How to Select a Distribution Center: Complete Guide for 2024

Picking the right distribution centers is essential for any business as factors such as warehouse location can make a drastic difference in your transportation costs. This may leave business owners asking “how to select a distribution center?”.

Worry not, here you will learn what factors go into warehouse selection and the challenges associated with choosing a warehouse. Warehouses know there is a demand for their services and that sums up why many businesses are looking for the best storage facility.  

Your selection criteria are not going to be limited to warehouse location. This is because even with the right location, great performance is not guaranteed. Believe it or not warehouse accidents are more common than you would expect.

Why is a Good Distribution Center Important?

With any supply chain, the warehouse is a crucial link between you and your customer base. So if a warehouse were to face any delays then your customer’s deliveries are directly impacted and delayed. 

Though there could be worse outcomes in the case of a warehouse mishap where your goods are at risk. In this scenario, you could also have to bear the loss of your goods being damaged due to a lack of skilled workers.

This is why diligence is key for any business looking for a distribution center. One has to take all factors into consideration in such processes. Even local environmental factors can make a massive difference in your delivery performance. Let’s discuss those factors in the next section.

6 Factors to Keep in Mind Before you Select a Distribution Center

The problems caused by a bad warehouse facility are clear though understanding the things to look out for are not. This is why a comprehensive list of features to look out for would be helpful when you choose a distribution center. 

1. Location of distribution centers

There is no effective way to be punctual with your deliveries if your warehouse is located in an isolated area. Sure pricing might be far lower than in other areas but they will make your company’s ability to deliver much more time-consuming and expensive in other ways.

Delivery times might look negligible at first sight but they will quickly add up over a given amount of time. This leads you to not only have issues with customer satisfaction but it might also allow your competitors to edge you out. 

Not to mention that due to the isolation of the area delivery charges might also spike as excess fuel consumption comes into play. There is also a chance of low workforce availability if your warehousing facility is not within a fairly populated area.

You also need to consider the weather conditions of your strategic warehouse location. For example, if your warehouse location has a problem with water logging then it might be difficult to store items that are not good with moisture.

2. Amount of skilled workers

The number of skilled workers can make all the difference when it comes to overall supply chain efficiency. This often-overlooked aspect of site selection is one that controls every part of a supply chain network. 

A reliable and experienced workforce deserves every single penny that it makes and should be on top of your list when choosing a warehouse location. There is a direct connection between an employee’s skill level and customer satisfaction.

Unskilled employees are the greatest cause of failure for any given company. By investing in a warehouse space with a skilled labor force you eliminate most potential points of failure. There have been plenty of cases where losses of over hundreds of thousands of dollars have been caused due to warehouse accidents. 

3. Warehouse size

It is crucial for you to first understand if your warehouse locations are equipped to handle your demands. Let’s say that you deal with a lot of raw materials then you need to assess if the warehouse has what it takes to handle that raw material.

This includes all factors such as storage space and workforce availability. Even during peak traffic hours, your warehouse should be able to handle all of your shipping needs. This might be more difficult in high-cost markets due to lesser building availability. 

Though if your warehouse doesn’t have the required square feet of storage area then it might be time to look for a new location with more space. 

4. Additional Features

If a warehouse is able to offer additional features that give them a competitive edge over the competition then it might be worth the extra money. Features and abilities such as customer returns, last-mile deliveries, quality analysis, or tracking can prove to be truly indispensable.

Though even if a warehouse does have all the features that you’re looking for you might want to look into their experience with catering to past customers.

5. Past experience

It is very important for a warehouse to study and understand its customer base. A surefire way to know a warehouse’s capabilities is to look at its previous records. This is because if they don’t have a reliable record, then your supply chain might be added badly.

If the warehouse location is one that deals with adverse local environmental factors then you might want to check if they have ever successfully dealt with natural disasters. Running such checks is crucial for any business.

6. Integration of technology

This is an area where a new warehouse may be able to outperform older warehouses. The integration of new technology is a must for the logistics industry. New technology allows you to do stuff like enhance responsiveness and save money.

If a warehouse implements advance technologies such as drones or automated forklifts then transportation costs will be reduced heavily. It will also allow for smooth operations and business clarity among other benefits.  

With technology that automates inefficient processes, a company can drastically cut shipping costs. Though all technology comes at a cost, and It is not always possible to find the best fit for our taste without encountering challenges.

Challenges Faced with Warehouse Location Planning

No field is complete without a set of challenges and the supply chain is no different. Since we are talking about warehouses let us look at the most common challenges faced by businesses when looking for the perfect warehouse.

1. High cost of ownership

The biggest nightmare for every single eCommerce business is the cost of shipping goods. A business can indeed lower shipping costs by choosing a warehouse that greatly improves its distribution network.

Though unfortunately, this extra efficiency comes at a cost since a warehouse will have to hire better workers and integrate better technology. Both of these factors will contribute greatly when choosing a warehouse. 

The location of your warehouse again comes into play as a particular area might be more expensive to rent out. Your rent rates can also vary depending on the level of demand. If you are in a high-demand area then it makes sense for a warehouse to charge higher prices.

2. Lack of skilled workers

Another factor that can create a massive spike in shipping costs is finding skilled labor. Though to be totally honest it is not like they are causing the hike by themselves. As the logistics industry evolves it requires people with new and greater skills.

Since these new workers have greater educational attainment it makes them more expensive to hire. Apart from education, there are several factors that affect employment rates. One example of such a factor is taxation.

A single change in tax structures could badly disrupt the income levels of a warehouse as it can severely drive salaries up for the workers. This is because it could directly increase income tax for the employee. Sure there are tax incentives but they can still make life hard for a growing business.

Depending on the local demographics, it can be tough to find any workers to begin with due to low workforce availability. Some warehouses have great employees but don’t attain their true potential due to a poor warehouse management system.

3. Unfit location 

An unfit location always negatively influences the shipping process. Knowing if your needs are met is imperative when choosing a warehouse location. A business needs to ensure that the warehouse has easy access to delivery locations.

Even a minor seeming issue such as traffic congestion can turn out to be a massive hindrance to smooth operations. All of these are important factors to consider before you go about choosing a new warehouse.

While choosing a warehouse is indeed a complex process, it would be great if every complex problem had a simple solution—much like how a complex problem such as route planning is easily solved by a automatic route planning software like Upper.

Get the Fastest Routes for Shipping Goods from the Warehouse to the Buyer’s Location on Upper

A delivery business need not worry about all the complications that arise from poorly planned routes when they use Upper. This is because Upper delivers the most perfect routes known to mankind within a minute.

Upper also allows you to gain more trust with your customers, thanks to highly accurate estimated times of arrival and proof of delivery. You can also schedule deliveries months in advance thanks to the flexibility that Upper offers you. 

There are many factors that could affect the deliveries of a business though with Upper you can properly plan around them without worry. Give yourself and your customers a better experience with Upper route optimization software.

Takeaways 

Choosing a warehouse location is by no means an easy job. One has to account for factors such as cost, ability, stability, specialization, technology, and experience to make the right decision. All these factors play a crucial role in the supply chain by themselves.

It is not as if warehouses have factors to consider for themselves either since they have to not only give their customers the best service but also retain their workers. In that case, you can get the benefit of Upper to ease the workload of your team and provide a better customer experience. Try a 7 days free trial to know more about Upper. 

Though regardless of anything that happens across the globe one thing that you can always rely on is Upper’s sheer power to give you the best routes for your deliveries. Great route planning is something that can save you both time and money making it essential for any delivery business.