Tips investors have to consider in additional warehouse space investments


The demand for retail warehousing, inventory storage and distribution centers in Australia is escalating due to the general increase in online shopping. Also, with the rising export demand from countries like China, local businesses are taking that advantage through highly seeking the existing storage and food processing facilities.

Warehouse demand is being felt in most areas of the country as warehouse spaces continue to be scarce and rental rates skyrocket. With the existence of little or no vacant spaces available, retailers are attempting to utilize the available spaces optimally.

Due to that fact, various real-estate analysts are suggesting that an investor ought to maximally use the warehouse spaces already available before looking out for more. During this period of real-estate shortage and high demand, the budget-friendly alternative would be to efficiently restructure various operations that take place in the facility. As such, we shall show you how you can the already existing facility if you are an investor.

  1. Improve Inventory Visibility – One way to identify various obstacles before they affect customer relationships or operations of the business is to track the demand patterns and view inventory levels accurately in real time.

    The reason that spurs most retailers to acquire additional warehouses is to find a place to store inventory near consumers. However, you don’t necessarily require additional space to run efficiently, you just require a better inventory management system. A better system caters to the entire inventory handling in the warehouse.

    With such kind of system, you will just need to transfer products through the already established warehouse networks using the data gathered on customer demand and inventory levels instead of launching a new warehouse. Even if the current inventory levels are lower than what meets existing demand analyzed in any region, the company can position its products near where it is needed without getting a new facility.

  2. Streamline Workforce Procedures and Ramp up Staffing – An investor can choose to hire additional workers rather than spending a large amount of the budget on acquiring a new warehouse. With more workers around, you will able to fulfill a lot of customers’ request.

    When the number of times a personnel comes into contact with a package, the packing efficiency is reduced. Rather than taking an item from one station to the other for someone else to check and package it, just one worker that is able to pick and package it, so that it can be delivered easily. It might also be a challenge since the personnel should be equipped with all those packaging skills.

    Another useful thing to consider is to minimize the movements that workers take. If it is a large warehouse, the process will be slowed down when workers walk around as they will get tired and be prone to making mistakes. In such a case, you will have to adopt a zone-based picking strategy whereby inventory in the warehouse is divided into different zones. You will maximize efficiency as steps are reduced since each worker will be trained to work on the inventory at the assigned zone.

    Therefore, to increase productivity in the warehouse, there should be proper management of the workforce and their day-to-day performance.

  3. Enhance the Warehouse Layout – As you increase the visibility of inventory, you should also change the warehouse layout to boost efficiency.

    An investor should not only make use of the horizontal space but should also consider the vertical space as the inventory escalates. As long as t poses no risk of safety, operational personnel should maximize on the vertical space that is above docks, work areas or any available empty space to maximally use the facility.

    For instance, 80 percent of sales can be gained from 20 percent of the products. Make changes to the warehouse layout so that the items that are ordered most will be close to the packaging area. It will help reduce the time workers will take to move goods as it increases the speed of working.

    You can even further obtain the customer’s shopping data that shows which items are ordered frequently. Just like popular items, itms that will be shipped together should be placed near the packaging area.

  4. Look for Warehouses that are beyond the Prime Markets – The time that you can now consider moving to a new warehouse is whereby all the above-discussed strategies have been implemented and more than 85% of the warehouse space has been utilized. When this happens, you can have a reason to expand to a new warehouse as the current warehouse might be near full capacity.

    Currently, secondary industrial markets that exist have shown to present great potential. According to a study done by commercial real estate firm CBRE, the increase in the warehouse growth that is currently seen in secondary markets is due to the necessity to have a supply chain located outside the major areas that are capable of supporting greater operations.

    Many business people in the secondary market see the order volume not that high. As people throughout the country are able to make orders online, the demand will be diversified. You should not restrict commerce to large metropolitn areas since you can open smaller operations in strategically chosen markets that enable you to meet the customer expectations as you save money. Therefore, when acquiring a new warehouse don’t be limited to focusing only on the prime markets but consider other secondary markets that are on the horizon as potential places of operation.

In summary

It is important to optimize on the already established facility. Bt just like most people around, you may be agitated to open a new warehouse when you notice that your warehouse is almost occupied. But, with the current high rental rates and shortage in real estate, it can be challenging to make such a decision. The best option available could be to get the most value in the already existing space through strengthening the existing areas and processes in the warehouses like wrkforce and inventory management. Only after the current capacity of the existing warehouses become nearly full, can you consider to venture into new warehouses.