The Ten Commandments for Planning and Establishing a Logistic Center
Planning to establish a logistic center? Before you begin, here are the Ten Commandments to help you stay on schedule and budget, choose the right professionals, and, most importantly, avoid costly mistakes.
In recent years, logistic centers have taken center stage. With advanced smart warehouses, automated and robotic systems, cooling and humidity control facilities, and even storage solutions for hazardous materials, they are no longer the exclusive domain of shipping and distribution companies. Logistic centers have become a solution for various challenges in inventory, trade, sales, transportation, and supply. Due to rising land costs, the ROI on logistic centers has become highly worthwhile, driving the adoption of sophisticated production tools, vertical storage solutions, and advanced robotics. These centers enable more efficient workflows, better customer service, reduced manpower, integration of new technologies, and increased storage capacity and density, making them a popular choice among companies and factories across all industries.
Establishing a logistic center is an extraordinary project requiring substantial investment and expertise. Whether building a logistic center from scratch or adapting an existing structure to meet your needs, it involves precise planning, methodical execution backed by experience and expertise, high-quality implementation, regulatory compliance, and a seamless transition that minimizes operational disruptions. But how do you approach such a project, choose the right management company to lead it, and ensure nothing is overlooked? To answer that question, we’ve formulated for you the Ten Commandments for planning and establishing logistic centers:
1. Invest in a Detailed Program: Whether building from scratch or adapting an existing site, every logistic center begins with a comprehensive program that examines — in granular detail — your current and future needs, logistic processes, operational methods, and compatible technologies. This is the time to assess storage requirements, operational outdoor spaces, shipping, and distribution areas. Like the foundation of a building (or a logistic center!), thorough planning is critical and influences the project’s success more than any other stage.
2. Envision the Ideal Logistic Center: Since establishing a logistic center is a rare event in a company’s lifecycle, think big and broad to allow room for growth. Consider its location and design — even if you lack all the resources initially — as your plan can always be implemented in stages.
3. Choose the Right Location: Select a site that provides optimal service to your company’s geographic hub. The site should suit your size, logistics, vehicle traffic, and accessibility needs. It must also accommodate maneuvering areas, operational spaces, material types, inventory turnover rates, and more.
4. Stick to Schedules and Budgets: Building a logistic center involves considering multiple elements: infrastructure, permits, processes, manpower, machinery, and equipment. To avoid delays or wasting valuable time, ensure the project manager is actively involved and conducts ongoing supervision and monitoring to ensure goals are met in terms of budget, quality, and timeline. Professionals accompanying you on this journey should be partners in the process—not just temporary visitors—to acutely understand your workflows and needs.
5. Maintain Oversight: While having a project manager, supervisor, and PMO is essential (and highly recommended), it’s equally important to maintain oversight from your side. Establish regular management routines and hold scheduled meetings with the management company. At the start of the project, prepare a detailed specification document that defines requirements, goals, budget, and necessary equipment. This document will serve as a benchmark to ensure the professionals meet expectations and deliver on their commitments. Don’t hesitate to raise questions or request alternative solutions if necessary.
6. Plan Everything in Advance: The natural tendency to save money, cut corners, or take shortcuts can become a liability when establishing logistic centers. Thoroughness is key, given the scale and complexity of such a project and the significant investment involved. Planning costs typically account for 10% of the total project budget. While this may seem like a considerable expense, a single mistake during execution can cost exponentially more. Be meticulous and ensure that nothing is left to chance.
7. Choose Specialized Professionals: The external professionals and suppliers you hire must be experts in precisely what your project requires. Choose planners and constructors with significant experience in similar projects who understand the unique nature and construction methods of your logistic center. The same applies to architects, contractors, and other professionals. Be critical of the suppliers suggested to you. Always ask to see completed projects and speak to their past clients to confirm their expertise.
8. Think Hard About Choosing a Main Contractor vs. a Number of Subcontractors: When balancing budget constraints and tight schedules, a common question arises: should you hire a single general contractor or multiple subcontractors? A general contractor typically comes at a higher cost but helps avoid coordination problems and reduces delays. Conversely, multiple subcontractors might save you money upfront but often extend the project timeline. Evaluate both options carefully based on your available budget and timeframe to decide which is the better choice.
9. Maintain Business Continuity and Logistics During Construction: Maintaining continuous operations while building a new logistic center is one of the most crucial aspects to focus on. The transfer and relocation of warehouses must be carried out while maintaining business operations, allowing you to continue generating revenue without losing income, customers, suppliers, or market share. The process requires careful planning to preserve logistics, material flow, and operational continuity with minimal disruptions. Minimizing the impact on the transfer of warehouses, equipment, and staff is essential. In some cases, it may be wise to operate two sites simultaneously—the existing site and the new one—for a short period to maintain functional continuity. This dual operation can provide a buffer to ensure the smooth transition of activities, safeguarding the company’s performance during the critical handover phase.
10. Engage a Single Management Company: Establishing a logistic center is not a project you should handle alone, as it involves significant budgets and, to a large extent, the future of your company and its financial outcomes. Avoid hiring separate companies for program development, functional planning, and construction management, as passing responsibility between multiple parties increases the risk of details slipping through the cracks. Instead, choose one management company that has expertise in project management, civil engineering, and industrial management. This company should accompany you throughout the entire process, starting from the initial concept stage, to leverage its knowledge and experience to provide a comprehensive solution. A single management partner ensures continuity and a complete understanding of the project, preventing gaps in communication and delivering a unified vision.
