Warehouse Locations

Warehouse location - definition

The warehouse location provides basic information about the geographical placement of a physical warehouse. The determination of the warehouse location depends on various hard and soft factors, which are explained below. Depending on these factors, the company chooses the location where a warehouse is to be built or rented in order to optimise processes and save costs with a suitable warehouse location. Furthermore, a distinction is made between centralised and decentralised warehouses.

Influence of location factors

The choice of location depends on various factors. A distinction is made between soft and hard location factors.

Hard location factors

Hard location factors are aspects that have a strong influence on the choice of location. In logistics, these include above all components such as:

• Infrastructure and transport connections: The location should have good infrastructure, including road, rail and/or port connections, to enable the smooth transport of goods. Good access to major transport arteries is crucial.
• Proximity to suppliers and customers: A good warehouse location should ideally be close to suppliers or production facilities to minimise transport times and costs. At the same time, it should also have good access to potential customers to ensure efficient delivery.
• Costs: The costs of the warehouse location play a major role. These include rental or purchase prices for the property, operating costs such as electricity and water, and local taxes and duties, if applicable. It is important to weigh the costs with the other factors to find a balance that makes economic sense.
• Legal and regulatory aspects: Depending on the country and region, different legal and regulatory requirements may apply to warehouse operations. It is important to ensure that the chosen location complies with the relevant regulations and that all necessary permits are in place.
• Storage capacity and flexibility: The site should provide sufficient space to meet storage needs. It is important to check that the warehouse can be easily expanded if requirements change in the future.
• Security: The storage location should be secure to avoid theft, vandalism or other damage to the stored goods. It may be useful to find out about the site's security measures and statistics to assess potential risks.
• Labour availability: It is important that the warehouse site has sufficient qualified staff to carry out warehouse activities effectively. The availability of workers with appropriate skills and experience should be considered.

Soft location factors

In addition to the hard location factors, there are also soft location factors. These are usually not weighted as highly as the hard location factors when determining the location, but nevertheless provide an important indicator for the choice of location. The soft location factors include:

• Proximity to other businesses for possible cooperation:
  This is an important part of any successful business strategy. If you as a business are able to build strong relationships with other businesses and maintain them successfully, you can benefit from many advantages. Working closely with other businesses can help you attract new customers and increase your reach. By sharing resources, costs can be saved and synergies can be exploited. Furthermore, cooperation enables the exchange of know-how and the development of new products or services. In addition to these obvious benefits, there are other reasons to cooperate with other companies. For example, even small companies can quickly become better known through joint marketing campaigns or support each other in case of staff shortages. In order to build networks successfully, however, you should keep a few things in mind: Firstly, potential partners should be carefully selected and screened - after all, it's about your own image as well as possible risks in case of a bad partnership. Furthermore, you should make sure that both parties benefit equally from the deal - only then will long-term satisfaction be guaranteed. All in all, good cooperation requires time and effort, but those who are prepared to make this investment will be rewarded in the end - not least through economic success!
• Infrastructure and accessibility for employees:
  Quality of infrastructure, such as schools, hospitals or public transport - Quality of life in the region, such as cultural and leisure activities, nature experiences or housing options for employees. These soft location factors can make a significant contribution to a company's decision to settle in a particular location in the long term. They not only contribute to the satisfaction of employees but also to a positive external perception of the company as an attractive employer. First of all, the company should invest in modern technologies to enable its employees to run their daily office routine smoothly. This includes, for example, fast internet connections and powerful computer systems. The spatial design of the office also plays an important role: large window areas provide plenty of daylight and thus create a pleasant working atmosphere. Ergonomic furniture should also be available to avoid back problems or other physical complaints. In addition to these aspects, however, it is also important that the company's location is easily accessible - both by car and by public transport. For example, car pools can be organised or the company can offer its employees discounted parking. Overall, the better the infrastructure at the workplace is designed and the easier it is to access, the more motivated your employees will feel - which in turn will ultimately have a positive impact on the success of your company!
• Image of the location for customers ("Made in Germany" as a quality feature):
  The location of a company plays a decisive role in its image with customers. Especially in today's globalised world, where products are offered from all over the world, a "Made in Germany" label can serve as a quality feature and create trust with the buyer. A company with a production site in Germany signals to the customer not only high standards of quality and safety, but also social responsibility towards employees and environmental protection measures. These factors can contribute to the customer consciously choosing this product. In addition, a German location often has a positive influence on the perception of the product abroad. German products are known worldwide for their reliability and durability - qualities that are valued by many people. Therefore, it is important for companies to consider how they can strengthen their image through their location. Offering production or at least parts of it in Germany can help to improve the brand image and thus be able to operate successfully on the market in the long term.
• Attractiveness of the location for workers and their families:
  In addition to the economic factors, the attractiveness of the location for workers and their families also plays a decisive role. For only if workers feel comfortable in their environment will they remain loyal to the company in the long term. This includes, among other things, good housing, a high quality of life and a wide range of recreational opportunities. The local infrastructure is also of great importance: good connections to public transport or motorways not only make it easier to get to work, but also enable quick access to important facilities such as schools or doctors. Another important factor is the region's cultural offerings. This includes, for example, theatre and concert events, but also museums and sports clubs. These contribute significantly to identification with the region and thus promote a sense of belonging within the community.

Differentiation of centralised / decentralised warehouse

Decentralised or centralised warehouses represent two different approaches to determining the warehouse location. Depending on the company and the requirements of the respective warehouse, one or the other can therefore be advantageous.

