How to Choose a Region for your Warehouse Operation
When developing an effective warehousing strategy, choosing a quality region for operations is just as crucial as selecting the facility itself. Regional factors can influence a warehousing strategy's effectiveness, profitability, and efficiency. As you chart your warehousing strategy, it’s crucial to consider these variables.
Understand Your Customer Base
One of the crucial variables to consider for your warehouse strategy is where your customer base resides. It’s a simple yet impactful component of any supply chain decision. Setting up your warehouse location closer to the bulk of your customer base can reduce transportation costs, speed up delivery times, and even reduce inventory. It all comes together to help your business penetrate the market more quickly and become more profitable.
Consider Real Estate Variables
Real estate factors also play a significant role in choosing a warehouse location. It’s crucial to consider what makes the most sense for your business:
● Purchase an existing building
● Build a facility from scratch
● Work with a warehousing provider such as Scarbrough
As markets become more competitive, finding affordable space becomes more difficult. However, keeping an eye on the future and looking beyond immediate site selection is essential. You’ll want to consider whether a given facility can grow and scale as your business expands.
Evaluate Work Force Availability
Finding affordable warehouse space is great – but it doesn’t do much good without a strong labor pool to support it.
Any effective warehouse needs a reliable blend of full-time and part-time workers to function effectively. Choosing a location with a solid workforce helps ensure quality labor is available. Before choosing your warehouse facility, explore the following variables with a thorough labor market analysis of the region:
● Current and future workforce availability
● Unemployment rate
● Number of workers in comparable occupations
● Average wage rates
● Benefits
Assess Local Infrastructure
Quality warehousing relies on more than just a solid facility. It also counts on having access to quality transportation infrastructure centrally located relative to customers, carriers, and suppliers.
From air cargo hubs and railroad access to interstate highway proximity, having a warehouse within a reasonable distance of quality transportation infrastructure is essential. Access to such infrastructure can help reduce carrier and transportation costs while mitigating the potential risk of loss of goods during transit.
Check Tax Structures and Incentives
Regional tax structures and incentives also affect warehousing operations.
While exploring warehousing options, it’s crucial to consider how local taxes may impact both your business and your employees. Inventory taxes and franchise taxes can influence your bottom line, while regional incentives may bolster it. Similarly, you may want to consider how factors like income tax, sales tax, and property tax rates may affect your team.
If Necessary, Seek a Foreign Trade Zone Facility
If your supplier network is mostly international, you will likely benefit from a warehouse with a Foreign Trade Zone. These types of facilities allow you to streamline your international supply chain with helpful benefits:
Direct Delivery
Duty Deferral
Duty Elimination
Duty Reduction/Inverted Tariff
Weekly Entry and MPG Savings
Access to Inventory
Determine Warehousing Footprint Needs
A significant factor to consider while configuring a warehouse strategy is finding the correct balance between incurring the lowest possible distribution and holding costs while still meeting your customers’ needs. This calculation will inform what kind of warehouse footprint your company needs.
The more facilities you work with, the more inventory you must have on hand. On the other hand, shrinking your warehouse footprint could result in savings via rental costs, labor costs, facility upkeep, and more.
Kansas City Delivers on Warehousing and Distribution
If you’re considering a new warehousing strategy for your company, the Kansas City region likely holds the answers.
The region sits near the geographic center of the lower 48 states and has access to a multitude of rail lines, interstate highways, and air freight facilities. As a result, it takes two days or less to ship from Kansas City to 85 percent of the U.S. population and can reach 95 percent of the US within 3 days.
This geographic advantage has prompted rapid growth in warehousing and distribution infrastructure. The Kansas City region has witnessed its warehouse footprint grow by 60 million square feet since 2012. With move-in-ready buildings and vertical-ready sites throughout the area, companies can quickly secure their real estate and begin operations or development.
Once you establish a facility, your company can draw from the 94,940 regional workers in the transportation and warehouse industry. This workforce has provided long-term stability for the warehousing industry; it reflects overall U.S. employment in distribution and warehousing.
Despite its landlocked geography, the Kansas City region is a strong foothold for international operations. The area has a massive foreign trade zone presence, with more than 450 million square feet of approved FTZ space.
Finally, Kansas City has a robust industrial business environment. With an aggressively priced industrial market, multiple business incentives for distribution operations, and a foothold among the top 15 industrial markets in the country, the region offers fertile ground for warehousing and distribution growth.
Ready to take advantage of Kansas City’s warehousing and distribution resources? Scarbrough Warehousing’s 416,000-square-foot facility in Liberty, MO offers storage, compliance, retail fulfillment, and distribution services. Contact us to learn about customized warehousing solutions done right.
The Scarbrough Group
7280 NW 87th Terrace, Suite 300 Kansas City, Missouri 64153