Good afternoon. This is Jeremy with Easy Logistics Management.
We were noticing that a lot of people were searching for the terms warehousing in logistics. I wanted to cover what I see as the benefits and opportunities of integrating warehousing and fulfillment and warehousing-related activities to the logistical process to economize and create efficiency and another whole host of benefits.
But I wanted to go through what I see as the benefits and opportunities of integrating retail warehousing or warehousing in general into the logistical process since we both manage a freight logistics and shipping company and a warehouse in my company.
Number one, I would say, is that you’re storing and shipping your material and products closer to your end clients. What does that yield you? Faster transit times to your end customer, less expensive overall shipping costs because you’re shipping a shorter distance to your end customer from the regional warehouse and fulfillment centers, and then obviously less handling and less transit-related damage because the products aren’t being pushed through cross-dock or sorting facilities and handled quite as much along the way because it’s just a hopefully ideally a 1-2 day transit time.
Number two, I would say, is that you’re trading a fixed cost of owning your own warehouse for a variable cost of working with a third-party logistics company. That translates to only paying for the space that you’re using versus paying for a warehouse year-round. Especially if you’re a seasonal company and you see peaks and valleys in your inventory, you’ll only be paying for the pallet positions and space that you’re using in a warehouse or a professionally managed 3PL warehousing and fulfillment center.
Number two, they’re professionally run and they’re more cost-effective. That is a 3PL warehouse’s core competency is running a warehouse. Generally, they should be running it more efficiently and more productively than maybe you could do yourself if that’s not your core competency and you’re into building other commodities or products.
Again, you’re not going to have any fixed employee costs, utilities costs, rent costs, or insurance costs. A lot of people don’t take that into consideration when looking at a 3PL warehouse and fulfillment center versus having your own facility, but those are all costs associated with that. Instead of having these fixed costs of having a certain number of employees to run your business, utilities, and all that other stuff, you’re just paying for the actual pallet positions and storage and handling that you’re using per month. Those are the big benefits there.
Number three, they’re professionally-run 3PL fulfillment centers and warehouses, and they can provide a lot of value-added services. In my mind, generally, they have better warehouse management systems or online software systems that provide you better visibility to actually what you have in your inventory.
You laugh, but a lot of people have told us that our warehouse and management systems are so much better than their internal products. That even though they can walk into the back of their warehouse, they can’t really tell what they actually have available for sale. By looking at our easy-to-use online tools, it makes it that much easier to figure out what they actually have to sell.
Ideally, you should be getting better shipping discounts, both in terms of FedEx, UPS LTL freight shipping and truckload freight shipping, and USPS just because the warehouses are generally moving so much more material. They’re getting discounts based off their bulk shipping and you should benefit from that in the case of lower rates.
Then just more options of pick and pack options as far as kitting or cross-stocking or consolidating your shipments in a variety of ways that maybe your warehouse or your office warehouses isn’t set up to do. You might not even have the machinery to handle some of this stuff. So using a third-party warehouse in your logistical program should allow you more options and flexibility of how you can prep and ship the material, especially if you’re shipping to Amazon or some of these other third-party aggregator sites. We can consolidate those products in a variety of ways and ship it to them just the way that they require.
Number four, using a warehouse in your logistical process allows you to refocus on your core competencies. You’re not probably a warehouse or a storage company at your core; you’re designing products and marketing them. It allows you to design and make better products, hopefully, because you’re allowed to put more energy into that by outsourcing this to a warehousing and fulfillment center. And it allows you to increase your spending and effort on your marketing and sales effort, which is what really drives your sales and profitability, not having a warehouse and fulfillment center and employees to do all that.
Then ultimately, hopefully, it allows you to grow your business faster and more profitably because you’re focusing on what you are best at and outsourcing the other parts.
Number five, as far as a benefit and an opportunity, it should allow you to scale up your business faster and with less overhead. 3PL warehouses can grow with your business faster versus having a lease on a building. Then if you start growing really fast and you need another warehouse, it’s much easier to grow within a large 3PL warehouse infrastructure versus going out, having to rent more space, or rent a completely new building and move everything over. It just allows you to scale and move faster, especially in high-growth markets.
You’re also focusing the capital that you do have on growth-related tasks. Instead of putting money into a warehouse that doesn’t necessarily make you money, putting that capital into things that help you grow your business and make more money faster. Then hopefully, overall it saves you money too, in the form of reduction in rent costs because you’re paying a variable, not a fixed cost, to store all of your products, materials, and hopefully, you’ll be getting drastically reduced shipping rates by leveraging the warehouse or 3PL warehouses’ shipping rates and carriers.
Then number six, not really a benefit or opportunity, but to speak to our business, we have warehouses in California, New Jersey, Kansas City, Missouri, Texas area, and a few other locations that are in the mix. But that puts your product within a 1-2 day transit time of almost anywhere, so faster overall reduction in cost and just quicker time to market. There’s a whole host of benefits.
Again, this is my company. I’ve been running it for 14-plus years. If you don’t think that you’re properly set up as far as warehousing in logistics, we’d be happy to drill into your current process and show you if we have a better solution for you, or at least drill into some of these ideas and really help you assess if you’re doing things in the most advantageous manner.
My company, we’re looking to grow and we’d be honored to meet with you and discuss warehousing in your logistical process. My phone number is 866 854 5341 extension 3 or jeremy@easylogisticsmanagement.com. Hope you’re having a great week. We’d love to talk to you soon.