One of the hardest decisions to make in scaling your distribution capacity is whether to construct a new building or move into an existing facility. Throughout my career, I have worked in 70-year old buildings as well as brand new buildings says Joe Peppers, Weitz Sr. Business Development Manager for the Distribution & Warehouse market sector. There are countless 3PLs out there that move into more buildings than they can afford and subsequently have to scramble to find tenants.
There are retailers and e-retailers out there that are constantly moving into or paying for more building than they need, based on future volume projections. For example, you may need a 100,000 square feet building, but you rent for 400,000 square feet. Or you may want a 250,000 square feet facility, but you pay 600,000 square feet in rent. I think you get the point!
What makes it worse for those with P&L responsibility is the waste in your spending associated with your mansion of a warehouse. Wasted storage is a budget killer. It can also lead to the hoarding of inventory and just like your once-empty garage at home, your warehouse ends up full of junk that seldom gets used. The cherry on top is antiquated material handling solutions that force us to take the man to the inventory versus taking the inventory to the man.
What’s an operator to do?
I believe you can build a better way, by building what you need now and working with the right company to reduce your capital burden through modern financial solutions.
- There are vertical solutions out there, to help you store your inventory in an intelligent and intuitive way.
- There are cost effective material handling solutions that will enable you to take inventory to the man/woman and not the other way around.
As you look to scale your distribution capacity, don’t get stuck leasing a warehouse you don’t want. You deserve to have the facility you want at a cost better than some of the leasing options out there right now.