In rapidly changing business environment driven by intense competitive pressure, warehousing strategy is increasingly becoming important. For businesses, effective management of flow of goods through efficient supply chain can result in better cost control, better inventory management, effective utilization of cash flows and streamlined transportation. As a result, more and more number of smaller as well as larger businesses are exploring the possibility of outsource warehousing. It can help them to focus on core operations resulting in strengthening of business in strategic markets. Also, larger businesses can efficiently scale up their operations by expanding into newer growth markets.

Key reasons to go for outsource warehousing

• Flexibility: It provides businesses to set up and scale up storage and distribution model according to shift in demand trend. Businesses can expand into newer markets to expand its customer base in quicker manner with the help of outsource warehousing. It is possible to manage inventory levels in much more responsive manner to accommodate spike in demand and seasonality. Also, by using decentralized model of outsource warehousing, businesses can reduce transportation cost.
• Consolidation: As 3PL operators have scale of operations, they can offer cheaper rates for storage as well as transportation compared with cost associated with in house warehousing. This results in considerable cost savings for businesses.
• Expertise: Third party logistics (3PL) operators offer benefits such as access to proven processes and deep industry knowledge. It is highly critical to use correct methods of warehousing and distributing for effectively serve customers. As 3PL operators can offer various value added services and benefits, businesses can operate in much more efficient manner resulting into higher revenues and improved profitability.
• Solutions: Outsource warehousing also makes sense as 3PL operators invest heavily in various technologies and systems to improve the effectiveness of overall operations. Some examples are Warehouse Management Systems (WMS), Radio Frequency Identification (RFID) and Electronic Data Interchange (EDI).