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Benefits of Contract Warehousing | Boost Efficiency with a 3PL
First things first, what exactly is contract warehousing? Let’s break it down:
A contract warehouse manages the shipping, receiving, and storage of goods on a contract basis. This warehouse type usually requires a brand to commit to services for a particular period (typically years rather than months). The fee structure also varies based on transactions; it may be a fixed cost, cost-plus, or a combination of both. Contract warehouses can also perform many other services, such as eCommerce, handling, packing, labeling, packaging, fulfillment, and similar activities.
There are a couple of different warehousing options available to brands of all sizes. Some will choose to develop and maintain their own spaces, while others opt for leased space.
A popular option is a contract warehouse space. Here are some benefits:
Lower Capital Investment
Establishing a new warehouse operation can be time-consuming, and sometimes it’s best to focus your efforts on what will lead to business growth, leaving the logistics to a partner (Like #TeamTaylor). Contract warehousing requires less financial investment upfront and less commitment overall. In addition, suppliers, manufacturers, and retailers can benefit from facilities already set up for their specific needs, such as temperature-controlled storage or approved food-grade facilities, and respond to growth quickly and efficiently.
With less of a commitment needed overall, contract warehousing allows any sized business to avoid taking on risks associated with the long-term investment of developing a more extensive warehouse operation.
Contract warehousing allows you to use only what you need. This flexibility is vital if your needs change over time, like seasonal changes or new product launches. It also allows smaller businesses to benefit from equipment or procedures that would be too costly to implement independently.
Better Efficiencies of Operations
Contract warehousing can lower your operating and distribution costs immensely. But, of course, warehousing is only one part of your entire business operation. Still, for contractors, that is all they do so they can streamline their processes, lower operational costs and pass on the savings to you.