Supply Chain Quarterly Newsletter Highlighting the Port of Quincy – News Release

Think globally, site locally
By John H. Boyd | From the 2012 Special Issue

Site selection for a new distribution center has always been influenced by local costs and constraints. Now companies also need to consider global trends.

Where to locate a new distribution center (DC) is one of the most demanding and far‐reaching decisions that a logistics executive will ever make. A less‐than‐optimum location will result in higher costs and put the company at a competitive disadvantage that could persist for years. To choose the best location and avoid these risks, companies must consider not only local but also global factors that will affect the cost of getting their goods to their customers.

When situating a DC in the United States, not all locations are equal in terms of cost. A 2012 study shows significant cost variances among surveyed DC sites (see Figure 1). These figures are based on a hypothetical 150‐worker distribution center occupying 450,000 square feet and serving a national market. A comparison of a Meadowlands/Northern New Jersey DC site vis‐à‐vis an Indianapolis location, for example, shows a total annual cost differential of 29 percent, favoring Indianapolis. Costs in the analysis include labor, construction, taxes, utilities, and over‐the‐road shipping in truckload lots.

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