September 2009 | Commentary | 3PL Line

Defining the Ideal Pacific Rim Warehouse

Tags: 3PL

Warehouses may serve the same function regardless of where they are located, but the criteria for choosing and operating these facilities is anything but consistent from one continent to the next. If manufacturing or distribution in Asia is part of your business, keep in mind the following ways in which the ideal facility might look different over there.

  • Proximity is powerful. Although some Asian countries have begun improving roadways and railways, few have adequate infrastructure to move products rapidly from warehouse to point-of-sale. To achieve delivery turnaround times comparable to those in the United States, Asian warehouses usually must be located closer to their companies' customers.
  • Multiple locations simplify moves. Centralizing warehousing operations is common practice in the United States, where every facility is subject to the same commerce and import/export laws. Centralization may not make economic sense overseas, however, because the borders crossed frequently involve different countries instead of different states. Keeping track of relevant laws and regulations adds time and complexity to a multi-country warehouse manager's job and can also add substantial duties and tariffs to a company's overhead. Many companies elect to operate at least one warehouse in virtually every country where they do business—even if those countries are a stone's throw away from each other.
  • More inventory might make sense. Opinions about how much inventory to store vary, but the general rule in the United States is that less is best; the ultimate goal is to substitute information for inventory whenever possible. That strategy may not work overseas because some countries' systems aren't sophisticated enough to provide the necessary data. Unless you are working with a global logistics provider that imports its inventory management systems, your business may need to carry more inventory in your Asian warehouses than you're used to.
  • Going up? Most U.S. businesses would never dream of leasing a multi-level warehouse—much less one in Hong Kong that's 24 stories high. But in many developing countries or locales where land is scarce, single-level warehouses are more difficult to come by. When looking for space in Asia, think in terms of "best available" instead of "best all around."
  • Mechanization? Maybe, maybe not. When it comes to determining how mechanized to make your overseas warehouse—using machines instead of employees to do the bulk of your picking and packing, for example—look closely at prevailing wage vs. real estate rates. The balance between the two varies from country to country, and an economical decision in one venue might not be as financially viable in another.
  • Standardize processes, not people. Even if you're running your international distribution centers based on American operational principles, it's not acceptable to make overseas warehouse workers fit an American mold. Honor the differences. Observe the local traditions and significant holidays. Become acquainted with each group's communications styles and taboos. And try to learn at least a bit of the language, even if you're far from being fluent. These efforts convey a high level of respect that goes a long way toward building employee loyalty and improving workforce morale, both of which ultimately could have a huge impact on international logistics success.