One of the most common decisions that companies face if they require warehousing is selecting either shared or dedicated warehousing. You need to understand that a warehouse includes more than simple space for storing your products, and that these two types of warehousing services are different in certain ways.
Dedicated Warehousing for a Single Organization
Dedicated warehousing uses a warehouse space that only one company runs. Businesses can either own or rent the property, but they’re responsible for operating the facility and covering all pertaining costs.
All fixed costs of operating the warehouse belong to the owner or renter alone, which means they pay all of the rent and cover all other expenses regarding operation, including specialized skills, labor, technology, value-added services, and equipment.
Shared Warehousing Among Multiple Companies
While a single organization owns or rents a dedicated warehouse space, shared warehousing divides the space into several areas for two or more companies to utilize. A third party manages shared warehousing to provide services to these companies, making this type of warehousing less expensive than dedicated warehousing.
Select the Right Type of Warehousing for Your Business
With dedicated warehousing, nearly all costs are fixed at a monthly rate regardless of the volume of product and orders, allowing for more predictable pricing. Rent remains the same along with labor expenses and other costs of running a facility. The burden of all of these costs falls on the owning company.
However, shared warehousing costs are evenly divided across all companies using the facility. Many of these costs will change depending on the activity and volume levels of the business. Costs can also adjust depending on seasonality and cyclical fluctuations.
In the end, shared warehousing is a better choice for small businesses that don’t need an entire warehouse space to conduct business, while allowing them enough space to accommodate growth. Shared warehousing also allows for more adjustable pricing, and businesses don’t need to be concerned about managing all aspects of warehousing operations, with third-party ownership that covers all of those expenses.
Dedicated warehousing, on the other hand, is ideal for larger companies that require more space to handle their operations. Dedicated warehouses will force the sole owner to cover all expenses, but they will have more freedom than companies sharing a warehousing space with others.
Determine the right type of warehousing for your business, and turn to a reliable provider that can give your business everything it needs to thrive. With the right warehousing provider, you’ll see the benefits of using either shared or dedicated warehousing, helping your company remain cost-effective while encouraging expansion.
A good provider will also be able to provide other services such as trucking and logistics, covering all of your business’s transportation and storage needs.