Wondering if you should outsource or insource your warehousing? Trusting a third-party (3PL) specialist to run such an integral aspect of your operations is a decision that takes a fair amount of consideration. Will enlisting the services of a warehouse partner make your business more efficient overall? Will it save it time and money, and add value? If the answer is yes, then outsourcing is the right way forward.
But what things should you look for when weighing up whether to outsource your warehousing and distribution to a trustworthy provider?
Here are five questions to ask yourself before making that all-important decision.
1. Will your business be more efficient?
Will hiring a specialist provider save time and money? To answer this question, you’ll need to conduct some thorough analysis. Dig deep into the history of your business to work out how much it costs to run your warehouse operation. Next, gather quotes from several 3PL providers to see how their numbers compare.
Price alone shouldn’t be the deciding factor. Filter your shortlist using a range of other criteria too. Include customer reviews, the range of services offered, and how much experience these providers have.
If one or more of the 3PL warehouse providers on your list meet your criteria – and will be more cost-efficient – then it’s time to progress discussions with relevant parties to the next level.
2. Are you really a ‘warehousing’ business?
You need to run warehouses as part and parcel of your business model. But you also operate a haulage service to get your products from A-to-B. That doesn’t mean you’re in the transportation business. These services are ancillary to your core offering – which might be retail, import, or export.
If you’re focussing too much time on warehousing operations, it’s time to handover this non-essential service to specialists. Outsource to a 3rd party warehouse specialist and you’ll have time to concentrate on marketing, product development, recruitment, and other essential business activities.
3. Are your warehouse locations sub-optimal?
Time is money. More hours spent on the road equates to increased costs you’d rather avoid. If you work in import and export, your aim is to get goods into a warehouse within as short a timeframe as possible once past the UK port of entry.
Could your proposed 3rd party warehouse provider offer a distribution service and locations built closer to key ports? If so, outsourcing will make sense and lead to better operational efficiencies.
4. Is your industry seasonal?
Does demand fluctuate depending on the time of year? Perhaps you run a seasonal business and rely on making a profit at Christmas or another significant time of year. If that’s the case, you may be paying to run your warehouses 24/7, 365 days a year, even when your shelves are laden with slow-moving stock that customers aren’t buying.
Flexible leasing could save your business money. Money that could be put to better use elsewhere. Outsourcing your warehouse function to a 3PL provider would therefore make sense.
Imagine being able to access pallet warehousing, equipment, and other services on a demand-only basis. If long term leases are eating into your bottom line, it’s time to start making some brave and dramatic changes to your operations.
5. Equipment costs skyrocketing?
Investing in warehouse infrastructure year-round makes little sense if you can outsource to a provider that has everything you need in situ – including pallets, forklift trucks, barriers, and mezzanine floors.
That’s without mentioning the cost of hiring staff to operate equipment. You also need to take maintenance and service costs into consideration. All of this stacks up and can eat significantly into your profit margins — can you afford it?
Outsourcing your entire warehousing operation to a flexible 3PL provider will save you money all year round.
Other benefits of outsourcing
- No need for HR operations. Warehouses are run by people. People need to be paid, trained, and performance managed. Outsource your warehouse operations and your HR function will be managed externally too.
- Reduce your capital outlay. Investing in infrastructure is expensive. Wouldn’t you rather lower your overheads and put the money you’ve saved to better use? It’s a simple case of ownership versus outsourcing.
Ready to outsource or have questions?
Then take the next step by talking to the Amco team. Our solutions continually push the boundaries of warehousing. We only invest in the latest equipment and facilities, which are strategically located to make our customers’ lives easier.