Top 10 Reasons to Outsource Your Warehousing Operation

Here’s a list of the top 10 reasons why businesses outsource warehousing operations to reduce costs and make their businesses more competitive.

  1. 1.       Focus on your core

If warehousing and shipping isn’t your core business, then outsourcing your warehousing operations to a 3rd Party warehouse often results in greater focus on core business activities like sales, marketing and new product development.

  1. 2.       Risk Reduction

Warehousing and shipping comes with all kinds of risks; from financial risk of inventory loss and damage to possible injury of your workforce.  Outsourcing your warehousing and shipping operation typically results in less business risk for you.

  1. 3.       Better Systems and Performance

A 3rd Party Logistics warehouse’s main business is warehousing and shipping products.  They have systems and processes suited to do just that.  Typically, their investment in technology specifically related to manage inventory, pick, pack and ship is greater than the average business where this operation is not their core business.  By outsourcing to a 3PL Warehouse you can take advantage of their leading edge technology without the huge investment!

  1. 4.       Cost Reductions in Storage

Typically, outsourcing your warehousing operation to a 3PL Logistics company results in an overall cost reduction.  Here’s why:  Most businesses have cyclical sales.  That is to say sometimes they need to carry more inventory than others.  So, if you are taking care of your own shipping and warehousing you have to own/lease capacity for your peak inventory.  Even if that only happens once per year.  A 3PL has the ability to mix and manage different customers with different peaks in their business.  Therefore, you only have to pay for what you use.

  1. 5.       Cost Reduction in Labour

Much like warehouse space capacity, labour usage for a typical warehouse has peaks and valleys.  If you’re running your own warehouse, you need to staff for the peaks and then have less than optimal labour usage when you’re not busy.  If you choose to outsource to a 3PL then the labour a 3PL uses is spread of many customers, reducing slack time and waste.

  1. 6.       Better use of Capital

Warehousing is an expensive proposition in terms of capital and investment.  If you’re like most business, you fight for every dollar of capital for investment.  If you’d rather invest your precious capital in developing new products or buying new machinery that gives you a competitive advantage, then 3PL warehousing is for you.   Because you only pay for what you use, it’s an expense, not a capital investment.

  1. 7.       Economies of Scale in Shipping

Because 3PL’s ship for a variety of customers, that volume of shipments are pooled together allowing the 3PL Warehouse to get better shipping rates on your behalf.  You save based on their larger volume of shipments.

  1. 8.       Agility

If you’re business suddenly grows or shrinks, this has a huge impact on your investment in storage space and your human resources if you’re managing your own warehouse operations.  It takes time to ramp up or slow down.  You may miss market opportunities while you’re building and hiring.  With a 3PL you have access to instant capacity.  This makes your business more agile and responsive to the market.

  1. 9.       Choice of Location

When you choose to outsource warehousing and operations to a 3PL, you have a choice of location.  You no longer have to have your warehouse attached to your head office geographically.  You can choose a 3PL that makes geographic sense where it’s optimal to serve your customers.  This typically results in savings from shipping operations and better customer service.

  1. 10.    Improved Service

Because a 3PL warehouse’s sole business is to pick/pack/ship, they are specialists.  They have the systems and people to excel at this operation.  Most business that chooses to outsource their warehousing operations experiences an improvement in customer service as a result.

 

XTL Distribution has warehousing operations in Toronto and Montreal with over 75 years combined experience in warehousing and distribution operations.  Plus, XTL’s Distribution operations combined with XTL Logistics and XTL Transport give clients unparalleled access to warehouse, logistics and transportation assets in Canada.  Contact us for a free consultation on how we can help you leverage 3PL warehousing to reduce your costs and make your business more competitive.

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