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Site Selection Group’s 150 Mile Logistics Analysis Optimizes Location Strategies

by Josh Bays, on Mar 26, 2019 4:33:19 PM

In an environment where direct-to-consumer distribution center operations are rapidly growing, you often hear about Last Mile Logistics and how companies spend significant resources making sure this “last mile” is optimized. This last mile isn’t necessarily restricted to the final 5,280 feet a product travels to the consumer, rather it is just a term used for the final step in the delivery process and can represent up to 30% of a product’s overall transportation costs.

Due to a variety of factors, there are many distribution center operators that are not as sensitive to last mile logistics as their cousins in e-commerce. These factors that make them not as susceptible include smaller distribution center networks, limited points of destinations, and less pressure for the timely delivery of products. For example, a company with just one distribution center on the East Coast and one on the West Coast has a larger geographic target area when adding a third distribution center than an operator who is adding one more center to their large expansive portfolio (Amazon being the extreme case).

Although Site Selection Group, a full-service location advisory, economic incentive and real estate services firm, routinely performs last mile logistics analyses for many distributors with complex networks, we have an adaptation of that analysis that is equally effective for clients with less complicated networks. 

Variance of operating environments within the last 150 miles

Every distribution center site selection project, regardless of network complexity, has an optimal logistics centroid. However, the more simplistic the logistics network, the further a distribution center can deviate from its centroid with minimal cost impact. For example, the variance in logistics costs within 150 miles of a project’s centroid can be small enough where savings from other operating cost factors can meaningfully influence the selection of a new location. Those other more meaningful factors include labor cost, real estate costs, taxes and utilities.

In many instances, there can be multiple distinct markets with varying business environments within 150 miles of the logistics centroid. Therefore, Site Selection Group encourages distribution clients with less complicated logistics networks to cast a wide geographical net to evaluate other operating cost factors, before they focus their site search on the exact centroid.

Dallas-Fort Worth case study 

To demonstrate how much business environments can vary within 150 miles, SSG did a comparison of the Dallas-Fort Worth market. As the map below indicates, there are 25 distinct metro areas in two states within 150 miles of Dallas. If you hover over each metro area, a summary of key operating statistics will display.

Topics:Distribution CentersEconomic IncentivesSite Selection GroupSite SelectionLocation Advisory

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