We Hope You’re Good at Chess: Selecting Logistics Firms’ Locations

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July 26, 2014

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Photo credit: businessdailyafrica.com/

Photo credit: businessdailyafrica.com/

A secret war wages silently across our capital: an intricate chess match where one false move could cost millions. Banks, retailers, eateries, none have been spared in the struggle for prime business locations in Nairobi more so the CBD. With international sandwich chain giant Subway taking over where café chain Savanna previously operated, and retailers Tuskys, Nakumatt and Eastmatt consistently working to outdo each other and nab prime coveted spots, it is clear that location of a business has a great impact on the success of a business, spanning across most industries in operation. So how does that bode for us in the logistics industry?

The first and, arguably, most important factor to consider in choosing a location to base a logistics firm is proximity to the shareholders that make the business a success. For a supply chain management firm, it is necessary to be in close proximity to suppliers and other partners who assist in the delivery of services. In this case, a firm focusing on operations by road would do well to set up a base of operations close to their chosen external mechanic, or spare parts dealer for convenience and ease in communication or consultation services. Supply chain managers must also position their firms in a location central to business that would be easy for potential clients to locate and access.

Another concern in choosing a location for a supply chain management firm is infrastructure. It is imperative that logistics firms be located in areas with easy access to a well-developed infrastructure system. This factor is obvious for companies specializing in freighting by road: road networks must be suitable to facilitate this business. For supply chain management firms operating under different modes of transport, such as rail, air or sea transport, the chosen location must have access to facilities such as docks, airstrips, rail centers and the like. In choosing a location, therefore, this must be kept in mind.

Photo credit: bmauritz.wordpress

Photo credit: bmauritz.wordpress

Selection of a location also hinges on real estate concerns. The availability of land is a key consideration: will the size of land available comfortably accommodate all structures required by the company? These include warehouses for goods, parking space for vehicle fleets, office buildings, staff quarters where applicable and so forth; exact needs vary from company to company but the core concern remains the same. Pricing is also an important factor in that it should be fair: whether purchase, lease or rental, cost of the location should be reasonable as compared to market prices and company budget. Pre-existent structures must also be considered: it would be advantageous to have a proposed location already equipped with warehouse buildings and so on from the previous tenant, but where structures cannot be re-purposed to suit the logistics firm, it may be necessary to tear them down ad begin anew.

In some cases, the choice of location goes beyond the local concerns of a place to base the business: for international logistics firms, finding locations may also refer to diversifying into other countries. In this case, choice of location will be greatly influenced by the government of the proposed new location as well as laws governing the industry. Such considerations will include labor laws, taxation, extent of government intervention into private companies and so on. The other concerns of specific locations will then come into focus after issues of legislation have been attended to and settled.

It is imperative that supply chain managers seeking to set up a logistics business take choice of location as seriously as any other concern, and work to secure headquarters that do not present headaches, even in the smaller matters of client parking, employee accessibility and so forth. Just as in chess where a poorly selected location could spell doom, logistics and firms in other industries could accelerate their own failure with improper bases of operations. Your business is your Queen; do be mindful of your chess pieces this week, won’t you?


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