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Ownership vs. Contract Warehouse: Why to Choose the Latter?

Owning a warehouse surely has its share of advantages. However, startups and small business owners often find it hard to keep up with the soaring market costs and therefore owning an entire facility can eventually sabotage their growth. In addition to that, purchasing or even availing a facility comes with its own set of obligations— which often overshadows the benefits.

 

The best answer to ownership is a Contract Warehouse. Companies must eventually realize that ownership restricts them to a predefined area. Be it the cold facilities or an operational area involving dry products, everything about a commercially owned warehouse is trickier than usual. Owned facilities often push companies to their limits, especially when it comes to maintaining stocks at the peak. This is where contract warehouses come to the fore as they allow companies to breathe easily, even when there is a gap between demand and supply or vice versa.

 

Apart from that, businesses usually have a lot of warehousing options at their disposal, depending upon the size and scale of operations. While some organizations prefer maintain their own spaces, there are certain firm which prefer leased facilities. However, nothing beats the effectiveness of a contract warehouse as it is definitely synonymous to lower costs, guaranteed reliability and lower investments.

 

Defining a Contract Warehouse

 

Unlike regular facilities, contract warehouses are easier to work with. They can seamlessly handle the storage and shipping whereabouts of an organization, precisely on a contract basis. However, companies taking the services of a contract warehouse must commit to a periodical timeframe. The tenure, however, depends on the company and concerned service provider. Transactional fee can also be a determinant as contract warehouses usually function under cost-plus or fixed cost revenue models.

 

Associated Benefits

 

  1. Lower Capital Investments and Overhead Costs

 

When it comes to purchasing a space and converting the same into a storage facility, massive costs are involved. Structuring a warehouse according to the requirements of an organization also attracts additional costs. Be it renovating the entire building or purchasing equipment for beefing up the storage space— owning a warehouse can come with a lot of headaches. However, contract facilities usually have predefined zones for product storage. This eliminates the infrastructural costs and therefore excessive capital investments. Apart from that, sections for cold storage, controlled storage and even general storage are already carved out when it comes to a contract warehouse. There are instances when staffing requirements for the entire facility is also handled by the logistics company— as a part of the contract. This in turn, further reduces the incidental expenses related to staff handling and overall maintenance.

 

  1. Minimal Hassles

 

Contract warehouses function in a remarkable and hassle-free manner. Companies hiring similar services are contract bound which in turn protects the same from additional and unexpected expenses. There is a definite lock-in period to look after and this actually safeguards the concerned organization from hassles. Logistics companies associated with these warehouses specify even the minutest of details, including monthly costs, possible changes to the existing prices and even provisions for extending the period of contract. Owned warehouses, on the other hand, are completely controlled by the concerned enterprises. Therefore, it is possible to miss out on several factors— which isn’t the case with a third-party service provider at the helm.

 

  1. Improved Reliability

 

Logistics Companies offering contract warehouses also take care of distribution and packaging. With these useful services covered, organizations need not worry about increasing customer demands. The existing service provider eventually takes care of the goods and other aspects of a storage facility. This approach allows an enterprise to establish long-term ties with the partners and clients, regardless of the timeframe. When it comes to the reliability quotient, nothing beats a contract warehouse. The best part about hiring contractual services is that the company offering the same also helps envision and ascertain the design improvements.

 

Bottom-Line

 

While it’s great to depend on a logistics company for your warehousing requirements, it is the selection that eventually matters in the long run. It is understandable that every service provider wouldn’t offer the same catalogue and set of features and it is equally important to assess the professional requirements of your firm, beforehand. Regardless of the size and stature of a company, it is the right warehouse that makes all the difference when it comes to aspects of storage and distribution. A contract warehouse, therefore, simplifies proceedings for the entrepreneurs— depending upon the service period.

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Here is How Saving Money can help Logistics Companies

Logistics is the inseparable link between supply and demand. While warehousing is equally important when it comes to assessing the customer requirements, the logistical considerations actually play a pivotal role when it comes to amplifying the credibility of an enterprise. Needless to say, most organizations are on the constant lookout for lowering down the logistic costs which in turn saves a lot of money for them.

