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Distribution Center and Logistic Hub Site Selection Strategies

If you’re planning to set up or relocate your distribution center or logistic hub, finding the right location can be time consuming and challenging.

You’ll likely spend a lot of time on the site selection process. After all, you need a place that can easily handle the organization, transportation, coordination and distribution of goods.

Research will likely start online and progress into tours, conversations with city developers and budget talks.

To help you through the site selection process, here are nine strategies to consider

1. Location

Today’s customers want products fast. They aren’t willing to wait for them to arrive. That’s why the location of your distribution center or logistic hub is so important.

Keeping customers happy is a priority, but they don’t see what happens when a product is ordered. It’s your job to streamline the process, and make sure the product journey is quick.

During site selection, you should look for a spot that’s close to your customers, if possible. However, many businesses serve customers that are located all over the U.S. and the world, so focusing on transportation is more important.

For instance, you want a location that has easy freeway access. If you’re moving products by truck, the ability to hop on the highway quickly is a must.

Having an airport nearby is also handy, in case you have to ship something quickly.

2. Buy, Lease or Build

Part of the site selection process is guided by your decision to buy, lease or build a distribution center or logistics hub.

There are pros and cons to each scenario. If you buy, you’re making an investment but may inherit problems that come with an older building.

If you lease, you won’t be responsible for parts of the building’s maintenance, but your monthly payment isn’t an investment.

If you build, you need a location that has available and affordable land, and a city that has an economic development association that’s willing to help you through the process.

3. Find the right size

How much space do you need? It’s one of the most important questions you’ll have to answer. Here are a few things to consider:

  • The size of the products
  • Product turnaround
  • Plans for growth
  • Employee space
  • Long-term and short-term storage space
  • Ability to stack products
  • Ability to set up and utilize technology
  • Number of loading doors

You want a space that’s big enough to handle your day-to-day operations, but also provides room to grow or move things around.

If you’re looking at an existing building, it’s important to know the dimensions and tour the facility.

4. Cost

Cost is one of the most important site selection factors. Be aware, it will take time to compare costs and make a decision.

Have a budget prepared before you start looking. Knowing how much you can spend will help you narrow your search at the start. Since the site selection process takes so much time, looking at property that’s out of your budget isn’t productive.

Consider speaking with other owners that have gone through a similar process. Try to learn from their experience.

Bring in your accountant. Talk about your investment plans and make sure the numbers work.

In addition, you should talk with someone from the city to understand fees, expenses and taxes that come with the property.

5. Quality of workforce in the area

Location is important, but so is the local workforce.

Technology makes things easier, but you’ll still need qualified people to keep products moving seamlessly. You’ll need people to do things like sort, organize, pack, label and ship products.

Look at the city’s demographics. You’ll likely hire local folks, so you want a solid population to draw from.

Take some time to discuss how your business can connect with job seekers. Some cities have recruitment centers that can help you advertise jobs and find the right candidates.

6. Think of the employees

Your employees factor into your site selection as well. To keep employees happy, they need room to work, eat lunch and take breaks. Make sure the facilities are well maintained. Check out the parking situation. Are there enough spots for your employees?

As you tour the building, ask yourself if it’s someplace that you’d like to work. Retaining employees will save money in the long run. Keep employees in mind as you narrow your search.

7. Look for incentives

During site selection, look for a city that offers you incentives to move in. Cities that want to attract great businesses offer perks to make their city standout. Here are a few incentives that you should look for:

  • Utilities

For instance, some industrial parks offer discounts on utilities. For large buildings like distribution centers or logistic hubs, utilities can add up fast. Getting a break on these monthly bills keeps money in your pocket.

  • City fees

Some cities offer a break on the many fees that come with developing a property. From planning to fire prevention fees, setting up shop comes with more expenses than most people are aware of.

Look for a city that’s willing to give you a discount on some of these fees as a reward for choosing their city.

  • Assistance finding federal and state incentives

There are hundreds of programs, tax breaks and incentives that your distribution center could qualify for.

However, finding these programs isn’t easy. Cities that are serious about attracting great businesses have resources that can help.

8. Consider the weather

Mother Nature should play a part in your site selection too. Areas that get bad weather could impact your business. Areas that get snow, for example, often deal with road closures and traffic delays in the winter.

If you’re not familiar with the weather in an area, take some time to research it online. Consider how snow, rain or extreme heat could impact the products.

9. Be prepared to compromise

After touring dozens of sites, it’s time to make a decision. Take some time to compare sites, and remember you may have to compromise. Make a list of priorities so you know where you’re willing to bend.

Consider the support system in the city too. A city that works to attract your business will likely offer assistance. The relationships that you build can help your business thrive.

June 8th, 2017|

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