Many businesses and companies were started in the basement or garage of someone’s home. With growth, these companies and businesses began to need additional space. A great number of successful business owner-operators become overwhelmed from the organization, storage and distribution of merchandise. These overwhelming tasks can take a great deal of time and a lot of commitment from the leaders of a business that may need to be spent focused on other areas of the company. Outsource warehousing is generally the ideal solution for growing businesses. With outsource warehousing, a third party is used to store, fulfill and distribute a company’s products.

Once a warehouse has been located and secured for use by a company, many find that the entire process is rather simple and usually very cost effective. In the following, reasons to use outsource warehousing are listed.

• A company may not be optimized for managing a distribution area for lack of expertise or certain resources.
• No experience in the area of commercial real estate allowing for an arrangement to be negotiated.
• Supply professionals will help in giving the company a competitive advantage over others offering the same products.
• Avoidance of certain expenses associated with warehousing such as equipment and certain software.
• Warehouse companies have great power in transportation buying.
• Extreme improvement in a company’s process of fulfillment and supply.
• Most warehouses offer complimentary services to their customers such as final assembling, labeling, packaging and others.
• No upfront investing on certain advanced technology and software for warehousing.
• Acquiring customer service representatives for delivery and shipment that are both knowledgeable and flexible.
• Increase in reliability and shipment scheduling by using warehousing that offers several centers for distribution.

All of these factors and many others are great reasons to choose outsource warehousing to better a business. With this type of precise functioning, a company will see an increase in their customer base which will show in the amount of profits gained.

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).