The latest marketing trend for companies is to outsource the logistics via select 3PL service providers. However, there are times when outsourcing adds to the hassles and sabotages the growth of an organization. Therefore, it is evident that most logistics companies try to minimize the headaches associated with deference and outsourcing. Although, technology can always extend a helping hand, it’s all about assessing the requirements beforehand and modifying strategies, accordingly.

Reducing Logistics Costs and Headaches: Best Possible Solutions

  1. Utilizing Open Spaces

The first approach involves identifying and eliminating vacant spaces associated with a container. However, this needs to be done in a diligent and highly organized manner. Increasing storage density is one way of looking at lower logistics costs. This involves full truck utilization where a company can pack in a few more options, thereby lowering the overall costs. Strategies like these lower freight costs and even encourage organized operations. The perks of utilizing spaces include asset utilization, inventory accuracy and even labor efficiency.

  1. Understanding Your Competition

Companies offering services related to warehousing, distribution and packing must be cognizant of the market competition. Having the best price for services can automatically attract a greater customer base, thereby improving revenue generation. Cutting logistics costs isn’t only associated with the freight storage and movement. Even if a company quotes lower prices as compared to some of its contemporaries, profits can still be generated if the underlining costs are lower than the expenses. This can be easily achieved by implementing streamline processes— including efficient management of accounting and transportation teams. Proper accounting is yet another technique for lowering logistics costs despite the concerned company quoting reasonable rates for its services.

  1. Carrying a Safety Stock

Logistical considerations can get tricky at times. Companies offering services aren’t always in direct contact with the retailers and miscommunications can hamper the credibility quotient. Therefore, it is advisable to carry a safety stock, especially for premium and loyal customers. The safety stock offers a backup plan in case the expedited shipments aren’t in the desired condition upon delivery. Although some companies consider safety stock as an additional expenditure, it helps create great relationships with buyers. Not just costs, utilizing this approach also minimizes the headaches associated with logistics.

  1. Having Customized Containers for Liquids

Liquids, when transported in bulk, are prone to spillage. From an economic standpoint, it is always advisable to use Intermediate Bulk Containers or IBCs for the same. While the standard drums are good for basic orders, the cost to spillage ratio is something which needs to be assessed. With IBCs in place, companies can move a substantial amount of liquid using fewer containers. This minimizes overall costs and also offers a sense of assurance to the customers and service providers.

  1. Opting for Automation

Believe it or not, automation actually simplifies the way companies undertake logistical activities. In the truest possible sense, an automated approach comes with myriad regulatory measures which are difficult to initiate manually. Moreover, manual labor requires constant validation and therefore incurs higher costs. Automation seems more like a one-time investment which seamlessly handles logistics, transportation and a host of other activities sans human intervention. It needs to be understood that automation holds true for every aspect of logistics and the quicker companies opt for it, the better it is for them.

  1. Tracking the Inventory

Companies that regularly track their inventory are better off at saving money. Updated inventory levels prevent overstocking, which in turn minimizes overall costs. Having a spreadsheet to fall back upon is yet another option for the enterprises. In addition to that, it is essential to keep a note of the available merchandise and the quantities asked for. If an organization is good at replacing the merchandize, it need not worry about the deadlines and additional costs. Moreover, an adequately stocked inventory minimizes the logistics headaches and hassles; thereby adding a sense of credibility to the affairs.

Bottom Line

Logistics companies usually have a lot on their plate when it comes to user requirements. Be it working overtime during a busy season or handling multiple customers at the same time— there are a host of elementary issues to deal with. However, at the end, it all comes down to the costs and efforts associated with the same. While the mentioned strategies can surely help an organization minimize the overhead costs and lingering discrepancies, it is all about innovation that assists a logistics company when it comes to surviving and growing in this keenly contested market.

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Why Warehousing, Distribution and Packaging Impacts Customer Satisfaction Levels?

