Increasing numbers of businesses are choosing to outsource their warehousing operations to third party specialists, often known as 3PL (standing for third-party logistics provider).
But why is this? There are a number of reasons, from the straightforward, such as the reduced upfront costs, to the increased flexibility that it offers your company.
Reduced upfront costs
Of course, one of the most important things for any business to consider is its costs. And whichever way you look at it, buying or renting out a warehouse is one of the heftier costs that you’re likely to have to deal with.
Outsourcing requires far less capital upfront, and while it could be argued that as you don’t own the warehouse, the costs will be more in the long term, this all depends on the circumstances, and every business is different!
Warehouses also come with a range of added costs such as the racking, mezzanines and forklifts, as well as staff training and health and safety costs, which will be recurring costs that you need to bear in mind.
One of the benefits which we feel allows 3PL to come into its own is its flexibility when it comes to the lease.
This is especially true for seasonal businesses. For example, if you sell Christmas lights, there’s no need to have a big empty warehouse sitting there in June is there?
This is also handy if you’re in an industry where demand is known to fluctuate. Third party logistics allows you to use the space as and when you need it, and for as long as you need it.
Frees you up to run your business
Whatever your business is, it’s likely that the warehousing element is just a necessity, and that you’d rather be spending your time getting on with whatever it is you do.
Warehousing is considered a ‘non-core’ operation, and in reality it’s not bringing you any money into the business, and is rather just a necessary drain on your time and resources.
Check out this article for more information on core vs. non-core businesses processes.
Allowing a 3PL company to take this off your hands leave you more time to focus on the things that actually matter to your business.
Leave things to the experts
Instead, your warehousing operations will be managed by people who specialise in it, and who work in warehousing day in day out.
This means a higher level of service, and you’ll be working with someone who knows what they’re doing.
While logistics may fall fairly low on your list of priorities, it’s number one for 3PL companies.
Ease of scaling
The truth is that nobody really knows where their business will be in a year or even in six months’ time, and it can be tough to plan ahead.
Chances are though, that you’re going to need to expand your warehousing operations at some point to accommodate higher levels of stock.
While it’s hard to predict things like this, outsourcing allows you to scale your logistics up or down as your circumstances change.
For more information on why you should consider outsourcing your warehousing, check out this list of ‘The Top 10 Reasons to Outsource Your Warehousing’, from Master’s Logistical.