Why opt for a 3PL provider instead of setting up your own warehouse?

They say if you are a growing business, it’s a good idea to outsource order fulfillment to a third-party shipping company. However, most people often think that setting up their own warehouse is the safest way to resolve their warehousing needs. Though it is not wrong, it depends on your needs and goals whether or not you need to build one. Moreover, setting up your own warehouse needs both time and effort and if the benefits are not evident, all your endeavors go in vain. If you dig deep, you will find that 3PL is the ultimate choice, if you want to pay more focus to your business bottom line. In this post we have come up with a detailed guide telling you why opting for a 3PL provider is better than setting up your own warehouse. So, let’s get started.

#1: Stay Away from Establishing and Maintaining an Infrastructure

Setting up your own warehouse is not as easy as it may seem from the top. You need to not only set up infrastructure but also maintain it for which you need to hire and train the workforce as well. On top of it, you need to bear heavy maintenance and overhead costs. Some of the activities involved in setting up a warehouse are:

Renting a warehouse of procuring land for building one

Buying pallet racks and shelves to store the inventory

Buying warehousing equipment that includes pallet trucks, conveyors, and forklifts

Restocking the shipping & packaging such as labels, tape, cartons, printers, and wrappings

Paying the overhead costs such as rent, administrative expenses, property taxes, and utilities

Buying or creating a warehousing management system (WMS) for managing the operations

Staying compliant with safety regulations while handling warehousing machinery

Hiring and training employees.

These were the most evident costs involved, there could be several hidden costs as well such as costs incurred due to processing of purchase orders and job orders. Moreover, the seasonal spike up in the demand for products may result in storage space shortage or low demand may result in unused spaces. On the contrary, the 3PL warehouse companies are well equipped to meet any kind of demand as such.

#2: Integrate Numerous Sales Channels

3PL logistics warehouse providers not only employ cutting-edge techniques for picking, packing, and shipping but also use industry best practices to fulfill orders. Data is automatically taken by their WMS from all your online shops and sent to the warehouse. It allows you to track the orders in real-time and provides you with access to the inventory reports. So, monitoring the inventory levels and replenishing them before the stock is used up becomes easy.

#3: Innovate to Grow

Being in the industry for a long time and having dealt with multiple issues for multiple clients from multiple industries, 3PL warehouse companies create innovative solutions very easily. For instance, they guide you on using the most cost-effective and reliable shipping and handling methods. They also help you execute and improve processes to deal with the glaring inefficiencies in them. One such example could be supply chain automation through EDI.

Wrapping Up

We just now discussed how advantageous 3PL warehouse companies are. These were only the top 3 benefits. There are plenty more. For example, you get expert warehouse management services, reduced SG&A costs, scalability benefits, and much more. So, between setting up an internal warehouse and outsourcing to a third-party shipping company, which option are you going to settle on and why? Let us know in the comments section below.