When you use offsite storage you'll find that money seems to just constantly trickle out of your accounts on various expenses that are a direct result of using off-site storage solutions, but where is this money going?
One large cost with several separate streams is insurance and security. If you're renting a warehouse in another location then you'll be paying to insure the contents of the building, at a higher cost than if they were stored on site. If you have good security at your main premises you'll have found that your insurance premiums won't be going up much each year, and that if you take extra measures you can often get a discount on the premiums for next year – an NSI approved alarm, for example, will please an underwriter and net you some savings on your insurance costs. By the same token, having an off-site, less well protected building housing your stock will frighten insurers, who know that burglaries are more likely to succeed when the target building isn't as heavily protected as a main premises is.
In order to avoid a huge insurance bill you may decide to install CCTV, an alarm, or even employ a security guard to protect the contents, but this is not cheap and you might even end up paying more than you need to in security costs, all to keep the insurance costs down. Vandalism is also a serious problem for poorly protected sites, and once it is a target other criminals will know that building isn't well guarded and may break in to steal what's inside. There's then a cost to you to clean up graffiti or replace broken windows and doors.
Bringing stock or raw materials to the main site for production or distribution involves a vehicle, with the costs being the vehicle itself, insurance, fuel and a driver's wages. This can also cause bottlenecks in the workflow if the driver breaks down or gets stuck in traffic, leading to a drop in productivity which costs the business money. It's also harder to keep an eye on stock levels when the items are not on site – doing a stock take involves someone taking time out to go there, conduct a stock check and return to headquarters, rather than being able to just nip in to the warehouse. Due to a lack of supervision at the off-site storage, employees might be tempted to steal if they think they can get away with it, and then you incur costs replacing these items and also investigating what happened. It can become a very costly exercise to get the evidence you need of an employee stealing and the ensuing sacking or disciplinary procedures can become onerous, taking focus away from the core business.
Using a temporary warehouse on your existing site is a much better and more economical choice. There's no need to invest in extra security, as your existing arrangements should cover the new structure – although you may need more CCTV cameras if the temporary warehouse is in an area where the existing provisions don't reach. Your insurance and security costs aren't going to change much.
A temporary warehouse is also less prone to vandalism thanks to the existing security arrangements, and with everything and everyone on site employees are less likely to the drawn to stealing, as they can't get away with it so easily. Stock takes are also easier, as there's no need to go off site, and there aren't the extra costs involved with moving materials and stock from one site to another. Sure, you will be paying out for the temporary warehouse, but not for those extra costs that add up quickly when you use off-site storage on top of the rent – it just makes sense!