#1 BENEFIT: Shared Environment
Determining your warehouse strategy is an important part of your supply chain. Based on your business characteristics and dynamics, identifying the best fit for your organization will be key to your supply chain and meeting your budgetary needs. As all cost factors are reviewed, it will be clear as to what option will be best.
Shared Warehousing (also known as public warehousing or multi-client warehousing) is a common option for many who don’t want to invest in fixed costs and have high variable fluctuations in their volumes.
A facility that has multiple clients that is managed by a 3PL allows you to share all costs with those other clients that are also served by the 3PL.
Labor sharing can help with volume fluctuations by using personnel when the activity warrants. When your business is slow, personnel can be working on other clients and you aren’t absorbing those costs. Your cost per unit, in this scenario is more efficient.
Supervision in a shared facility can be handled a variety of ways. Some customers prefer to continue in a shared approach with supervision on the floor. This works well as long as your business doesn’t require a lot of specialized knowledge. For customers who have very specific needs in their logistics handling, they may decide to pay for a dedicated supervisor who becomes the “in-house” expert for the 3PL.
Management, in most cases, is also a shared cost amongst all clients in the warehouse. The overseeing of the entire operations, its efficiency and costs work well under the same manager.
If your business uses the basic warehouse equipment, a shared environment is a cost effective way of saving money. The 3PL is responsible for sharing equipment and getting optimal usage of the equipment. Should your business require any specialized equipment, that can be the exception to the rule and a dedicated cost assigned just to your business.
When a shipper manages their own inventories, they must invest in warehouse management systems (WMS) that give them the efficiencies required within the operation. In many cases, since this area is never their core competency, the learnings and management of the WMS is never maximized resulting in lost efficiencies and cost savings that are never realized. Using a 3PL that provides a WMS that provides transparency, visibility and 24/7 access gives you the best of both worlds without the costly investment.
One of the biggest savings that can occur in outsourcing is changing your building and storage costs from a fixed to a variable expense on your financials. As a variable item, the costs can align with your activity and allow your product costing to reflect demand. Under a 3PL, shared buildings, racking and other related items are common expenses with other clients and gives you the flexibility in your supply chain as your business grows to expand into additional space.
MILAN Supply Chain Services is a longtime provider of Multi-client warehousing with customers sharing their costs. Our western Tennessee operations provide services for customers in the southeast and midwestern regions. MILAN works with all levels of customers specializing in Food & Beverage, CPG and the Automotive industries. However, all general merchandise is welcomed into the facilities.