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On Site or Off Site Storage – The Decision Making Process

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On Site or Off Site Storage – The Decision Making Process

When a business needs extra space, whether it is for storage, manufacture or other functions, the first pressing matter is whether that space is provided on site or off site.  There are benefits to both which depend a lot on the nature of the business.  We will take two hypothetical scenarios and look at how the decision can be made.

 

  1. A Business Which Imports Goods For Online Resale

 

This business imports items for consumers, who order online.  Orders are fulfilled from a single central hub, where the administrative functions are also housed.  Orders are shipped via a third party courier with whom the business has a contract for delivery.  The business is now growing, with a significant increase in online sales and burgeoning consumer demand for more options within the existing product range, as well as new products.  More space is needed to house stock and to pack up orders for dispatch.

 

The courier contract means the business doesn't need to worry about location too much, because they are not responsible for shipping and don't pay a different rate for orders depending on their shipping address.  This means the company can afford to keep operations on site without needed to diversify geographically.  In theory, this allows them to provide extra storage on site rather than having to set up a new location to save money on shipping charges.

 

The company is currently in a location which works well for the supply chain and there is scope for extra staff to be hired from the surrounding area, so moving the company or setting up a new location doesn't make sense.  The issue they have is that there isn't adequate space at their current site for a new building.

 

As a temporary warehouse can be fitted into a space where a traditional building would be unsuitable the company could explore a temporary building as a solution to the problem. Planning permission would be relatively straightforward, as there are few objections to erecting a temporary building on an existing industrial estate; making a temporary building on site a viable option.  If space is very tight then a temporary building could still be useful if located within a 5 mile radius.

 

  1. A Manufacturing Business Which Makes Automotive Parts For Distribution Via Resellers

 

This business doesn't ship huge numbers of orders every day but instead receives orders weekly from resellers, who are located all around the country.  The business has their own distribution fleet but occasionally uses a third party courier for orders which are distant from their headquarters to save money.  When audited, the costs of using the third party courier are actually higher than expected, due to staff using the courier for small, ad hoc packages, and the fact that they do not have a contract.

 

There is a growing demand for certain parts and while there is ample manufacturing space on site storage is starting to be an issue.  The company holds bonded stock for several clients, so storage space is often used for sold items which stay there for months at a time.  The company is looking at obtaining more storage space on site, but is open to the idea of setting up a separate location due to the potential for saving money on couriers, as they can employ more drivers at a new location to cover deliveries.

 

This company would do well to set up a geographically diverse new location and they are already considering how they can improve their bottom line by not using third party couriers at a premium but instead employing their own drivers, or contracting self-employed drivers at a new location.  This makes a lot of sense because their need for warehouse space to fulfil new and bonded orders is growing, and with some careful analysis they can split their stock across two sites to make order fulfilment easier and provide more flexibility in the space they have. 

 

A temporary warehouse would be ideal for the new location because the building project will be quick and easy to manage – one project manager could stay in a hotel at the start and end of the temporary warehouse construction to oversee the building and this would be completed within a week. 

 

The speed benefits of temporary warehouse construction means that they are ideal for expansion projects of all types, but for this hypothetical company particularly, a temporary warehouse in a new location would be the best solution to the issue of needing extra space.

 

If you are in a similar position then a temporary warehouse can solve your storage problems, both on site and off.  Keen to know more?  Call us on 0121 288 5440.

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