The reasons for outsourcing your warehouse function to a third-party specialist are many and varied. They include the obvious ‘hard’ justifications such as reduced capital investment, but also extend to less tangible benefits such as the ability to focus on your core business and speed to market for your product.
In this article we offer you ten powerful reasons why outsourcing your warehouse operations to a specialist Third Party Logistics (3PL) operator makes good business sense.
- Focus on your core business
Regardless of whether you design and manufacture flooring products yourself or import them from other manufacturers, your core business is flooring products and not warehousing.
The case for outsourcing ‘non-core’ business operations is strong, especially if those operations are not direct revenue earners. Instead, when properly viewed as overheads, those operations are likely to be soaking up cash and diverting management time that could be put to better use on your core business.
- No warehouse OHS compliance issues
Running and managing a warehouse can be complex, particularly with all the compliance obligations involved. Regular specialist training and certifications for staff in some areas of warehouse operations are mandatory and subject to strict enforcement.
OHS obligations, while entirely justified, can be cumbersome and even overwhelming. For those reasons alone, it may be best to outsource your warehousing function to a 3PL expert.
- Better service
Specialist 3PL providers, whose revenues depend on the provision of quality warehouse services, are more likely to be true experts. Their service levels can also be backed up by appropriate contractual terms.
These service level agreements are enforceable, not only in a legal sense, but also because the 3PL provider has a reputation to uphold. It is in their best interests to do an excellent job for you.
- Speed to market
You are most likely currently paying for your product to be picked up by your transport provider and transported to their cross-docking facility. It’s not only the cost and the double handling involved, there is also a delay in the delivery of your product to your end customer. Speed to market is vital and your 3PL provider will have the appropriate transport network available at their warehouse.
- Reduced capital investment
Whether you own your own warehouse or rent the space from a third party, your capital investment is significantly lower if you move to an outsourced solution.
If it’s a simple matter of ownership vs outsourcing where costs and cash flow are the only factors, outsourcing is almost certainly the answer. You can free up capital by switching from an in-house to outsourced model or avoid the upfront cost altogether if you are choosing between investment in your own warehouse or outsourcing to a specialist 3PL provider.
- No ancillary equipment purchases
As well as avoiding capital investment in warehouse infrastructure, you’ll also save on the associated costs of equipping your warehouse with everything from pallet racking to fire sprinklers, safety barriers, mezzanine floors and forklift trucks.
The costs of maintaining and servicing this equipment on a regular basis is also significant and it’s worth considering outsourcing on this basis alone.
- No long-term lease or wasted space
A key benefit of outsourced warehousing is the flexibility it offers your business. You no longer need to worry about long term property leases nor the cost of empty racking during quieter periods to ensure you have space available for the peak season. You will also have an additional incentive to keep stock levels low, as you will only be paying for what you use, rather than the fixed cost of your own warehouse.
- Benefits of a shared resource
A shared resource is likely to be a cheaper resource – because your 3PL provider is spreading their overheads across multiple clients.
The quality of your operation is not compromised because your 3PL provider knows that his business also depends on your business being efficient and successful.
- Reduced HR obligations
Management of warehouse staff can be difficult and time consuming, particularly if operations carry on round the clock or your workforce is unionised. As well as outsourcing your warehouse operations you are also outsourcing a big part of HR management, including recruitment, training, performance management, payroll, leave entitlements and more.
- Because there are specialists to do it for you
The old business principle holds true: a specialist 3PL provider will almost certainly perform your warehouse function more efficiently than you can.
If none of the other reasons for outsourcing your warehouse persuades you, start here. Simply analyse what your warehousing operations currently cost and then compare against the cost of a specialist 3PL provider. GMK Logistics will be more than happy to provide you with an itemized quotation for the warehouse services you require.
For more information or to discuss your warehousing requirements, contact David Knagge on customerservice@gmklogistics.com.au or call us on 1300 796 208.
