Calculating the True Cost of Storage Space
Regardless of where in the U.S. your manufacturing or distribution operations are located, square footage is a significant cost. Learn how to maximize your inventory density and reduce storage space costs by deploying automated, dynamic storage and retrieval systems.
Introduction: Space—The Next Savings Frontier
Industrial square footage used in manufacturing and distribution operations throughout the U.S. is both expensive and increasingly scarce. Depending on the region in which a facility is located, cost of rent per square foot (PSF) and scarcity per million square feet (MSF) of space are magnified to different degrees, but both have been trending up over the past 12 months.
Consider Table 1:
As shown in Table 2, average asking rents per square foot vary slightly depending on the type of space. Costs differ whether the space is in a manufacturing facility—holding work-in-process (WIP), components or spare parts to support equipment repairs in a maintenance and repair operation (MRO)—or in a distribution center (DC), holding inventory for shipment to customers.
What this means, of course, is there is a consistently decreasing amount of available space, and what is available is becoming increasingly expensive. Although most operations have a clear grasp of how much each of their facilities’ square footage costs annually, very few have taken the time to calculate the true cost of space in terms of storage density—and how those costs impact the bottom line.
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Calculating the True Cost
of Storage Space