Private Warehousing?

A thought that may occur to a manager is why do I have to pay an outside vendor to do something that we can do internally? Although, it may sound nice to feel that you have control over where your inventory is stored, labor, and distribution, a good question to ask yourself is if you have the time and resources to manage a separate company within your corporation.

There are many things to consider before expanding your company to include a private warehousing facility. Situations to consider would include:
Where will the warehouse be located? Placement of your warehouse location is so important, because it will affect availability and quality of labor, cost of labor and distribution. Ineffective positioning will affect bottom line, because you will work harder instead of smarter to supply your business with necessary information, labor, raw goods, and transport routes. An imperative step will include research to determine available resources within the region.

Capital expenditure is another major consideration. Warehousing is a major concern for many businesses. Where would you store your merchandise while waiting for orders to come in and shipments to depart? Do you rent or own. If you rent a location, you may be expected to sign a lease, which is a long-term commitment. Whether your business is successful or not, you will be responsible for paying the rent on the building even if you do not use it. Okay, so the other alternative is to purchase a location. Now, you pay property taxes and are responsible for maintaining the facility.

Control is good, but perhaps the alterative of using a third party warehouse service may be a good option by letting someone else handle those issues.
There is no such thing as one size fits all in industry. The primary thing is to do your research before making any decision.

Source:
http://www.geocities.com
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