For more than 30 years, we have spoken to a steady stream of companies about their warehousing needs. The word that comes up maybe more than any other is FLEXIBILITY. People want a flexible warehouse, and they define that in many different ways.
Basically, they want a warehousing solution that can adapt to changes in their business. Perhaps the business is highly seasonal or perhaps they run promotions that may spike volume 4 and 5 times what is normal for a very short period of time.
Have you heard the phrase “Don’t build the church for Easter Sunday?” Well, when it comes to product demand, companies want to be able to accommodate all the “Easter Sunday churchgoers” without having to pay the cost of building a permanent capability. They want to rent, not build. It’s a tough thing to do if you’re actually running a church. But it’s actually quite easy if you’re storing and processing inventory.
Many third party logistics providers (3PLs) cater to companies that require a high level of flexibility.
How can you find a truly flexible warehouse partner? Here are some questions to ask.
Can I pay only for the space I use?
The classic public warehousing company will charge you for space used by the month. That will include a storage charge and the inbound and outbound handling charge for that given month. Think about how a parking meter works. You pay only for the time and space you need. Different 3PLs may pro-rate your charges if you come in or leave mid-month. Any way you look at it, public warehousing offers great flexibility.
Some 3PLs don’t like the unpredictability of accounts with frequent volume spikes, so they require customers to contract for a longer timeframe. This may suit your needs fine, but know that there are more flexible space options out there in the market.
Can I pay only for the services I use?
Aside from the cost of your inventory, labor is your biggest warehouse expense. You want a warehouse partner that is very adept at managing a flexible labor solution. Two things you should look for:
- Cross-trained staff. Public warehouses typically serve many customers in the same warehouse. These customers can have differing order activity at different times of the day or week or month. So when one account is slow, another is busy. You want to make sure your provider has cross trained associates so that experienced associates can be “borrowed” from other accounts to avoid the need for outside temp labor.
- Temporary labor. Speaking of temps, they are a very economical way to handle volume spikes on a short-term basis. Look for a 3PL that has experience and a clear process for working with a temporary agency. A poor temp solution can actually cost you MORE money – inaccurate orders, poor productivity – if inexperienced workers are recruited and thrown on the line with little training.
Can I expand into other operations?
If you have an urgent need to expand warehouse capacity, you want to be able to handle that need with one phone call. But smaller, single-facility operations may not be able to help. As a result, you’re left with the challenge of finding the additional capacity yourself. Look for a partner with multiple locations or one that has identified flex space that is readily available upon request.
Can I handle unanticipated value-added services through your operation?
Lots of things can be done in a warehouse that are not “typical” warehouse duties. Special packaging, labeling, combining separate products into a new “kit,” repairing, inserting a customized note into the box… The list goes on.
Every provider you ask will tell you they can handle these flexible warehouse activities, but you want to see clear evidence. Have them show you, in real time, how they handle value added supply chain services.
The last thing you want to do is send products outside the facility, incurring high freight costs and inflated and unnecessary labor costs.
Can you handle B2C fulfillment?
Moving pallets in and out of a warehouse is vastly different than picking and packing individual orders for online commerce. Don’t assume a warehouse partner can serve all your sales channels. If your requirements now, or may one day, include B2C fulfillment warehouse services, look for evidence that the 3PL has the systems and demonstrated processes to efficiently process these direct-to-consumer orders.
A Flexible Warehouse Allows Costs to Parallel Revenue
Many businesses cannot predict demand. Rather than invest significant capital to build an infrastructure that may go unused, companies “rent” space and services from a flexible public warehouse provider. This gives them a variable cost model where distribution costs parallel their revenue stream – a financially sound and flexible warehouse solution.