Why Storage Matters In 3PL Warehouse Management
Third-party logistics providers (3PLs) have warehouses in strategic locations all across the country, even the world. Businesses are able to expand their markets with minimal costs by working with a 3PL. Companies are able to focus on their core competencies when a 3PL takes over their warehousing operations.
3PLs handle inventory management, fulfillment, and shipping/delivery for multiple clients out of the same warehouse. They must know and utilize best practices in the industry in order to provide the best services for their clients. Warehouses must be optimized for maximum space utilization so the warehouse can handle a fluctuating number of SKUs as clients add/subtract items within their inventory.
What 3PLs store in their warehouse also fluctuates on a contract-by-contract basis. One year they could have a 12-month contract for wireless earbuds, the next that same space could be used to store couches. Or, they could be concurrent contracts, requiring different areas of the warehouse to hold the agreed-upon amounts of both earbuds and couches.
Because a single 3PL can serve a variety of industries ranging from temperamental pharma/nutraceuticals to dry or bottled goods, it’s essential a 3PL warehouse is organized to accommodate a variety of product sizes and types, but also that space can be adjusted as contracts end and new ones begin.
Additionally, 3PLs earn their revenue through temporary contracts, making return-on-investment one of their biggest challenges when purchasing new equipment for the warehouse. As such, when a 3PL invests in upgrades to their warehouse, they need to get their investments back quickly to justify the cost.