Top Strategic Considerations for Locating Distribution & Logistics Facilities
If your business depends on moving large volumes of products, choosing the right location for your distribution, fulfillment, or cross-docking facility is more than a logistics decision. It’s a strategic one. The right site can reduce costs, speed up delivery, and keep your supply chain operating efficiently.
Here are five critical areas to evaluate when planning a new logistics facility:
1. Transportation Network: Can the Site Keep Freight Moving?
For high-volume operations, the transportation infrastructure surrounding your site plays a major role in performance.
- Highway and Freight Access: Look for sites with direct access to major interstates and freight corridors to avoid delays and reduce fuel costs.
- Intermodal Capabilities: Proximity to ports, rail yards, and cargo-capable airports gives you more flexibility and can improve shipping efficiency.
- Local Infrastructure: Pay attention to road quality, bridge weight limits, and congestion patterns that could impact transit time.
Key Question: Will this location keep products moving efficiently and on time?
2. Distribution Network Fit: Does the Location Strengthen Your Supply Chain?
Your facility should work in sync with your broader distribution strategy.
- Network Modeling: Use supply chain tools to identify the best location based on demand zones, shipping costs, and customer density.
- Central vs. Regional Hubs: A single centralized location may offer cost savings, while multiple regional sites can improve delivery times.
- Proximity to Key Partners: Being closer to suppliers or customers can help reduce transit time and improve service levels.
Key Question: Does this location align with your supply chain design and service goals?
3. Facility Operations: Can the Site Support Efficient Fulfillment?
Where you build affects what you can build—and how well it runs.
- Operational Design: Make sure the site supports efficient layout and workflows, with room for automation if needed.
- Room to Scale: Look for properties that can accommodate future growth or operational changes.
- Special Requirements: If your operation involves perishables, hazardous materials, or high-security goods, ensure the site can support those needs.
Key Question: Can this location support your current and future operational needs?
4. Cost and Resource Factors: Is It Economically Sustainable?
The cost structure of your site has a long-term impact on your bottom line.
- Real Estate Costs: Land, lease, and construction expenses vary widely. Factor in permitting and development timelines as well.
- Labor Market: Consider local wage levels, workforce availability, and competition for skilled workers.
- Utilities and Services: Reliable and affordable access to electricity, water, and internet is essential for uninterrupted operations.
Key Question: Will this location support long-term profitability?
5. Risk and Resilience: How Vulnerable Is the Site?
No site is perfect, but some are more exposed than others.
- Disruption Risk: Consider weather-related risks, natural disasters, and other local vulnerabilities that could impact operations.
- Supply Chain Flexibility: If this site goes offline, can you pivot? Avoid creating a single point of failure.
- Security and Compliance: Make sure the site supports safety protocols and meets any industry-specific regulations.
Key Question: Can your operation stay resilient in the face of disruption?
Final Takeaway
Location decisions for high-volume logistics operations require more than checking boxes on a map. They demand a balance of cost, efficiency, scalability, and risk management. The right choice can boost performance across your entire supply chain.
If you’re looking for guidance, Toggle Space specializes in helping companies find locations that support logistics and growth goals. Reach out to explore how we can help you move smarter.
– Jeremy Spillman, Chief Executive Officer, Toggle