Building a cold storage facility is expensive, but so is having an off-site rental. It can be easy to turn a short-term cold storage facility into a long-term solution, but you may be hurting yourself in the long run. If you can relate to this space issue, you may want to consider these 5 hidden costs.
1. Extra Transportation
Cold Storage space is in high demand in the US. There are many requests for it but not enough of it to accommodate everyone. To solve the space problem, companies will rent out cold storage space and the rental space may not be conveniently located to your production facilities. The space could be anywhere from 5 to 50 miles away. Additional transportation costs associated with reaching available rented space ends up quickly increasing the overall cost.
2. Rental Cost
An obvious cost is the price of the rental. While renting space may be a good short-term decision. Renting, especially cold storage space, can be expensive and is not always a sustainable solution. You may be paying too much for rental costs and, over the long haul, means someone else is making money you could be investing in a permanent asset.
3. Business Process
Another cost is the inconvenience of the rental space. Moving product to an off-site location generates additional transportation costs and leads to handling a product multiple times. Not only does it require more labor, but it also can bottleneck the process and decrease throughput and ROI.
4. Loss of Control
Consider the risks you may incur when product is no longer under the roof of your facility. You lose some control over that product. Product may not be monitored as much as at an on-site facility. With an on-site facility, the product is always in the hands of your company.
5. Inventory Management
Inventory management is already a complex part of a most companies’ processes. Adding another facility to this gives the inventory manager even more headaches. Keeping track of the amount of product at both sites could later cause problems with shipping the product on time or misrepresenting how much product is actually on-hand.
It is easy to look at the short-term benefits of an off-site facility, but long-term, renting may not be an ideal investment. If you’re renting cold storage space that has gone from a short-term solution, to near constant, you may want to consider investing in a cold storage facility for the long-haul.
Consider having a site evaluation to find the best solution for your facility. Contact Integral Strategic Solutions and let us help you explore your options.