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04
Jan
The Top 10 reasons why you should outsource your warehousing
The reasons for why you should outsource your warehousing and operations to a 3rd party expert specialist are many and varied.
They include the obvious ‘hard’ justifications such as the reduced need for capital investment in your warehouse space as well as the knock-on savings that can be made on warehouse equipment purchases, the reduced cost of sharing vs owning and the reduced need for specially trained warehouse operations staff.
But they also extend to less tangible or quantifiable benefits such as the value of flexibility that outsourcing brings.
In this article we offer you 10 reasons to outsource your warehousing operations to a specialist, expert 3rd party warehouse operator – and explain why it makes such good business sense.
1. More time to focus on your core business
If your business is in retail, import, export or some other sector such as agriculture that simply requires ‘storage space’, your business consultants might argue that you are not in the warehousing business.
The case for outsourcing ‘non-core’ business operations is strong, especially if those operations are not direct revenue earners. Instead, when seen as overheads, those operations could be soaking up and diverting management time and expertise – as well as cash – that could be put to much better use on direct business building activity.
2. No warehouse Health & Safety compliance issues
Running and managing a warehouse can be particularly complex because of the health and safety requirements involved. Regular specialist training and certifications for staff in some areas of warehouse operations are mandatory and subject to rigorous enforcement.
Health & Safety, while entirely justified, can be cumbersome and may be seen by some businesses as ‘red tape’ even though it is a matter for legal compliance. For those reasons, it may be best to outsource the whole warehousing function to specialists.
3. Better service
Specialist 3rd party warehousing operations service providers whose revenues depend on warehousing provision are more likely to be experts – but will also offer a high level of service which may be backed up by performance agreements under contractual terms.
These service level agreements may be enforceable not just in a legal context, but also because your service provider will work hard to retain your business. Thus it is in their interest to do an excellent job for you in order to keep your business.
4. Ideal distribution location
If you’re an importer, an overriding priority will be to keep your road miles to a minimum. That means getting your goods into a warehouse as soon as reasonably possible after passing through your UK port of entry. So it makes sense to select a warehouse with easy access to that port.
If your chosen flexible warehouse provider can also offer a distribution operation, they can then manage and distribute your goods for you – leading to even more operational efficiencies.
5. Because there are specialists to do it for you
The old business principles hold true: if a 3rd party provider can do it more efficiently than you, it’s worth investigating the outsourcing route.
If none of the other possible reasons for outsourcing your warehouse operations to a 3rd party provider persuades you, start here. Simply analyse what your warehousing operations currently cost in real terms and then compare against the cost of a specialist outsourced provider.
6. Reduced capital investment
Whether you are looking at buying your own warehouse or renting the space from a 3rd party, if you plan to operate the warehouse yourself as part of your business, the costs are high compared to outsourcing.
If it’s a simple matter of ownership vs outsource your warehousing, where costs and cash flow are the only factors, outsourcing is the answer. You can free up capital by switching from an in-house to outsourced warehousing model, or avoid the upfront cost completely if you are choosing between investment in your own warehouse facility or outsourcing to a suitable 3rd party.
7. No ancillary equipment purchases
As well as avoiding capital investment in physical warehouse infrastructure, you’ll also save on the attendant costs of equipping your warehouse with everything from pallet racking to safety barriers, mezzanine floors and forklift trucks.
The costs of maintenance and servicing of these aspects of your warehouse on an annual or more regular basis can also stack up so again it’s worth considering outsourcing on this basis alone.
8. Flexibility: No long term lease
A key benefit of outsourced warehousing can be flexibility on lease terms. If your business is seasonal or demand fluctuates for other reasons, there’s no point paying for aisles of empty racking or for keeping masses of slow moving stock on shelves.
By outsourcing your warehousing requirements to a flexible supplier, you’ll have access to the pallet warehousing and other storage, as well as the accompanying services and equipment you require when you need it for as long as you need it.
9. Shared costs: Benefits of a shared resource
A shared resource is likely to be a cheaper resource – because your warehouse supplier is spreading the cost of overheads across multiple clients.
The quality of your storage and pick/pack or forwarding operations is not compromised in any way by sharing warehouse resource because your provider knows that his business depends on your business being efficient and successful.
10. Reduced requirement for HR operations
Management of warehouse staff can be a major overhead, particularly if operations carry on round the clock.
As well as outsourcing your warehouse operations you are also outsourcing all your aspects of HR management, including training, payroll, sick pay, holiday pay and performance management.
For more information or to discuss outsource warehousing and distribution requirements, contact Masters Logistical on [email protected] or call us on 01353 648222.
