Facility Location Planning: 3 Factors to Consider During the Site Selection Process

March 16, 2022

According to commercial real estate services company JLL, nearly 96% of existing industrial space is currently in use, and the United States may need an additional 1 billion square feet of new space by 2025 to keep up with demand. While the increased demand may make many companies want to immediately jump into action, it is vital to have a strategic plan in place to ensure the new building is flexible enough to meet your company's current and future needs. Below are three additional considerations to keep in mind during the site selection process:

Labor Rates and Availability

As labor availability continues to decrease, wages for warehouse workers continues to increase, with employers offering higher hourly rates and attractive compensation packages to attract and retain talent. Before making a final decision, be sure to research the current labor rates and availability, as well as other competing organizations in the area. You'll also want to evaluate if automated solutions can help offset any staffing shortages and/or costs.

Transportation Costs and Challenges

Driver shortages and capacity constraints have caused additional challenges for companies, including rising costs and delivery delays. When evaluating a specific area, it is important to not only look at access to major highways, airports, railways and ports, during site selection, but also other factors that affect your overall transportation strategy. For example, proximity to your existing retail store footprint can also help reduce transportation costs and times.

Lead Times and Costs

In addition to skyrocketing costs, the current labor and materials shortages are causing manufacturing and construction delays across the industry. Depending on the type of solution, lead times can be up to six months or longer for most material handling equipment. Be sure to closely examine vendor contracts and finalize agreements as soon as possible to avoid further delays.

A version of this article originally appeared in SupplyChainBrain.