As a business owner, deciding where to store your physical inventory can have a big impact on your operations and bottom line. On site storage, where inventory is stored at the same location as your business operations, offers several potential advantages compared to off site storage facilities. In this comprehensive guide, we will explore the key benefits of on site storage and help you determine if it’s the right choice for your business.
Quick Answers:
– On site storage provides faster access to inventory when needed for production, shipping, or sales. No need to transport items from an outside warehouse.
– Better loss prevention and security when inventory is stored on premises. Full control over security protocols and access.
– Savings on transportation costs of moving inventory to and from external storage facilities.
– Ability to monitor inventory levels and conditions more closely with on site access.
– More flexibility to adjust layouts and inventory tracking as business needs change.
– Keeping inventory close can enable just-in-time manufacturing and rapid order fulfillment.
– Potential tax incentives or other savings by using existing facilities versus leasing external storage.
Faster Access to Inventory
One of the biggest advantages of on site storage is the ability to access your inventory quickly and easily when it is needed for manufacturing, shipping, distribution, or retail sales. Storing inventory on premises eliminates the delay and costs of needing to transport items to your facility from an outside warehouse space. The faster you can get to your raw materials, finished goods, or merchandise to meet production and fulfillment needs, the more efficiently and responsively your business can operate.
For example, if you operate a retail store, having inventory stored on site means you can rapidly restock shelves or access additional merchandise when items sell out. You don’t need to place orders and wait for deliveries from a separate warehouse. For industrial or manufacturing operations, on site raw materials mean production lines can be supplied just-in-time to start new batches or complete orders. The agility provided by on site access to inventory enables you to respond to changing customer demands or production schedules far more quickly.
Similarly, businesses that depend on shipping products to customers can benefit greatly from keeping inventory in the same facility. Orders can go out the door faster when everything is on hand, as opposed to needing to be transferred from an off site facility first. This speeds up fulfillment times and improves customer satisfaction. The strategic advantages of faster access to inventory strongly favor on site storage for many businesses.
Key Takeaways:
– No delay or costs for transporting items from external warehouses
– Enables just-in-time manufacturing with on demand access to raw materials
– Allows retail stores to rapidly restock shelves when merchandise sells out
– Faster order fulfillment improves customer satisfaction for shipping businesses
– On site access provides flexibility to handle changing production or sales needs
Improved Security and Loss Prevention
On site storage also provides significant advantages when it comes to keeping your inventory secure and preventing losses from theft, damage, or spoilage. When you store inventory at the same facility where you operate your business, it is much easier to control and monitor access to your items around the clock. You can oversee security measures and protocols directly instead of relying on personnel at a separate facility.
Many businesses invest heavily in on site security for their inventory, including surveillance cameras, alarms systems, security guards, keycard access doors, and more. These measures are more difficult and costly to implement at an off site facility. By keeping inventory on premises, you have complete oversight and can quickly adopt new loss prevention strategies as needed.
In addition, on site storage enables you to more closely track inventory itself, something that can be challenging with external warehouses. You can conduct regular inventory audits and inspections to watch for unusual discrepancies or suspicious activity. If any items do go missing from on site storage, internal security measures give you a strong starting point for investigating and recovering those losses.
The potential for theft, vandalism, or simple misplacement of inventory is greatly reduced with on site facilities. This leads to lower overall losses and insurance costs, making on site storage highly advantageous for security-conscious businesses.
Key Takeaways:
– Tighter access controls and security protocols for on site facilities
– Ability to regularly monitor inventory for loss prevention
– Oversight of security measures without reliance on external facility
– Internal surveillance systems deter and help investigate losses
– Lower risks of theft, damage and spoilage of inventory
Savings on Transportation and Labor Costs
Storing inventory at an off site warehouse facility typically requires frequent transportation of items back and forth to your business location. This logistical activity incurs substantial costs for fuel, vehicle operations, drivers’ wages, insurance, and other overhead. Over the course of a year, these transportation expenses can really add up and take a bite out of your bottom line. They also represent an ongoing disruption to your operations.
With an on site storage solution, the costs and labor associated with transporting inventory are dramatically reduced or eliminated altogether. Without constantly needing to shuttle items to and from an external warehouse, you can realize significant cost savings in your operations. It also provides more flexibility in accessing inventory as needed without coordinating deliveries from the warehouse.
Any labor you were using for transportation, loading/unloading, and tracking shipments between locations could potentially be allocated to more productive uses with on site storage. For some businesses, keeping inventory on premises can mean reducing headcount or redirecting those labor hours. When evaluating the return on investment (ROI) of on site storage, be sure to account for all the transportation and labor savings you may gain. This can make the business case for investing in on site facilities much more appealing.
