How to find a warehousing partner you can trust
The slowdown in the Chinese economy might be just a blip.
Or it might be a turning point in the world economy. A sign that the future may not be looking quite so bright as it did this time last year when GDP growth was forecast by the UK Chambers of Commerce at a healthy 2.6%.
Whatever your view, uncertain times call for a review of capital investment plans.
And at times like this, it’s worth looking at whether the new warehouse you’ve been planning is actually the right move. You might also review whether instead of a new capital project, it may be better to sit tight for a little longer, keep the cash in the bank, avoid the burden of debt, and go down the outsourced warehouse solutions route.
Right now, sourcing – new or additional – warehouse space from a reliable 3PL provider could be a really smart move.
Where should you start?
So how do you find a reliable, trustworthy 3PL warehousing partner that’s right for your business?
One that will treat your goods with care and attention and will commit to running your logistics operations through thick and thin to deliver on time, every time?
Simply finding a list of possible partners isn’t enough. You need to know this is the right decision, so in this article we look at how to find and evaluate the right 3PL provider for your business.
The key factors involved
Before you jump into a contract with a warehouse solutions provider, it’s worth considering a few key factors first, including:
- The reasons why you may want to outsource your warehousing
- How the business case stacks up
- The things that you want from a 3PL provider
- The main benefits
- Some of the risks, if any
- What the ideal 3PL provider looks like, in order to fit with your business
- Doing your due diligence
Here’s a bit more detail.
- Know why you want to outsource your warehousing and fulfilment
Obviously you know why at a surface level. You just want someone else to do it for you. Right? But what’s driving that need, and what are the real underlying factors that make outsourcing your warehouse to a 3rd party expert a good decision? Let’s look at a few:
- Uncertainty: when future business isn’t as clearly mapped out as you might want, it might not be the time for a big capital project. So the managed warehouse option is more sensible until confidence returns.
- Rapid growth: on the other hand, maybe your business growth is outstripping your operational capacity to support this growth – so you need to outsource until things settle into a more manageable growth trajectory.
- Limited expansion options: if your current warehouse is full to the brim, but can’t be expanded or redesigned for some reason to accommodate more goods, you’ll need to source extra space elsewhere.
- Flexibility: if you need flexibility in your business, outsourcing your warehouse requirements makes great sense. If your storage needs are likely to increase in the future, it’s good to know that the space is there when you require it.
- Location: if you import your products or components from overseas, it’s worth noting that over 75% of goods from China come into the UK via Felixstowe. Saving road miles is important so there’s good reason to establish a warehouse and distribution operation you can call on day and night close to the arrival point.
- Seasonal sales fluctuations: if your sales fluctuate up and down through the year, the cost of owning (or leasing) and operating a warehouse probably don’t stack up. It’s worth outsourcing – see this useful case study on why KWS chose the outsourced warehouse route.
- Understand the business case
Get the business case for 3PL warehousing and logistics really clear in your head first before starting your search for a 3PL provider.
The number one example in making the business case for outsourcing your warehouse is simply the comparison of capital investment outlay against the operational cost of outsourcing.
One brings with it possible debt and a requirement to service it; the other brings a set monthly fee which can be known and planned for, possibly flexed up or down depending on your contract, and which ultimately gives you more flexibility.
There are many other aspects to the business case, so it might help to look at our article on the business case for outsourcing your warehousing.
- Decide what you want in a 3PL partner
Read up on what makes a good 3PL provider – or get advice from an expert in the sector. This is going to be a big decision, and potentially one which will have long term impacts (positive ones!) on your business.
As this article about what to look for in a 3PL warehouse provider shows, examples might be to look for evidence of responsiveness, service quality and attention to detail.
It’s important not to use price alone as your decision maker. Yes, price is ultimately a major factor, but the attitude, ethics and approach of your 3PL partner will affect your business far more than a saving of £100 a week.
- Know the basic benefits
The basic benefits of using a 3PL warehouse provider are – in order:
- No capital investment cost
- No long term lease on a permanent warehouse building
- No additional team members to manage
- Access to expert services
- Greater efficiency
- Overall savings
There are others, but what they are may well depend on the exact nature of your business.
- Be aware of the risks
From the outside, many warehouse and 3PL providers will promise the world, and it may first seem like the relationship can work well for you.
But scratch the surface and things might not be quite as they seem, and when you put your goods into the hands of a 3rd party, you can’t afford to take too many risks. Be aware of what ‘could’ happen if you choose the wrong partner.
Or to be more positive about it, look for evidence in your chosen provider of a healthy business record, case studies and an attention to detail that befits a service provider that has your best interests at heart.
Key to it all is to do your due diligence before signing any contracts.
- Find a 3PL provider that ‘fits’ with your business
Your 3PL provider doesn’t necessarily have to have experience in your industry sector, but they should be able to show capabilities in the areas you need. For instance, if you need daily pick and pack fulfilment operations they’ll need experience of that.
Business ethics are another key area of ‘fit’ – and if your values are aligned with your provider’s it’s a recipe for success.
Attention to detail is important, so look for a warehouse solution provider that can demonstrate that they understand what’s important to you, and prioritise it in the service they offer. Closely checking the condition of every pallet of goods when it arrives into the warehouse before accepting it is a great example of this.
Communication is also key, so again you need to be on the same page about what is required. If your calls and emails go unanswered, better steer clear.
- Select on a range of factors
According to research, the most common errors occur when buyer decisions are made purely on the basis of price.
Very often the cheapest is not the best, and in warehousing and logistics where margins may be tight, it’s almost certainly the case that you get what you pay for.
Evaluate your potential 3PL warehouse providers on a set of criteria based on the points above and be prepared to negotiate on price.
For more information on Masters Logistical and its 3rd party warehousing, distribution and logistics services call us for a confidential discussion or request a brochure on 01353 648222.
Need some expertise in your warehousing operation? Visit our warehousing page to find out how we could help your business.
Alternatively, call us on 01353 648 222 for more information.