Central warehouse

The central warehouse represents a warehouse location where all or the majority of a company's goods are stored. This is positioned in such a way that it provides optimal access for customers and suppliers due to its central location. This bundling of warehouse activities can reduce costs, as long as one does not have to operate several warehouses. In addition, an easier inventory overview can take place, provided that all goods are located in one place.

Decentralised warehouse

A decentralised warehouse usually consists of several smaller warehouses located in different places. The aim of this method is to be able to supply customers faster and more efficiently, as well as to be able to guarantee a better response time due to a shorter delivery time. Likewise, decentralised warehouses offer a better adaptation to the requirements of the respective customers. Since the warehouses supply the customers independently of each other, failures or stock shortages do not lead to a disruption of all customers. However, this usually results in higher costs if you have to maintain several warehouses at the same time instead of one.

Suitable warehouse location for the respective industry

Since different sectors have different requirements for their warehouse, the warehouse location also differs. The following are examples of suitable warehouse locations for some sectors.

• Food industry

  In the food industry, decentralised warehouses are often used, especially in large supermarket chains. Although the food is usually delivered to a central warehouse, this serves as a distribution warehouse before the food is distributed to individual decentralised warehouses. This has the advantage that the individual supermarkets can store stocks according to demand. Furthermore, in the case of perishable foods, close proximity to the sales market is advantageous, as the food can be delivered to the supermarkets more quickly if demand increases. In the event of a problem with storage, the entire chain would not be affected, so that customers can switch to another supermarket in the chain or the supermarket is supplied by another decentralised warehouse.

• Automotive industry

  In the automotive industry, a central warehouse is usually used. A single production site is often supplied from this central warehouse, which is why the warehouse can be used centrally at this site. This makes it possible to save storage and transport costs.

• Pharmaceutical industry

  Central warehouses are also generally used in the pharmaceutical industry. The primary reason for this is that certain regulations regarding storage and safety must be observed. With a single, central warehouse, costs for personnel and storage are again saved.

• Textile industry

  Logistics plays a decisive role in the textile industry. From the procurement of raw materials to production and delivery to the customer, all processes must run smoothly in order to remain competitive and ensure customer satisfaction. The challenges in textile logistics are manifold: the industry is characterised by seasonal fluctuations, rapid fashion changes and a high demand for quality and sustainability. In addition, the wide range of products - from T-shirts to suits - requires flexible warehousing as well as efficient transport and distribution channels. To meet these requirements, many companies rely on modern technologies such as automated storage systems or track-and-trace solutions for seamless monitoring of the flow of goods. Co-operations along the supply chain can also help to compensate for bottlenecks at peak times or to comply with ecological standards. In addition to optimised logistics, aspects such as transparency in production conditions or recycling options are playing an increasingly important role in consumers' awareness. Therefore, companies should also pay attention to this and design their business processes accordingly. Overall, it is important for the textile industry not only to be logistically flexible, but also to act in a socially responsible manner in order to ensure long-term success.

• E-Commerce industry

  For the e-commerce sector, there are some special features to consider: On the one hand, the warehouse must be easily accessible - both for customers and suppliers. It should also be located as close as possible to the city centre or important transport hubs in order to guarantee short delivery times. Another decisive factor is the size of the warehouse: it must offer enough space to accommodate all products and at the same time leave enough room for fast picking and preparation for dispatch. In addition to these general criteria, industry-specific requirements must also be taken into account. For example, an online grocery retailer needs different premises than a fashion mail-order company. In any case, a careful analysis of your own needs as well as professional advice in the search for the optimal location is worthwhile - because ultimately, not only the satisfaction of your customers but also your success in the highly competitive e-commerce market depends on the right storage space!

• Building materials industry

  For building materials logistics, a storage location close to construction sites and construction companies is important. Large lorries should also be able to access the site without any problems in order to ensure smooth delivery. It is also very important that the warehouse has sufficient space and that the building materials can be stored safely. Good organisation of warehousing and efficient inventory management are also essential to avoid bottlenecks in the supply chain. Another important factor in building materials logistics is the timely delivery of building projects. Here, not only on-time deliveries must be guaranteed, but also flexibility in case of short-term changes in the construction process.

What are suitable procedures for deciding on a potential warehouse location?

There are various procedures for deciding on a suitable warehouse location. One possibility is a location analysis in which various factors are considered. These include the location's transport connections, the availability of labour and infrastructure such as electricity or water supply. Another method is the utility analysis. Here, several potential warehouse locations are evaluated and compared with each other based on predefined criteria. For example, cost factors such as rent or transport costs can be taken into account, as well as qualitative aspects such as security or flexibility. However, it is advisable not only to pay attention to quantitative data but also to exchange experiences in order to get as complete a picture as possible of the respective location. By using these methods, one can objectively decide which is the most suitable location for one's own company and thus successfully achieve one's goal in the long term: Ensuring the optimal supply of its customers through efficient logistics processes!

Conclusion - How can you ensure that you choose the right location?

Choosing the right location is of crucial importance for the success of a company. However, there is no universal solution that applies to every company. Every company has individual requirements and must take these into account when choosing a location. A thorough analysis of the target group as well as a careful consideration of the competitive situation are essential to find a suitable location. Factors such as infrastructure, availability of skilled workers and rental prices should also be included in the decision-making process. It is also advisable to seek expert advice and exchange ideas with other entrepreneurs to gain valuable tips and experience. Ultimately, when choosing a location, one should not only think in the short term but also plan for the long term - after all, a wrong decision can have serious consequences. However, with thorough preparation, the risk can be minimised and nothing stands in the way of a successful start!