At present, there isn’t a lot of empirical research going on regarding customer satisfaction and how it impacts the share-of-wallet. Moreover, some basic study modules have revealed that customer satisfaction is actually relatable to word of mouth, market share and even the repurchase intention. That said, enterprises that thrive on product sales are known to have warehouses and logistical considerations to look at. Needless to say, the deployed warehouse management techniques reveal a lot about the concerned organization an how it fares in  terms of customer service and satisfaction.

The Basics of Warehouse Management

There are a host of metrics that determine whether the company is looking to establish long-term relationships with the buyers or just trying to initiate moderate levels of purchases. However, amplified levels of productivity rates and efficient strategies can certainly drive in a lot of credibility for the companies. One aspect that simplifies things for the entrepreneurs is warehouse management that actually takes certain logistical considerations into the mix. Basically, if the existing warehouse is beefed up with products and showcases higher productivity levels, the confidence will surely rub on to the consumers— facilitating enhanced levels of customer satisfaction.

The likes of processing errors, shipping delays and other pitfalls are directly proportional to an incompetent warehouse which in turn sends a wrong message to the existing customer base. Therefore, it is important to make use of management software for minimizing manual interventions and improving overall retention rates and associated services.

The software module is probably the first step towards efficient warehousing— helping organizations with better visibility and customer service considerations. In this digital sphere, most users prefer quicker deliveries and hassle free returns. This is where having a well-managed warehouse sends out the right message.

Measuring Customer Satisfaction: The Handy Determinants

Having warehouse management software at the helm can easily measure certain automated considerations behind the convoluted world of customer service and satisfaction. Be it assessing the reduced customer churn, enhanced lifetime value or existing points of customer differentiation— it is important that organizations are well-versed with these determinants in order to leverage the warehouse management essentials in the best possible manner.

Moreover, customer satisfaction or the absence of it can determine whether the repurchases will be made and how loyal the existing consumer base is. Therefore, it is important to pair up warehouse management techniques with customer service modules, in order to understand the best practices and even the associated inadequacies.

The Concept of Warehousing

In basics terms, a warehouse or rather the storehouse is an area that shelters materials depending upon the distribution, production, packaging and even the maintenance requirements. As demands for products and goods grow, warehouses provide the needed strength to an organization— especially when it comes to making something available on a wider scale.

Be it a single-storied warehouse or a building with multiple stories— the storehouse deign can essentially determine the types of products stored within the establishment.  In simpler terms, the underlining design addresses the nooks and crannies associated with a warehouse management plan which in turn determines how satisfied or dissatisfied the existing customers are.

Warehouse management works in cohesion with storehouse maintenance and inventory control. It is obvious that customers wouldn’t like a product that’s old or expired and therefore maintaining the storehouse becomes exceedingly important. Not just that, the associated inventory or the collection of goods and products should be updated periodically, which then leads us towards inventory control.

Why Stocktaking is Important?

Product segregation is strictly customer-specific and depends on the purchase patterns. Therefore, companies with dedicated storehouses should look to strike the perfect balance between demand and supply. Stocktaking is one such concept that determines the balance between the stored items. This also involves physical checks and timely investigations for minimizing stock discrepancies. For those who are looking to delve deeper into the concept, stocktaking is further segregated into spot-checking, periodic and continuous stocktaking.

How important is Safety?

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A customer might not physically visit a warehouse but he or she gets a fair idea upon seeing the condition of the product in hand. This is where safety and security considerations come in handy while discussing warehouse management. While the store management security keeps the products and stocks away from miscreants— there are private security standards courtesy the inclusion of 3PL systems and other e-fulfillment options. Having storehouse security standards in place can readily amplify the stock value by improving upon the operational roles synonymous to an organization. Last but not the least, proper safety measures also keep the production values intact.

Bottom-Line

Warehouse management is a holistic process that involves a wide array of metrics to work with. Be it inventory control or the associated safety measures pertaining to a storehouse, warehousing is a concept that directly or indirectly influences customer satisfaction levels. In addition to the aspects which are already covered, warehouse management also involves packaging, preservation and keeping stock records. These facets work in cohesion with the inventory control and safety considerations; thereby offering an enviable user experience— both in terms of sales and services.