Contract Warehousing

How to choose the right warehousing partner

Businesses that sell products must have systems for delivering them to clients. Unless the product can be delivered promptly and efficiently it will struggle in today‚Äôs demanding market. The supply chain usually of 3rd party warehousing can provide, picking, packing, and shipping components, often referred to as logistics. 

Choosing a third-party logistics service can be tricky, and companies should be prepared with the right information before diving into the decision making process As any business with multiple stock keeping units (SKUs) and multiple orders per day knows, logistics is more complex than just putting up some shelving and making a few trips to the post office. From the local tee-shirt company to the multi-billion dollar pharmaceutical company and companies of all sizes in between, managing inventory is a major business challenge.

Long before the current economic situation, smart businesses looked for ways to streamline operations and keep costs under control. To that end, many companies have outsourced as much infrastructure as possible in an attempt to focus on core competencies. Outsourced logistics, or third party logistics (3PL), as it is often called, has grown as an industry because of its ability to offer ever more finely tuned supply chain solutions. 

Third party logistics is a combination of storage, transportation, and services that enable businesses to deliver goods to customers. Other services offered by third party logistics companies that are less dramatic--but just as important--are the ability to cross dock (receive merchandise and immediately route it to the consignee), kit, label, poly-bag, co-pack, RFID tag, and integrate with customized computer systems


When searching for the right third party warehouse for a business, it is necessary to look at certain capabilities that will meet the requirements of your business. The company should have the proper ability and experience in the industry. The company should be a warehousing company that is providing warehousing , not a transport company that is also doing warehousing as a add on to its mainstream business as the disciplines and requirements have two different approaches and business focus and if you get this wrong you will have a substandard operation. It should provide efficient and effective supply chain services at reasonable prices. Without these, you could be left without the required support. 

The primary provider should also be ready to interact with all secondary providers in its chain of operation. This communication is essential for continuous operation and stability. The company should have access to all necessary technologies, such as systems for warehouse management, reverse logistics, and transportation management. This is necessary in order to interface with additional aspects of the business. The 3PL should have a documented work history, reflecting good relationships with past and current business partners and their customers. 

When choosing a third party warehouse, you need to realize that it is a strategic decision. That you require a certain fit, such as a specific location, service and level of expertise. Your company may lack the expertise to do the work that a third party could provide for nearly the same price. Financially, you may find it serves you better to outsource your warehousing to a third party.

 You do not have to have the financial commitment of leases and plant (fork hoist/racking/ packing machines etc.) which allows you to invest in product and marketing and gain a better return. You do not have to be involved in managing the logistical flows of stock in and out and investing your time in this area and becoming involved with the staff and their management. Unlike in the past, companies are moving away from doing all the business themselves. They are now realizing that such a practice leads to less options and flexibility.

Technology is helping 3PLs to become increasingly sophisticated and seamless logistics services. The internet has led to increased virtuality, and in the future it's possible that with an outsourced partner you'll get better and more real-time data than on your own as they do invest in this area to improve their own management of stock on your behalf and are more likely to invest in a better and more expensive program than you may invest in or be capable of doing yourself. 

Companies outsource their product to warehouses in order to increase their web visibility. They want to know where everything is and when. By integrating a company product with the internet visibility, there is a real time inventory. Nothing becomes lost because it is all in perfect view. This is a key to good business. All of the above can turn a small internet business into a global business almost overnight. If a product is sought by someone overseas, your company can provide them a product because of the visibility the internet has given you.