If you are trying to decide between outsourcing or maintaining your own facility, we hope the following points help. According to our customers, these are the five most common factors they took into consideration about the decision to outsource.
- Make time to focus on your core business
If warehousing is not your “core business” and is not your major revenue earner, then the case to outsource these operations is very strong. Warehousing could be taking up time and diverting your management team’s expertise. Your resources could be directed towards business building processes instead. Outsourcing can remove distraction and costs. Sticking to the field you do best, while a third party handles your warehousing, should improve the quality and efficiency of your business while bringing down added costs.
- Reduced Costs
Acquiring warehouse space and infrastructure requires a considerable capital investment which is especially challenging for a smaller business. Choosing this route could mean tying up cash flows. And it’s not just warehouse space, but also transportation management systems, packaging equipment, inventory tracking methods, and even radio frequency identification systems and other technological solutions. The costs of maintenance and servicing everything from pallet racks to forklift trucks can run high. 3PL providers spread their cost of overheads across several clients and even large businesses benefit from outsourcing a part or all of their warehousing. With facilities and equipment owned by a third party, risks are eliminated without having to fork up capital up front. Furthermore, the quality of your storage, packing and forwarding will be high under service level agreements and with feedback on Key Performance Indicators.
If your main location is far from your customers, you are also likely paying for your product to be picked up and transported to a docking facility. This double handling hikes up costs and brings up room for potential delays. With a specialist 3PL provider, you will have access to an appropriate transport network from their ideally located warehouse and your speed to market will be improved.
- Relying on experience
For many business owners, supply chain management is not their first area of expertise. A 3PL provider can remove these potential challenges and offer in-depth knowledge and implementation of proven processes. Many 3PL providers have evolved from simple truck and freight companies to a one-stop-shop. They have a strong knowledge in logistics and through advances such as the control tower, bring their expertise to customs, business intelligence and even customer service. Their in-house teams are at your disposal to cut wasted time and overall costs, advising on everything from haulage options to packaging for ecommerce. It is worthwhile to leverage the knowledge of a team that has decades long logistics experience and streamlining as many processes into one single point.
- Managing HR
Managing warehouse staff can be a large cost especially if your operations run around the clock. When you outsource to a 3PL, you don’t have to consider training, payroll, sick pay and other HR management costs.
Even health and safety requirements can be complex and regular specialist training and certifications are mandatory for some areas of warehouse operations. To avoid these overwhelming procedures, it is best to outsource warehousing to specialists.
If your business is seasonal or demand fluctuates for other reasons, outsourcing to a flexible warehouse supplier makes sense. There’s no reason to pay for empty racking or long term property leases. On the flip side, when your orders are running over, they will be better able to accommodate any rapid growth in your business.
Some clients buy a few hundred racking spaces as overflow space when needed, and it is a lot more cost efficient than purchasing an entire warehouse just for periods when there is extra stock. Another perspective is you will have an incentive to keep stock levels low since you will only pay for what you use rather than a fixed cost for your own warehouse. Whatever your changing needs and circumstances, a 3PL will meet your special requirements.
Your 3PL provider knows that his business depends on your business being efficient and successful. To find out whether outsourcing is a smart decision for your company and how we can help your business, get in contact with our team here at Intercontinental Logistics Corp.