If you’re outgrowing your current warehousing partner or are ready to make the leap from DIY to a more robust operation, 3PL outsourcing may be the answer. In this article, we’ll tell you a little about what a 3PL warehousing operation looks like and give you 5 benefits that an outsourced 3PL relationship can have for your business.
Warehousing operations with a 3PL partner typically follow a shared warehousing model. Shared warehousing enables you to share space in a 3PL’s warehouse alongside other “tenants.” Instead of the large overhead associated with the DIY and contract warehouse models, you pay only for the space and services you require. Your 3PL can accommodate any shifts in space or resource requirements – effectively scaling your footprint to your needs as they change over time.
For larger companies with predictable sales volumes, there is also dedicated warehousing. With this model, pay a 3PL to fully dedicate one (or more) of its warehouses to your operation. Or, you can lease the facility(s) yourself and hire a 3PL provider to run your operations.
2. Improved efficiency: 3PL providers leverage best practices across many different customers to optimize warehousing operations for efficiency. This can lead to reduced order fulfillment times, improved accuracy, and lower inventory costs.
3. Scalability: 3PL providers can scale operations up or down based on customer needs.
4. Reduced risk: Outsourcing warehousing services can help companies reduce their risk in a number of ways. For example, 3PL providers are typically insured against damage or loss of inventory. Additionally, 3PL providers have experience in dealing with a variety of supply chain disruptions, such as natural disasters and labor disputes.
Your 3PL vetting process should start with the basics:
From there, you should look for characteristics that separate one 3PL from the rest of the pack. Two areas that should be of interest are continuous improvement and KPI management.
For most companies, it is important that their 3PL partner has a documented continuous improvement program (CIP) in place. Such a program seeks to improve operations, prevent non-conformities and ensure that errors, should they occur, are never repeated.
Some 3PL providers go the extra mile with CIP and are ISO-9001-certified. While not every company that has a CIP will be ISO-9001-certified, every ISO-9001-certified company will have a CIP. ISO-9001 is one of the standards developed by the International Organization for Standardization (ISO). Companies who are certified in the ISO-9001 standard have demonstrated a commitment to quality that goes far beyond lip service.
When you contract with a 3PL for warehousing and distribution, you’re entrusting key components of your supply chain to an expert that can perform these services at a high level. Key performance indicators (KPIs) are the metrics that help you to understand just how well your 3PL is performing.
Importantly, these KPIs should be established with your 3PL at the outset of the relationship. Each metric must also have a goal which denotes success (e.g., 99.5% on-time shipments). If/when your 3PL provider falls short of the mark with any given metric, you’ll want to have confidence in its ability to identify the root cause and to establish corrective measures to improve performance.
If you’re looking for East Coast warehousing that allows you to reach 70% of the U.S. population in just one day, look no further than Kanban Logistics. We are an Eastern North Carolina 3PL provider that offers dedicated and shared warehousing (with rail access) and a full suite of additional logistics services. We’re always happy to talk warehousing, so feel free to contact us anytime.