Things to Consider Before Investing in Manufacturing Spaces

November 02, 2017


If your company doesn’t have enough room for your inventory needs, more manufacturing space may be the solution. Buying industrial real estate can be an intelligent decision, but there are some things to keep in mind before jumping straight to acquiring more property. Manufacturing is currently experiencing business growth. Ever since 2009, the low point, the output of manufacturing has steadily increased. As of 2015, it had grown by 12%. However this number is still 3% below the output in 2007, which was before the recession. So while manufacturing as a whole is seeing resurgence in output, it still has not completely recovered from the economic downturn of the last decade.

If you want to invest in industrial real estate in order to have inventory located closer to customers, consider upgrading the inventory process first before immediately acquiring more property. Examine the data of customers’ purchasing habits and divert products to the existing system of warehouses to fulfill the demand. By utilizing data collected, you can potentially eliminate the need to purchase more property. By having up to the minute inventory levels and following demand patterns, these practices can both help to prevent any issues that will affect operations.

Before acquiring more manufacturing space, try to first utilize the room you have now. Improving the layout of your current warehouse can have a tremendous impact on how much inventory can be accommodated. Make sure that all the vertical area is being properly used. Any empty space, that doesn’t impose a safety concern, can be used to hold more inventories. Consider the 80/20 principle that states that 80% of sales come from 20% of the products. Rearranging the warehouse to prioritize the 20% of products can improve efficiency. It is also smart to store items that are commonly purchased together near each other. Having the items in close proximity will allow for easier packaging.

Before spending lots of money for prime industrial real estate, consider expanding your location options. Instead of opening a new manufacturing space in a major market, think about investing in secondary markets. The smaller market would have more cost effective property options available. A study has shown that there is a demand for more supply chain operations away from major areas.
Optimizing the workforce process can deliver an increase in production. Hiring additional workers with the money that would have gone towards a new warehouse can accomplish this goal. More workers can increase the number of orders completed. You can also set up the warehouse as a zone-based picking approach. Utilizing a zone dependent system requires the workers to take fewer steps to pick the items, and thus speeds up the workflow. It’s also beneficial to decrease the amount of times the package is passed around. Each time a transfer occurs, it requires the package to be checked and packed by another worker. Limiting the turnover can help to make the fulfillment process faster.

If you find that after all is said and done you still need more manufacturing space, contact NAI Isaac. We are real estate experts who specialize in the nuances of industrial and commercial real estate, and we can give you valuable insight on your purchase. At NAI Isaac our main motivation is customer satisfaction, so you can rest assured that we will provide beneficial information to assist your business’ needs. NAI Isaac is located in Lexington, Kentucky and provides service to the surrounding area.

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