NEW YORK? LOS ANGELES? ATLANTA? CHICAGO? COLUMBUS? MEMPHIS? MIAMI?
T he lineup of cities that traditionally appear on popular lists of “best” logistics sites is nite and predictable. But the actual list of ideal locations for your next distribution center (DC) is by no means consistent for every company—including companies that share the same classi cation code. At a time when the nature of supply chain economics is rapidly evolving, the process of selecting a DC site is by no means a one-size- ts-all analysis. Nor can companies nd the correct answer through website searches. “It all depends on the grocery list for your house versus my house,” says Adam Roth, executive vice president of Chicago-based NAI Hiffman, an independent real estate services rm. “We might go to different grocery stores, but we all buy groceries.” GOING SOFT The checklist of viable DC site possibilities is affected not only by the speci c distribution needs and nancial drivers of individual companies
as supplier and customer wants and needs, nancial incentives, and service requirements. TRAVELING THE ROAD AHEAD The variables are just that—variables, dependent on both the subjective and objective considerations of individual companies. “If a site selection team can control for the top three variables, they could save a lot of time by calling on some experts who are familiar with the regional market,” says Terry Coyne, vice chairman in the Cleveland of ce of Newmark, a global commercial real estate advisory and services rm. While Coyne relies on up-to-the- minute data, trends, and forecasts to inform his site-selection analyses, he says his core passion is people. But it is for reasons more practical than passion that he puts labor at the top of the list of DC site-selection priorities. A generation ago, a regional utility company adopted the slogan “Best Location in the Nation” to brand Coyne’s hometown of Cleveland. Depending on a company’s labor needs and other considerations, Cleveland
Sometimes for soft reasons alone, companies will choose to grow in the same place where they were rst planted—even if the location is no longer nancially optimum. “There are all kinds of reasons why companies keep certain locations,” says Marc Wulfraat, founder and president of MWPVL International, a supply chain and logistics consulting rm headquartered in Montreal. “More often than not, companies want to keep a certain building for historical reasons—for instance, that’s where the president who started the company lives,” he says. “There’s no such thing as a blank sheet of paper. There are always some constraints or sacred cows.” Sacred cows notwithstanding, data still reigns supreme for any company committed to optimizing its distribution network. DC site-selection teams must apply a “tremendously robust” algorithm to their search analysis, Roth says. Companies may use different versions of the algorithm, but they all include key variables such as property value and assets, real estate taxes, transportation access, and labor estimates, as well
but also by such “soft” assessment factors as company history and lifestyle preferences.
Large companies such as Amazon choose site locations that help best meet same-day or next-day delivery demands. To meet those demands, warehouse locations must serve transportation, population, and location needs.
210 Inbound Logistics • January 2023
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