Suppose your company sells ice cream, and your competitive strategy involves introducing innovative new flavors to market frequently. Would you...

Whether privately-owned or public storage spaces are used to store inventories of ice cream is a matter of economics, and, to some extent, security. Business decisions like this are predicated upon calculations of cost-effectiveness. If it is less expensive to invest in ownership of warehouses, including warehouses with large temperature-controlled storage freezers that would be necessary for protecting ice cream from spoilage, than that is the option one would presumably select. If, however, it is...

Whether privately-owned or public storage spaces are used to store inventories of ice cream is a matter of economics, and, to some extent, security. Business decisions like this are predicated upon calculations of cost-effectiveness. If it is less expensive to invest in ownership of warehouses, including warehouses with large temperature-controlled storage freezers that would be necessary for protecting ice cream from spoilage, than that is the option one would presumably select. If, however, it is less expensive to rent or lease space in another, publicly-owned storage facility, than that is the option that should be selected. One factor, of course, is the proximity of the warehouses to the destinations for the product. Transportation costs associated with trucking ice cream to market have to be considered, and if one or the other of the storage options is too geographically remote, then it won't be considered, as to choose such a site would increase the cost of the product to the consumer, thereby potentially undercutting this particular company's competitiveness. 

There is, however, an intervening variable in calculations of which type of storage option to pursue. That variable is the company's emphasis on "innovative new flavors" that must be gotten to market. That factor requires consideration of risks of what is called economic espionage--the threat that competing ice cream manufacturers would attempt to gain proprietary, or business-sensitive, information regarding the first company's research into "innovative new flavors." If economic espionage is determined to be a problem, then the privately-owned warehouse may be the better choice, as the company in question would maintain total control of its inventory and all documentation associated with it. By using storage space it itself owns and controls, the ice cream manufacturer can better protect its investment from prying eyes. Publicly-owned facilities can be secured, but the level of confidence in these latter facilities' security against spying and tampering will be lower than with one's own warehouse.

Specifics of the candidate warehouses would also need to be considered. For example, whether the publicly-owned warehouse is physically structured in such a way as to allow for the most efficient distribution of product from freezer to customer. If security is not a concern, and if the publicly-owned facility meets the company's requirements, and leasing or rental costs are not prohibitively high, then the publicly-owned warehouse may be the better option. A privately-owned facility, however, allows for better control of all aspects of the warehouse's operations, and can be better constructed to meet the unique demands of this company.