It's critically important to pick a 3PL with the capabilities you need and whose growth strategy aligns with yours, says Matt Schroeder, vice president of investment at WSI.

The first step in deciding the location of your fulfillment center is fully understanding your product and its requirements. Some considerations include where it comes from and where it’s going, is it heavy, and how much inventory should be kept on hand? 

If it’s deemed important to be close to customers and end users, multiple locations should be considered. It can be costly to serve, say, West Coast customers from an East Coast center. But excess inventory is a possible downside to a multi-site location strategy. “If you don’t plan your inventory well, it can be tough and expensive,” Schroeder says. 

Locating near major highways and railroads may be advisable. In any event, geography is highly important. Schroeder says locating in Southern California, Dallas-Fort Worth or New Jersey-Pennsylvania puts a distribution center in large population areas that can easily serve huge regions in the country. “If you're a consumer business with sales across the country, you want to be in those population centers. It makes a big difference. It's that quick and affordable shipping that makes all the difference in the world.”

Customer expectation is often the key factor, Schroeder says. “If people are expecting the thing they ordered the same day or the next day, it becomes really important to be pretty close to them.”

Third-party logistics partnerships should be top of mind, Schroeder says. Not everyone has multiple locations in their networks, and that could mean missing delivery deadlines. What are the capabilities of your 3PL partner? Can they handle heavy items? How sophisticated is their order management and route optimization technology? And should you work with several logistics services providers?