What is a Public Warehouse?

Do you need short or long-term storage but not permanent space?

Warehouse
Supply Chain Management. Getty Images

Definition: A public warehouse is a business that provides short or long-term storageto companies on a month-to-month basis. Public warehouse fees can be a combination of storage fees and inbound and outbound transaction fees. A public warehouse can charge per pallet or charge for each square foot that is used by a company.

The public warehouse is not only a facility where a company can store their products, but the public warehouse offers inventory management, physical inventory counts and shipping functionality.

The public warehouse charges their clients for a certain rate for the goods stored, the volume of the warehouse used and the services the client wishes to use.

The company using the public warehouse does not have to employ warehouse staff, does not require any inventory software or warehouse equipment. The owner of the public warehouse is responsible for the costs and passes this on to their clients based on the rate they are charged.

Although most companies see public warehousing as a short-term solution it can often turn into a long-term relationship as companies been accustomed to convenience of the public warehouse services. Companies that own and operate public warehouses, invest significantly in modern facilities to remain competitive. They offer clients increasing levels of flexibility in order to retain and attract additional clients.

Public warehouses offer companies a range of labor solutions including picking, packing, inventory control software and dedicated workforce.

Public warehouses will also allow clients to bring in their own ERP or warehouse software so that the public warehouse becomes a satellite location with real-time data.

Criteria for Choosing A Public Warehouse

Because of the increasing competition between the public warehouse operators, potential clients should review the capabilities of each potential warehouse to identify which would be the best fit.

Each client will have a number of factors that need to be considered when selecting a public warehouse. Companies have a variety of reasons why they require an outside warehouse, as well as their short-term and long-term needs and the price they are willing to pay for the service. However, the majority of the following criteria is likely to be used by all companies comparing public warehouse sites.

  • Geography
  • Technology
  • Expansion
  • Company Network
  • Flexibility

Geography

The location of the public warehouse can be important to some clients, and less to others. If a large volume of items is to be moved between the company warehouses and the public warehouse, a location closer to the company site may be more advantageous. However, some clients may require a public warehouse to be closer to their customers if items are to be moved there from a number of company sites.

Technology

Although most public warehouses offer modern facilities and technology, the level of technology may vary, for example, one public warehouse may offer a warehouse management system that is not compatible with common ERP systems. This can be less attractive than a warehouse that allows clients a range of warehouse solutions or for clients to use their own systems.

Expansion

Depending on a company’s needs, the amount of space required at a public warehouse is likely to change during the period that the space is required. Although space requirements are often unknown at the beginning of a contract with a public warehouse, the agreement should include an expansion clause. This will guarantee that the public warehouse operator will accommodate any future space requirements a company may need.

Company Network

When a company negotiates for space in a public warehouse, future requirements for other warehousing needs would probably not be known. However, a public warehouse that is part of a warehouse network may be able to offer national or global supply chain management services that smaller public warehouse operators cannot.

Flexibility

The flexibility of the public warehouse operator is an important consideration.

 Clients can need warehouse functionality at short notice and warehouse operators that can guarantee rapid access to the facility, with trained staff and suitable technology are at an advantage.

An optimized supply chain is one that delivers orders to its customer when that customer wants them - and does that by spending as little money as possible.  If you can't afford your own warehouse, a public warehouse may be one solution.

Updated by Gary Marion, Logistics and Supply Chain Expert.