Key Takeaways:
– Eliminates fuel, vehicle, and labor costs for transporting inventory
– Reduces need for logistical coordination with external warehouse
– Provides more flexibility to access inventory as required
– Labor savings from no longer moving items on and off site
– Savings can offset construction or upgrade costs for on site storage
Improved Visibility and Management of Inventory
Another major benefit of on site storage is greater visibility into your actual inventory quantities, conditions, and movement. When inventory is stored remotely in an outside warehouse, you lose some control and insight into managing those items day to day. It makes cycle counts and inventory audits more difficult when you don’t have regular hands-on access.
By keeping inventory at your own facility, you and your staff can physically inspect and account for items much more easily. You’ll have better knowledge of exactly what raw materials, finished products, equipment, or other items are in your warehouse at all times. With that improved visibility, you can plan production cycles and sales volumes with confidence.
Likewise, you will be better positioned to identify issues like obsolete stock, damaged goods, expiration dates, and more when you can check inventory conditions on site. Storage conditions like temperature, humidity, cleanliness and organization can be overseen directly as well. Being proactive about inventory management is significantly enabled by on site facilities.
You can implement RFID tracking, barcode systems, enterprise resource planning (ERP) software and other inventory management solutions much more robustly when your storage is centralized and on premises. Keeping tight controls over inventory is vital for many businesses, making the visibility benefits of on site storage very compelling.
Key Takeaways:
– Allows more frequent and convenient inventory audits and cycle counts
– Improves visibility into actual item quantities, conditions and movements
– Easier to identify and address issues like damages, obsolescence etc.
– Oversight of storage conditions and organization is hands-on
– More robust controls with RFID, barcodes and inventory management solutions
– Enables confident planning and production based on real-time data
Flexibility for Changing Business Needs
Your inventory storage needs will likely change over time as your business evolves. Storage requirements can fluctuate seasonally in retail for example, or increase as a manufacturer scales up production. Construction companies may accumulate more machinery and materials with every new project. The flexibility to adapt your on site storage capabilities is another key benefit.
When you lease space at an off site warehouse facility, you are limited to the footprint and layout of that location. Any changes require coordination with the management and contracted terms there, which can be costly and inconvenient if your needs outgrow the space. Expanding or reconfiguring an external warehouse to accommodate changing inventory usually isn’t an option.
With on site storage facilities, you have much more flexibility to scale up or modify the space as required. You can repurpose, expand or remodel existing buildings on your property to get more storage capacity when necessary. The storage floorplan and organization can be altered to support evolving inventory types, quantities and business workflows.
Owning the storage facility on your premises also avoids the hassle of finding and leasing new off site space if you outgrow your current arrangements. As long as you control the physical property and buildings, you can adapt your on site storage strategy much more nimbly. This enables organizational agility and future growth.
Key Takeaways:
– Avoid restrictions of leasing fixed storage space from external provider
– Can expand, repurpose or reconfigure owned facilities as needs change
– Adapting storage layouts and organization is convenient
– No need to find and lease new off site warehouse if outgrowing space
– Owning storage facilities provides control and flexibility for growth
Supports Just-in-Time Manufacturing
For companies involved in manufacturing or production, on site storage enables much more effective just-in-time (JIT) inventory management. The concept behind JIT is that raw materials or components are received and manufactured into finished products right as they are needed. This avoids the costs of holding excess inventory for long periods, which ties up cash flow.
To execute JIT manufacturing optimally, you need immediate access to necessary materials so production can begin instantly when orders come in. Storing those materials off site would incur delays for retrieving and transporting them to production lines. Inventory kept right where it will be used eliminates any such lag.
On site storage facilities with layouts optimized for JIT can be replenished frequently with raw materials that then flow right to production areas. When inventory can move quickly and freely through your facility, production output can flex to align with incoming orders. This maximizes efficiency and throughput while avoiding accumulation of excess work-in-process inventory.
Enabling speed, agility and continuous production flow are major advantages of locating your inventory storage on site. JIT methods are proven to reduce costs and meet customer demand in a timely manner, so on site storage is ideal for manufacturers embracing just-in-time principles.
Key Takeaways:
– Supports just-in-time manufacturing with no delays for material retrieval
– Layouts can optimize material flow directly to production lines
– Avoids buildup of excess work-in-process inventory
– Flexible production capacities adapt to match real-time order demand
– Reduces costs associated with holding excess raw material
Faster Order Fulfillment and Delivery
On site storage delivers advantages for order fulfillment operations as well. When packaged finished products are warehoused at your business location, outbound orders can be processed and shipped extremely quickly. Having to retrieve items from an external facility would introduce delays and unpredictability.
