While many businesses up and down the UK have invested in their own warehouses, many are choosing to take a different route: outsourcing.
There are a number of third-party logistics (3PL) companies who specialise in warehousing, transportation and distribution, but is it right for your business?
Of course, it depends on the circumstances, but we’re going to take a look at some of the benefits that it could give you.
When you buy your own warehouse, that space is yours, but you’re confined to that space, with little or no flexibility.
While it’s great to be able to use your space as you wish, if it leaves you with little room for expansion, it could be quite limiting.
While it can be hard to predict where your business will be a few years down the line, if you do happen to experience rapid growth, you’re going to need a lot more storage space.
With a 3PL, you can easily negotiate more space as and when you need it, which will also be a lot cheaper than having to extend or relocate your own warehouse.
This also applies if you work in a seasonal business where stock levels fluctuate throughout the year.
Of course, this works the opposite way as well as if you find you don’t have as much stock you can downsize and cut down on your overheads.
Lower upfront costs
One of the most important things to a business is keeping costs down, and setting up your own warehouse can be a big drain on resources.
Some businesses simply don’t have the capital available to invest in their own warehouse and so choose to turn to a 3PL where the costs are much lower.
The rental model means that all of the equipment, staff and infrastructure are in place already and you can enjoy a top quality service at a fraction of the price!
We spoke to 3PL company Masters Logistical who told us: The number one reason customers come to us is that they don’t want to incur such heavy upfront costs.
“The 3PL model works for both us and our clients as they can have a fully operational warehouse ready to go with a fraction of the time and cost.”
Working with experts
A lot of business owners don’t have a lot of experience in logistics, which is understandable, but if you do choose to work with a 3PL, you can work safely in the knowledge that they work in logistics day in, day out and are extremely experienced at what they do.
Adjusting to a new warehouse could take your existing staff a little while, but with a 3PL, you know that they’ll be able to get on with the job as soon as required.
This will save you time and money on training your own staff, and you’ll know that while you’ve got warehouse people looking after your warehouse, you can focus on what’s important, which is looking after your business.
Perfect for smaller businesses
The 3PL model is particularly of interest to smaller businesses as they may struggle to warrant managing their own facility, as it simply wouldn’t make sense financially.
These businesses may also have cash flow issues which make it difficult to commit to managing their own warehouse facility.
However, this isn’t to say that outsourcing is only for smaller businesses, as many larger businesses are starting to adopt it, to allow them to focus on their core business model.
If your business isn’t necessarily close to your customer base, it can make sense to base your warehousing much closer to your customers to cut down on your transport costs.
If you often import goods into the country it might be worthwhile thinking about having your warehouse nearby a port, which again, will cut down on costs.
So when the time comes for your business to invest in a warehouse, bear in mind the time and money that you could potentially save by outsourcing to a third party.
Check out this article from WhichWarehouse on how to estimate the real savings that outsourcing could make.