Running your own business involves many challenges and the need to make difficult decisions. One such difficult decision is undoubtedly the choice – to build your own warehouse halls by investing your financial resources, or to use the services of an external warehouse.
Of course, each decision has consequences, so the choice must be well thought out, as well as tailored to the characteristics of the company, the work system and many other factors. So what should we consider before deciding on how to store our company’s goods and products?
Search and verify logistics service providers
First of all: before signing a contract, you should check who are the logistics service operators in the area, examine whether they are well-established companies in the market, or whether they are so-called “jumpers”, who often appear suddenly, in response to growing demand, and offer logistics services without having the necessary experience.
You should also find out whether the operator in question has modern IT solutions, which primarily consist of warehouse management information systems (WMS). The aforementioned WMS is a program for managing the movement of products in warehouses, used in logistics. Solutions of this type help coordinate warehouse work, allow for flawless location of goods in the warehouse, and efficient control of warehouse turnover. The system gives us information about the inventory according to specific guidelines. It allows efficient localization of each batch of goods and each individual shipment.
It is extremely important whether the future operator can provide customers with transportation with its own fleet of vehicles, and whether it is able to help with the shipment of goods – ordering a courier, contacting the transport company.
Finally, an important point – strategic location. Proximity to an expressway, highway or state border will be a big plus here. Today, time is of the essence, and a good location means saving it.
Let’s take a look at the benefits of working with a logistics company and renting warehouse space.
Savings from outsourcing
Using the services of a professional logistics operator brings many financial benefits. First of all, it allows you to avoid the effect of so-called overinvestment, i.e. a situation when the outlay in building a warehouse significantly exceeds the potential profits. When we build a warehouse, we prefer to build a large facility, in case we need one in the future. Not being able to predict whether a large warehouse will actually be useful to us in the future, we can easily lose money on an investment that will prove unnecessary or too large in some time. Many logistics companies offer an option where you can pay only for a specific storage space. Another option is also a long-term contract for the space you actually need. When a storage project for 2 years assumes that you will need 1,000 pallet spaces, you can rent a warehouse with that much space. This avoids the fixed costs associated with maintaining empty warehouse space.
When using an external warehouse, the entrepreneur does not need to hire, train and deploy his own employees, and avoids formal problems related to licenses, insurance, inspections or accidents at work.
As Matthew Oleksiejuk, CEO of LCL Logistic, puts it: “The logistics operator can offer a number of system solutions to reduce costs. These are, first of all, WMS systems, allowing the location of pallets on racks, automatic reports on stock levels, and thus saving time.”
Another benefit is the ability to use advanced systems at the disposal of logistics companies.
“Today logistics, it’s systems, processes and automation. Without these, many companies are lost in chaos, burning human potential, on antsy work,” says Wojciech Szubart, one of the employees responsible for implementing the WMS system at LCL Logistic.
An experienced logistics operator with advanced IT systems and technologies should be a cure-all for any problems related to inventory and warehouse processes. These problems often result in chaos, lack of flow of goods through the buffer, warehouse, or even queues at loading ramps.
Focus on what you are best at
Let’s say you own a company that makes Christmas baubles – business is booming, new customers are coming in, you ship product all over Europe. Is it worth building a warehouse with 10,000 pallet spaces to store your products year-round and then ship them out? Is it worth it to create hundreds of jobs for warehousemen, security, logistics support? Or is it better to entrust these tasks to a logistics company and focus your own efforts on what you are an expert in – manufacturing and selling baubles? Maybe, instead of a huge warehouse, it’s better to invest in another production hall and expand your business?
We strongly encourage you to talk to specialists – logisticians, who will look at your company in an individual way and advise you on the best solution. Redirecting your warehousing tasks to an external company will ultimately bring tangible benefits, reduce the frustration caused by excessive tasks and streamline processes, and this will allow you to focus on developing your business.