While a deficient workforce or lack of capital are common motivations for outsourcing, there is more to it than that. If you are an operations or warehouse manager and you have been handling your own warehouse operations, you may already have many reasons to outsource them.
Whether you are a small business, a start-up trying to gain some footing in a specific industry, or you operate a large well-established enterprise that wants to break into new markets across the globe, outsourcing warehouse and distribution operations to 3PL services is a smart move.
Is your business thinking about taking the plunge? Below are some reasons why you should consider working with FLEX Logistics, Southern California’s premier 3PL company, to bolster your supply chain operations.
What is Logistics?
Logistics is that part of supply chain management that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements. It is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost.
There are many elements that play key roles within a logistical structure, for example, prices and volumes are reviewed to make sure they fulfill what is being required. Quality assurance deals with the precision of what is being acquired and shipping and handling regulates and controls the time that takes to move the items from the shipping point to the delivery point.
Logistics play a crucial role to ensure high levels of productivity, since it can reduce the time it takes to get what is being demanded in the hands of those that are manufacturing or delivering the goods and services to the final customers.
What is 3PL?
A 3PL, or a third-party logistics company, provides outsourced logistics services to businesses. This includes functions such as transportation, warehousing, storage of pallets, and order fulfillment. The goal of a 3PL is to help businesses improve their supply chain management by more efficiently and cost-effectively improving your company’s logistics activities. They can do this because a 3PL is a specialist provider. They only do logistics so they know the industry, the technology, and the best strategies. By partnering with a 3PL, businesses can focus on their core competencies and improve their customer service, while reducing their costs and increasing their efficiency.
Four Common Third-Party Warehouse Operations
There are three warehouse operations you should consider when looking for a warehouse partner:
- Shipping and Receiving
Full truckload (FTL) and less than truckload (LTL) freight can be essential tools to save you money on freight. This is particularly true if you often ship large orders to commercial customers or wholesale orders to retailers. You can also use freight services to ship your products between warehouses or to a distribution point closer to your customers. Your outsourced logistics company can guide you through this process. It can arrange for FTL or LTL loads and process incoming truckload freight. Your 3PL can also help you find the best deals and the right service level for your freight shipping.
- Transportation
A 3PL does more than just book your company’s freight—it acts as an extension of your transportation department. In some cases, the 3PL may manage all of a client company’s transportation functions. A third-party logistics provider will have a complete understanding of a client’s shipping, demand cycle and supply chain. enables the 3PL to optimize loads, identify efficiencies, forecast freight fluctuations and reduce transportation costs. The 3PL can be a strategic partner that is constantly auditing freight performance, providing greater visibility to a client’s supply chain, and making it easier to spot overspending, delays and other inefficiencies.
- Warehousing
For any growing company that makes and sells products, figuring out how to store and track your inventory is a major question. Often, it’s smart to leave this important task to the experts. A third-party logistics (3PL) company will have the expertise to provide reliable warehousing and storage.
Businesses seeking 3PL services are not only looking for customized 3PL warehouse solutions, but a mutually beneficial relationship with the provider. Because a 3PL company can provide a range of specialized services outside of your core competencies, outsourcing your warehousing and logistics needs can actually save you money in the long run.
- Distribution
The capability to store your inventory in the 3PL provider’s network of warehouses to ensure your products are strategically positioned in locations as near as possible to your customers or other facilities – so that they can be successfully distributed to meet demand. Many 3PL organizations also provide a wide variety of distribution and wholesale services, including outbound order fulfillment, picking and packing, custom labeling, and manufacturing.
Benefits of Outsourcing Warehousing Operations
Choosing warehouse partners allows you to benefit from the skills of experts in the industry. Consider the following reasons to outsource distribution, supply chain and inventory management and other warehousing operations your business might partake in.
1. Reduced Costs
The primary benefit of outsourcing is reducing costs. Business owners can significantly cut overhead by outsourcing their warehousing. Establishing and operating a warehouse can be a significant financial investment that many small businesses simply are not ready to handle. Outsourcing reduces the capital required for investing in infrastructure and equipment.
- Simplified Workflow
Warehousing is not a single process; it involves coordinating multiple individuals, some of whom might be from different companies. Trying to coordinate between freight carriers, warehouse workers, drayage operators, and more can start making your workflow charts a headache to read. When outsourcing, this process becomes much simpler because all of these roles are filled by the same company. This ensures that everything is kept on track and coordinated, as well as making communication easier.
- Reduced Overhead
One of the most significant benefits of outsourcing your warehouse operations is reduced overhead costs. Outsourcing a workforce and sharing third-party facilities allow you to see instant savings to your bottom line. Sharing facilities also lets you shift your warehouse operations from a fixed to variable expense. You may only need to pay for the space, equipment and labor you need based on your current market, helping reduce your overhead even more.
4. Increased Flexibility
In today’s competitive eCommerce landscape, entrepreneurs need flexibility. Business owners need to scale up or down depending on the season. Outsourcing allows organizations to adjust their storage needs based on seasonal peaks and lows and reduce costs. Once the high-demand season is over, business owners can downsize and tailor the outsourcing to their needs. Owning or leasing a warehouse does not allow this kind of flexibility. Owning a warehouse entails a long-term commitment to the facility through high and low-demand seasons, meaning companies may run out of room during the peak seasons.
- Access to Industry Expertise
Many entrepreneurs and managers do not have adequate experience or knowledge in the supply chain, which makes it a very challenging process for the company. A warehouse and distribution service provider, on the other hand, will have in-depth knowledge and proven success in this domain. You can take advantage of their extensive knowledge and experience and make the difference between pleasing customers and losing customers.
- Reduced Risk
Outsourcing your warehouse operations also reduces your overall risk. Your outsourcing company is responsible for maintaining your processes, supporting your people and supplying your workforce during periods of lower demand. You will not have to worry about incurring any risk, allowing you to continue your business operation with reduced stress.
- Adds Supply Chain Value
3PL fulfillment services add a lot of value to your warehousing and logistics operations. Services include cross-docking, kitting, repackaging, assembly, processing product returns, product inspection, reverse logistics, order consolidation, and more. Hiring a 3PL company to handle these tasks for you can save you a lot of time and money and ensure that your operations run smoothly.
- Access to Advanced Technology
Warehousing operations and their associated technology are constantly improving. Small businesses that lack the required funds will find it almost impossible to invest in advanced technology, further creating a severe barrier to those who seek to enter the market. However, outsourcing your warehouse operations lets you partner with industry experts focused on adapting and adjusting to evolving technologies.
- Compliance With Guidelines
There are all sorts of laws and regulations that must be considered in warehousing and distribution centers. Several government agencies have their own requirements. OSHA has specific requirements to ensure warehouse safety. The FDA has regulations to ensure food safety. It is a lot to take into consideration and failure to do so could cost warehouses in fines and time lost while violations are resolved.
Instead of trying to work through these complex and changing guidelines yourself, you can trust a qualified outsourcing company to handle compliance. The company will take responsibility for complying with all regulations, ensuring you’re always in compliance.
The FLEX Logistics Team is Here to Help!
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.