I was approached about the storage and distribution of bottled water. The client needed somewhere to unload containers, store the product (up to approx 48 pallets), pick up stock samples as needed, and dispatch pallets to clients.
As he usually met with potential clients in their premises, it was determined that rather than commit to the expense of renting an office with warehouse, it would be far more effective to have the office at home, and contract out the warehouse.
Cost of renting a typical
office (around 35 square metres) with a small warehouse (around 200 square metres) would be about $35,000 per year (plus usually 3 months rent as a bond say $8,000), purchase a second hand forklift - say $10,000, buy and install 20 bays of used pallet racking - say $10,000. So in your first year you would have paid out a massive $63,000, and you have not even hired any staff!
However, to store the water with A Class Warehousing, have my staff pick and send the orders,
will cost him about $15,000, a huge saving of $48,000 and leaving the client totally free to promote his business
Further savings were identified in the transport area. The client had thought that he might do the distribution himself. However when you look at the running costs, a small van would cost at least $1 per kilometre to run a vehicle (taking into account fuel, tolls, wear and tear on all of the mechanical components, etc), say half an hour to hand load
2 pallets of goods, 2 hours to do the delivery, totaling about 4 hours time and 100 kms of running, adds up to substantially more than the average of around $60/pallet load that is available from many courier drivers.
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