Responsiveness
Although private warehousing may provide more operating freedom in responding to customer demand and meeting internal shortages of raw materials and supplies, the firm must also be able to use warehouse space efficiently when there are fluctuations in demand. Else, it might result in excess space or shortages.
Availability and cost of capital
Before setting up a private warehouse, the company must consider if it has enough capital to fund the warehouse. If the firm has limited funds, should it invest in warehousing (non-productive) or manufacturing (facilities)? Most firms based their capital investment request on Return On Asset (ROA), Return On Investment (ROI) or Return Of Capital (ROC). Profit generated from the warehouse rarely meets the requirements thus given the least priority for a firm with limited funds.
Management
The management of the private should have the same technical know-how as public warehouses to keep the warehouse operations smooth.
Warehouse labor competence and experience
A skilled labor-force is required to run the day-to-day operations of the warehouse such as space-efficient operation of materials handling equipment, picking packing and staging. It is especially important when the firm’s products’ requires specialized handling equipment or software.
Risks and liability
In a private warehouse, all risks for damage and loss to facilities and inventory, as well as harm and injury to employees are borne by the company itself.
Reference: Ernst F Bolten, Managing Time And Space in a Modern Warehouse.
dcm @ 1/18/2009 05:23:00 AM 
