self-storage vs. external storage

Self-Storage:

Self-storage means that a company owns its own storage buildings and equipment. This is useful when the company has particularly valuable products or when specialized knowledge is required for storage. It also helps to minimize the risk of theft or damage because fewer external individuals have access to the storage. However, operating your own storage can be expensive.

Outsourced Storage:

Outsourced storage means that a company rents storage space from another company. This is a good option when products do not have specific storage requirements and are not particularly valuable. It saves money because the company only pays for the stored or handled products and does not have to maintain its own storage facilities. It is especially useful when demand for the products fluctuates or markets are uncertain.

Ultimately, each company must decide which type of storage is the most cost-effective. This is often determined through a break-even analysis, which indicates at what quantity and at what price self-storage or outsourced storage is the best option.

Self-Storage and Outsourced Storage:

Self-storage and outsourced storage are two different approaches that companies can choose to store their goods. The decision between these two options depends on various factors.

Self-Storage:

• Self-storage makes sense when it comes to goods that require specialized knowledge and special care for storage. This may be the case when the products are sensitive or require specific environmental conditions.
• In self-storage, only a few external individuals have access to the goods. This reduces the risk of damage or theft.
• Self-storage is particularly suitable when there is a stable demand for the products and there is a high market concentration, meaning the goods are distributed to a limited customer base.
• When inventory turnover is frequent (high throughput), self-storage is advantageous. It is especially suitable for products that are quickly sold and do not require extended storage.
• In some cases, direct control over the storage process is required, especially when products are still maturing or require specialized equipment.

Outsourced Storage:

• Outsourced storage is a good choice when demand for products fluctuates, there are limited storage capacities, or the products are in the introductory phase.
• When markets experience significant fluctuations and are uncertain, outsourced storage can provide a flexible solution.
• With outsourced storage, companies do not have to bear storage operating costs such as warehouse personnel, buildings, energy, and storage technology. Instead, they typically pay a fee per stored unit.
• This is particularly useful when a company's space requirements exceed available capacity.
• For products with a limited shelf life or those that quickly become obsolete due to innovations, outsourced storage can be cost-effective.
• Decisions about self-storage or outsourced storage are based on a careful assessment of investment costs, ongoing expenses, the required expertise, dependence on external service providers, available space capacity, and information flow. Companies need to consider these factors to find the most cost-effective and efficient storage solution for their specific needs.

Self-Storage:

• for goods that require specific knowledge for storage
• limited access by non-company personnel
• stable demand
• market concentration
• high inventory turnover (fast-moving goods, no long-term storage)
• direct control necessary (during product maturation)
• specialized equipment required

Outsourced Storage:

• fluctuating demand
• limited storage capacity
• products in the introductory phase
• market fluctuations

Consideration of the following cost categories:

• storage operating costs (warehouse staff, buildings, energy, storage technology)
• inventory holding costs (capital costs, shrinkage, risk of obsolescence)

Decision criteria:

• investment costs
• ongoing expenses
• expertise
• dependence
• space requirements (capacity)
• information flow