The Importance Of The Location Of Your Warehouse

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Determining the location of a warehouse is one of the essential aspects to consider before setting up the project of its installation. The location of a warehouse is a factor that influences not only the construction itself but, above all, the strategic aspect, which can be decisive for the success or
failure of the company.

The larger the size of the business and hence; the scope of its distribution system is essential, the more the study of the location of the warehouse is long and complex. Either way, this study should be done by looking at four primary factors: production, demand, costs, and competition.

For each of these elements, you must observe two evaluation criteria to carry out the analysis in such a way as to adjust it as closely as possible to reality: the economic criterion and the commercial criterion. Also, there are several variables to analyze:

• First of all, the type and total quantity of products to be stored.

• Then, we must assess the costs of infrastructure (land, construction, and equipment), direct and indirect labor, transport and handling, costs parallel to the activity, and services and insurance to contract.

• Third, we must estimate the demand, i.e., the quantity and location of consumers, the number and size of orders, the demand curve, the catchment area's relative importance, and the delivery speed.

• Finally, we need to look at the location of competing warehouses and their efficiency and service delivery.

For the study of the location of the facilities, it is necessary to examine these variables and analyze other parameters in particular the manufacturing capacity of the industry, and the peculiarities of the network distribution.

Manufacturing capacity

The production capacity of the industry served by the warehouse determines the quantity of merchandise is stored, but this is a relative factor that must also be assessed concerning the demand for the product in question.

You can measure its influence on the location of the different types of warehouses according to the industry's degree of transformation.

Distribution network required

The composition and layout of the network needed to market an item affect the location, number, and type of the warehouses required to cover it.

Two different factors must be analyzed here: the composition of the network and the method of product distribution. These two factors are explained below.

Influence of the composition of the distribution network: The distribution network can be made up of independent dealers (independent companies) or agencies belonging to the company. In the first case, the quantity of product to be stored is exclusively determined according to the
demand and the number of orders received from the distribution network. Under
no circumstances should primary storage be carried out; the network itself
takes care of it. In the case of company-owned distribution agencies, in
addition to central, regional, and transit warehouses, a primary storage center
must be located in each of the distribution points, and these must be located
as close as possible to demand areas.

Influence of distribution on the marketing network: The geographic distribution of the distribution network influences the location, number, and type of warehouses the company must-have. As with the previous factor, there are two possibilities, depending on whether the distribution network comprises
independent dealers or company-owned distribution agencies.

It is also possible to outsource services related to storage in bangaloreby entrusting a logistics operator with the management of transport and distribution and the storage and preparation of orders, if necessary.