All companies need safe and secure warehouse facility for their products before being shipped to their destination. Perishable food depends on a temperature-controlled environment. High-value items may require secure vault storage. For whatever the product type, warehouses are a critical link in the supply chain. It’s under their roofs that products are unloaded, picked, packed and prepared for distribution. There are three main options when choosing a warehouse facility—public, contract and private. This article discusses the major differences, advantages and disadvantages of each type of warehouse.
Public warehousing: facilities are owned and operated by a third party provider. This is typically considered the best option for short-term warehouse needs because there is little commitment involved. Warehousing space is offered under a lease agreement as short-term as month-to-month. Warehouse Facility owners lease their space on a fee per square foot or pallet system. However, these fees tend to be on the higher end, so oftentimes this is the most expensive option. Public warehousing can be an ideal solution for the right business. An example is a company that is seeking visibility into new markets. Public warehousing provides economical and practical means to test new waters with no capital investment and little commitment.
Contract warehousing: facilities are also owned and operated by a third party provider. This is in a sense a hybrid of public warehousing. Space is leased for a fixed term, usually six months or longer. The cost per square foot or pallet is normally more affordable than with public warehousing. Another advantage to contract warehousing is its flexibility and value-added services. A contract warehouse can offer features like forklifts, dock rentals, security, as well as providing other custom solutions for managing supply chains.
Private warehousing facilities are owned and operated by the company whose products it holds. Typically the warehouse is operated as a division of the company and maintains on-site and off-site satellite facilities to expedite distribution. Those fortunate enough to have the investment and management available to run a warehouse are awarded total control for all aspects of its operation. For companies interested in future warehouse ownership, there is significant capital necessary to acquire and equip the space, as well as employ the workforce required to run it.