Choosing the Right Public Warehouse
The strategic importance of choosing a public warehouse that best meets a company's needs is often overlooked. Indeed, the difference between public and contract warehousing often comes down to strategy, says Rosario Rizzo, vice president of global warehousing and freight management services for APL Logistics, a global provider of supply chain management services.
Though a public warehouse is usually used as a short-term storage solution—to hold extra product during busy seasons, for example—selecting one that meets your demands is crucial. You may be underestimating the potential of your public warehousing relationship, according to Rizzo. Here are his 10 tips for optimizing your public warehouse selection.
1. Be strategic. Look at selecting a public warehouse as you would a major strategic purchase. Be sure to get several levels of management involved. Put the appropriate time and analysis into the selection process, and avoid the "it's only a public warehouse" approach.
2. Start with a thorough location analysis. Not being tied to a single geographic area the way you are with your own facility is one advantage to using a public warehouse. If you have always operated an in-house distribution facility near Chicago, for example, there's no rule saying your public warehouse can't be located near Memphis if that better suits your customer's needs. Using site selection and modeling tools before sending out a public warehousing request for proposal might help you choose the market that works best for your company.
3. Look for systems capability. A public warehouse's ability to provide the necessary systems support is imperative. Make sure you get the kind of systems capability you need to support your company's product and inventory requirements.
4. Look for room to expand. Though public warehousing arrangements are typically briefer than contract warehousing arrangements, your future expansion plans should still play a major role in your selection. You don't want to switch facilities every time your volumes change, for example. Ask the potential warehouse what capacity it can handle—and what it will do if you need additional space in the future. Find out what value-added capabilities the warehouse offers, such as kitting, reverse logistics, or pick and pack. You never know when you might need them.
5. Evaluate the public warehouse's networks. Though your company may currently need only a portion of one public warehousing facility in one market, consider carefully whether a potential provider's other locations might be beneficial in the future. If you're planning to increase manufacturing or marketing in Asia or Europe, for instance, a public warehouse network with global locations is a wise choice. Companies have gotten excellent results from taking advantage of the end-to-end supply chain management services offered by many public warehouses.
6. Remember that no warehouse is an island. The importance of easy port access cannot be denied in today's global business environment. If you are evaluating public warehouses in landlocked areas, be sure to look closely at the warehouse's access to major transportation arteries and railways. Poor access to transportation could be the reason behind lower prices at some facilities.
7. Ask about timing. Whether you need your public warehouse space now or in a few months, it is critical to know how quickly your potential providers can ramp up the services you need. An excellent litmus test for a public warehouse's bandwidth and start-up experience is its ability to begin receiving and shipping your inventory within one to six weeks.
8. Make a site visit. Seeing isn't just believing; it's good business. Build enough time into the selection process to visit each facility being considered. Be sure to examine the facility's cleanliness and maintenance standards, as well as the relationship between employees and management. Pay special attention to the damaged products area of the warehouse—if it's in good working order, chances are the warehouse pays attention to details in other areas as well.
9. Meet with warehouse executives.An efficiently managed public warehousing facility starts at the top, so it's important to meet the general managers and operations managers as well as the company's executive team. Meeting with top executives allows you the opportunity to see if consistent metrics are in place for safety, security, sanitation, and productivity, and to determine whether the company's leadership is firmly aligned.
10. Check references. While being evaluated, a potential public warehouse will put its best foot forward in hopes of winning your business. It is imperative, therefore, to talk to independent sources who do not have a vested interest in your selection. Interview customers of the facilities you're considering, and talk to other respected industry sources. Ask your potential public warehouses to provide examples of how they've previously handled products in your industry. These opinions and reality checks are worth their weight in gold.