The faster you can pick, pack and ship orders from on hand inventory, the sooner those orders reach your awaiting customers. This reduces lead and delivery times, improving overall customer satisfaction. For ecommerce or direct-to-consumer businesses, fulfillment speed is an especially critical competitive advantage.
Processing orders rapidly from your own on site storage allows you to guarantee faster, more reliable delivery dates after orders come in. Getting purchases delivered quickly is hugely important to buyers, so storing inventory on premises can definitely bolster your order fulfillment performance. Supporting expedited delivery options can also give you an edge over competitors.
On site storage enables quality control checks to be performed as orders are being prepared, further ensuring accuracy and customer satisfaction. Keeping inventory readily at hand allows your fulfillment team to get orders out the door and on their way with maximum efficiency.
Key Takeaways:
– Eliminates delays retrieving inventory from external sites
– Enables faster order picking, checking, packing and shipping
– Reduces order lead and delivery times for customers
– Improves customer satisfaction and loyalty
– Provides competitive advantage for ecommerce/direct fulfillment
– Allows offering expedited shipping options
Potential Tax Incentives
Depending on your location, building or upgrading storage facilities on your business property may qualify for various tax credits, deductions or other incentives. For example, some states offer sales tax exemptions for constructing warehouses and distribution centers. There are also federal tax deductions related to expanding storage capacity in certain Opportunity Zones.
Various accelerated depreciation rules may enable you to quickly write off a portion of construction costs for on site storage investments on your taxes. Municipal governments sometimes provide property tax breaks or cash grants for companies locating inventory facilities in their jurisdictions. Be sure to consult your financial advisor and local economic development agencies to identify any tax incentives you may leverage with on site storage projects.
The savings generated from tax breaks can further offset construction expenses and improve return on investment. On site storage upgrades may qualify your business for utility rebates as well with features like energy efficient lighting, HVAC systems or insulation. The potential tax and utility incentives are very valuable aspects of deciding to expand your facilities.
Key Takeaways:
– Check federal, state and local laws for tax credits or deductions
– Accelerated depreciation can provide write-offs for construction
– Property tax breaks may be offered for inventory storage facilities
– Cash grants may be available from local governments
– Utility rebates possible depending on energy-efficient features
– All incentives help offset project costs and ROI
Lower Insurance Costs
Compared to leasing warehouse space from a third-party storage provider, constructing and managing your own on site storage facilities can translate into significantly lower insurance costs. You have greater control over risk factors when you own the premises, versus relying on a separate company to insure the property.
It starts with being able to self-insure the physical buildings and assets involved in on site storage. This avoids markups that leased facilities charge their tenants to cover their own insurance obligations. Any required business personal property insurance or other coverage can be more cost effective when bundled under your overall policy.
More importantly, keeping inventory stored in your controlled facilities lowers the risk of losses from theft, disasters, power failures, accidents and other incidents. Your insurance premiums for inventory/stock coverage and business interruption can be minimized with proper on site storage loss prevention tactics. You also avoid any markups from a storage vendor’s policy.
Essentially, by securing inventory in your owned property with your own protective measures, you reduce insurable risk factors. This translates into reduced premiums and long-term insurance savings.
Key Takeaways:
– Ability to self-insure buildings and assets versus relying on vendor
– Lower premiums for bundled business property and stock/inventory coverage
– Reduced risk of losses leads to lower insurance costs
– No markups from leasing storage space and insurance from vendors
– Oversight of facilities lowers chance of theft, damage, disasters, etc
– Insurance savings add to the ROI case for on site storage
Conclusion
On site storage provides many compelling advantages for a wide range of businesses. Keeping your physical inventory at the same location as your operations enables greater speed, efficiency, security and flexibility across production, fulfillment, retail and other functions. It also lowers certain costs related to transportation, labor, taxes and insurance.
The most impactful benefits of on site storage include:
– Faster access to inventory when needed for manufacturing or order processing
– Tighter control over security and loss prevention for your stock
– Eliminating transportation costs for moving items to/from external warehouses
– Improved visibility and active management of inventory quantities and conditions
– Flexibility to adapt and expand facilities as business needs change
– Support for just-in-time manufacturing and rapid order fulfillment
– Potential tax incentives and insurance savings
For many organizations, these factors make investing in on site storage capacity highly strategic. Of course, the choice depends on your specific business model, inventory volumes, production workflows, growth plans and existing facilities. But in most cases, bringing storage on site delivers measurable advantages over maintaining inventory at remote warehouses.
