The Difference Between Shared Warehousing vs. Dedicated Warehousing

When it’s time to start looking for warehousing for your business, you have a couple of choices — shared warehousing or dedicated warehousing.

Before you decide to use either one of these methods, you need to evaluate the requirements and budget of your business.

This will help you determine which option is best for your company. You also need to look at the aspects of each option. Each style of warehousing has its advantages and disadvantages.

Utilizing a Dedicated Warehouse

One of the reasons that you may decide to choose a dedicated warehouse is that with this option, your company is in charge of all of the warehouse space. Your business makes all of the decisions and calls all of the shots.

The obvious advantage of choosing a dedicated warehouse is that it gives you free reign over the operation and control of the space. Your business is the only entity that has a say and that means you get to specify how the warehouse is run.

However, you will also be footing the bill for all of the costs that are associated with the day-to-day use of keeping the warehouse running smoothly.

These expenses include any equipment, insurance, utilities, mortgage or rental fees that are incurred, and you must remember, these costs are probably static and won’t change regardless of how much you use the space.

The Shared Warehousing Option

Shared warehousing is the direct opposite of a dedicated warehouse. As the name indicates, your business will be sharing a warehouse facility with other companies if you decide to choose this type of service.

With this option, you receive more than just access to the space. Shared warehousing supplies someone to take care of the facility for you and that means those costs that are associated with the operation and maintenance of the warehouse are split between all of the companies that take part in the service.

Immediately, this saves you money since you don’t need to worry about spending a large portion of your budget on the equipment that is used to stack and move your inventory. You also don’t have to worry about hiring a staff to run the warehouse.

The prices for using a shared warehouse is variable between different options. Often, the cost is dependent on how much activity your business is expected to generate. This level may fluctuate as you buy and sell your inventory.

Advantages of Utilizing Shared Warehousing

Businesses that are just starting out are often prime candidates for the temporary shared warehouse option. Demand for their products are usually fluctuating and it may be difficult to determine proper levels of inventory.

This option is also a great choice for a company that just wants to know that they can reduce space or increase space once there inventory dictates that it’s time to do so.

They’d never be able to do that by choosing a dedicated warehouse. The shared warehousing option should also be looked at by businesses that only require a small portion of space in several outlying locations. It may be more cost friendly to use this type of option than a main warehousing facility.

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