Public and private warehouses are the two main types of storage a company can access in order to complete its supply chain network. Both have their own advantages and drawbacks, which means that in order to optimize the shipping process, you must choose the most suitable option for your specific products and company structure. But what is the difference between public and private warehouses and how does it impact your decision?
The main distinction between public and private warehouses is that while the former is operated by a third party, the latter is owned and operated by a company’s division. It is therefore more likely that an up-and-coming business would choose to rent a public warehouse, whereas a massive corporation would purchase and customize a private warehouse.
However, these are not the only differences between the two. For more details, consult the lists of advantages and drawbacks presented below.
The Advantages and Disadvantages of a Public Warehouse
A public warehouse is owned and operated by a third party. A company can rent all or part of a public warehouse, as well as access additional services for specific fees. The main advantages of this type of storage space include:
A Public warehouse is more affordable up-front than buying and operating a private warehouse. Overall low usage and startup cost.
This type of storage is more flexible and convenient because it requires no long-term commitment. You can rent space in a warehouse so long as this suits your needs. In addition, you can decide to rent more or less space at (almost) any point.
There is high competition in the sector of public warehousing, which means owners strive to make the most competitive offers. As a company looking to rent space in a warehouse, this means that you benefit from additional features for a lesser price.
Many types of goods – such as, for example, perishable items or hazardous materials – require special storage conditions. Not all warehouses are equipped to provide these conditions, but many are.
Possible add-on services include packing, assembling, and even shipping goods, which can considerably lower labor costs.
Overall, using public warehouses posits a lower risk than investing in a private warehouse. The company can, at any time, switch location or terms.
On the other hand, there are a few considerable disadvantages to public warehouses. The most notable are:
Companies might require a more specialized service than a public warehouse in a specific location is prepared to offer.
In case more storage space becomes necessary, a public warehouse might not be prepared to accommodate the extension at the right time.
Public warehouses feature their own communication, inventory, and shipping systems, which might present idiosyncrasies that conflict with a company’s own standards. Under the circumstances, hiccups can occur along the supply chain network.
The Advantages and Disadvantages of a Private Warehouse
Unlike a public warehouse, a private warehouse is owned and run by a specialized division within a company. Naturally, the owner’s degree of control is much higher with these storage spaces, but the advantages don’t stop here:
Private warehouses are perfect for companies who want to decide for themselves how to best utilize the available storage space.
Using a private warehouse allows you to carefully track the flow of inventory, as well as all types of warehouse operations. With this information, you can make decisions meant to improve the efficiency of a warehouse and streamline the supply chain network.
The company controls the staffing of a private warehouse. If you need employees to work around the clock, you can arrange for multiple shifts and nighttime bonuses.
Investing in a private warehouse can be daunting, but if it’s something you can afford, it is likely to be more cost-effective in the long run.
A private warehouse can bring intangible benefits to a company, such as, for example, the fact that consumers might perceive the latter as a more dependable, stable, and lasting provider.
At the other end of the spectrum, the disadvantages of a private warehouse include:
The high investment required to start and run a private warehouse puts this form of storage out of the reach of most companies.
A private warehouse is both more and less flexible than a public one. On the one hand, you can customize the space for very specific demands upon purchase, but on the other hand, once the company moves in, it can be extremely costly to make additional changes.
Overall, private warehouses can bring a better return on investment, but they are also much riskier than public storage.