The acquisition of an adequate warehouse facility, which can cost well into the millions of dollars even for a modestly sized space, is an expensive endeavor. Think about all the factors to consider in warehouse layout alone!
Additionally, there are ancillary expenses like equipment purchases, building maintenance, and staffing costs. However, a third-party logistics provider already has the necessary infrastructure and personnel.
Although it costs money to partner with them, 3PLs offer a proven, tested, and optimized service. In addition to being faster, a partnership approach can be cheaper than setting up internal warehouse space from scratch.
Let's discuss several factors to consider when choosing warehousing services.
The Role of Warehousing Providers in the Supply Chain
Three-party logistics companies specialize in providing outsourced logistical support and supply chain management.
An effective third-party logistics provider allows you to focus on scaling up production (for manufacturers), procurement (for retailers), and streamlining your overall operations instead of getting bogged down in warehousing operations.
With a 3PL provider handling your logistics, you can focus on what you do best - growing your business. While 3PLs offer a wide range of logistics services, warehousing remains their most centralized service.
What Services Do 3PL Warehousing Providers Offer?
Many 3PLs specialize in different parts of supply chain processes. In general, most logistics services they offer fall into these categories:
- Procurement: Receiving and ordering goods from other suppliers.
- Order fulfillment: Picking, packing, and shipping orders received from customers.
- Storage: Providing temporary storage for goods in warehouses and similar facilities.
- Transport: Consolidating, deconsolidation, managing, and transporting goods.
A warehouse service provider can offer additional services such as IT integration, inventory management, data exchange, reporting, reverse logistics, etc., to ensure smooth operations.
Companies are increasingly outsourcing logistics management to warehouse service providers to gain access to pre-qualified carriers, seamless supply chains, industry expertise, and advanced electronic data exchange that can improve supply chain visibility and efficiency.
Choosing a Warehouse Provider: Top Factors to Consider
Most commonly, when finding warehouse space, businesses consider the cost of warehouses and the storage space they can provide. These are some primary factors to consider, but there are also more.
Quality Customer Service
High-quality customer service and proactivity are critical to a successful partnership. Your warehouse provider must be agile and able to adapt to changing markets. For instance, are they easy to contact? Do they offer escalation procedures? Dedicated warehouse providers have positive attitudes toward customer service and go out of their way to meet customers' needs.
Service Scalability
Understanding your business is essential to offering the right solution at the right time, allowing you to scale up or down as needed. Warehouse providers must manage your business's volatility and provide flexible solutions, whether it's an increase in storage requirements or a change in services.
Flexibility
Shippers, manufacturers, and retailers can quickly adjust their inventory levels based on seasonal demand or other fluctuations. Businesses with extreme shifts in inventory volumes at different points in the year need flexible warehousing. This keeps them from paying for warehouse facility space they don’t need.
Diverse Capabilities
A warehouse provider must meet your operational requirements, including order fulfillment, pick/pack, Out of Gauge (OOG) services, or bonded storage. Additionally, warehousing services should be accredited to a minimum ISO standard and demonstrate Authorized Economic Operator status (AEO) - an indication of solid governance.
Inventory Technology
Your warehouse service provider should consolidate your critical inventory data into one easily accessible platform, giving select supply chain members a complete view of your workings, lightning-fast reporting, real-time statistics, and accurate planning capabilities. As a result, you will have a simple and transparent idea of their activity to verify proper stock management.
Warehouse Location Convenience
The efficient delivery of products from a manufacturing plant to a warehouse and then to retailers is a very important aspect of optimizing the supply chain network. Therefore, the optimal location of a warehouse in a supply chain network has become a strategic decision for many businesses. Consider how the right warehouse selection can reduce shipping costs and travel time.
Supply Chain Network Accessibility
Warehouse location is paramount to on-time delivery. Factors to consider when choosing a warehouse location include; access to major transport routes, road conditions and safety, railroad and port proximity, the nature of traffic, clear road signage, and highway interconnectivity. The warehouse should be in easily accessible locations to relevant players in your supply chain, reducing transportation costs. The best location for warehouse is usually adjacent to a major highway.
Warehousing Facility Experience
Experienced warehouse logistics managers have the expertise to ensure that your goods are stored, handled, shipped, and tracked correctly. Seasoned warehouse providers will also offer more competitive pricing due to their existing relationships with carriers, shippers, and other vendors. Lastly, they will be better able to anticipate and respond to changes in the market, making them a reliable long-term partner.
Reliable Facility Employees
For businesses looking to expand rapidly, having warehouse staff already in place is crucial. Your warehouse provider's team should be trained in general industry best practices to adapt quickly to your business's fulfillment and distribution needs. Better yet, find a provider with a reliable and experienced workforce that supports local demographics.
Partner with the Best Warehouse Provider
From single-owner-driven local companies to international companies, the 3PL service providers market is filled with companies of all sizes and competencies. Traditionally, most of these companies were transporters or freight forwarders, but over time have developed capabilities like warehousing and contract management to meet customer demands.
As a Texas warehousing provider and member of the international warehouse logistics association (IWLA), we understand it can be overwhelming to choose a warehouse provider and entrust your logistics operations to them. Our goal is to provide you and your customers with some of the best services in the industry. Give us a call at +18175908686 for a warehousing estimate.
