Figuring out the prospective costs of your organisation’s warehouse storage is a complex and multi-faceted process with many considerations to bear in mind.
When sourcing warehousing for your own organisation’s needs, you will need to consider every factor from the cost of holding your inventory and fixed overheads such as rent, to start-up costs for any new premises and the installation of items such as racking, shelving or loading bay kits.
To help break it down, here are just a few of the factors surrounding warehousing that can have an effect on costs.
Obtaining warehouse space that meets your needs is crucial
The size of a warehouse can affect labour costs – so much so, that it can often be the second highest warehouse-related expense after inventory holding costs. A warehouse that is larger than it is strictly needs to be requires more pedestrian and driver movements, which can affect efficiency, resources and profit.
Your space needs to be able to manage any sudden booms or seasonal peaks, thereby increasing levels of demand for your products. There are options available should you require last-minute storage that aren’t too financially draining, such as temporary onsite buildings, mezzanines or even short/long offsite storage solutions.
On average, warehouse costs absorb about 2% of total sales revenue, excluding the cost of holding inventory. Within that 2%, labour is normally the biggest factor, accounting for 20-25% of the total warehouse running costs, dependent on type and size of the operation.
Space – that’s rents and rates – typically accounts for another 20-25% of storage costs, while energy tends to be fairly forgiving at 2-5% – except in cold/chill stores, where it can absorb 25% of total running costs.
Flexible contracts to help manage current demand
Storing product can be expensive, having the best fit for your requirements is the only way to optimise the warehousing space you choose. Flexible, short-term contracts can then be introduced as and when there is additional or increased demand, so that you only pay for what you need instead of adding multiple fixed cost contracts to your business.
Count on Bis Henderson Space to deliver the most effective warehousing solutions
Whatever your warehousing needs may be, Bis Henderson Space can help match you to the space that best meets your needs. For more information please contact firstname.lastname@example.org or call 01604 876352 / 07738 683 329
Should you require an in-depth review to further optimise your space, please contact Bis Henderson Consulting – the leading consultancy for the supply chain and logistics industry, please email email@example.com or call 01604 876 358.