Site Selection Best Practices: Location, Location, Logistics
It’s important to involve a cross- functional team in the site selection and design process to help understand what the needs for the facility will be both from the outset and in the years ahead—and also to plan for ramping up the usage of the facility for an ef cient launch. “You don’t want to be out of space the minute you open the doors,” Mitchell notes. “A linkage to the commercial team is critical because they know the growth plan, and they know what services or products they’re going to focus on,” Mitchell adds. “Planning and inventory management has to be a part of the process from the beginning. Sometimes they are pulled in at the very end, and they don’t realize the value that they bring. “You don’t want to have a warehouse sitting empty when you’re paying for it,” she says. n
“For instance, communities with higher tax rates become more competitive by offering performance-based property tax abatements,” Lindsay says. “Likewise, a community can provide infrastructure to a site that may have access challenges which, in turn, makes the site more attractive to the company. “In short, incentives can play an important role in the selection process but only after the company has determined the new location will work from a business and cost standpoint,” he adds. “At that point, incentives are icing on the cake. As the old saying goes, incentives cannot make a bad site good, but it can make a good site better.” 4 Keep an eye on the future. Planning for the future is a complex but necessary component of selecting a site—understanding not just what the operation will be on day one but years down the road, too. That includes
examining how well a site would be able to accommodate increased volume and perhaps future facility expansions or upgrades, as well as how it will t into the overall distribution network as it evolves. On the ip side, some companies will negotiate for a shorter lease when they don’t feel as though they have a strong grasp on their future needs and how well a site may be able to meet those needs. "Incentives are the icing on the cake, but only after a location already makes business and financial sense. They can't turn a bad site good, but they can make a good one even better."
12 SITE SELECTION MISTAKES TO AVOID
1 Unprepared site selection team. An effective team requires core competencies in human resources, cost accounting, logistics, taxes, engineering, construction, and environmental issues. Neglecting to assemble the right mix of stakeholders and experts early increases the risks of project delays and poor location selection. 2 Lack of executive consensus. Sharing only nal analysis results can lead to challenges. Include corporate leadership throughout to promote buy-in and understanding of the analytical process. 3 Incorrect search area. Problems arise if the initial general region isn’t validated with the facility’s operating objectives. 4 Narrowing the search area too rapidly. Quickly eliminating large geographic chunks can omit favorable alternatives. Prioritize critical location factors to avoid this. 5 Failure to consider all issues. Each location search has unique factors. A common error is considering only easily quanti ed aspects such as labor costs, real estate, or taxes. 6 Incomplete labor market analysis. Unemployment and hourly earnings are general indicators. Quantify the dozens of other factors affecting employee markets.
7 Failure to consider community trends. Towns, counties, states, and regions are dynamic. Labor and real estate markets, utilities, political factors, and demographics change. Datasets don’t capture this context. 8 Poor or absent technical site review. You can avoid unforeseen circumstances such as adverse geotechnical conditions, oodplains, and permitting hurdles. Understand environmental risk, timing, development obstacles, and construction costs. 9 Breach of con dentiality. Project con dentiality protects owners. The site selection team must take precautions to not reveal corporate identity or business nature to third parties. 10 Failure to capture negotiable incentives. State and local economic development communities attract jobs and investment. Don’t overlook or underachieve discretionary incentives. 11 Acceptance of overvalued incentives. The negotiation strategy must account for the operation and corporation’s needs. Don’t accept tax credits that won’t apply. 12 Poor implementation of incentives. Once the deal is signed, continued effort is needed. The implementation team must ensure they capture all bene ts.
SOURCE: 12 Mistakes to Avoid in Site Selection, Deloitte Report
158 Inbound Logistics • July 2025
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