companies.

Government Regulations

Some considerations for business include energy restrictions, limits on driver hours, transportation limitations and more. Restrictions on the number of consecutive hours drivers can operate a vehicle should be considered when choosing a warehouse. If raw materials are coming from a location that is 12 hours away, you need to consider the amount of hours on the drivers’ allowance. Using location intelligence for route analysis, businesses can optimize driver routes to meet regulations most efficiently.

How Does Location Help? 

In the supply chain and logistics landscape, location intelligence and technology provide one of a kind insight into ideal areas of expansion and ways to improve warehouse efficiency. Companies can select their warehouse location by using location data to analyze the factors that may affect efficiency and overall functionality. Location intelligence offers the keys to unlocking in-depth understanding of consumers’ behaviors and preferences. This type of information can be used in many ways in the logistics space, and site selection is very important. 
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