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Common Industries That Use 3PL Services

Partnering with an experienced third-party logistics (3PL) provider offers modern businesses many benefits, such as helping manage supply chain risks more effectively while enabling more efficiency. This strategy also helps support future growth by improving customer service and satisfaction.

Since this solution is useful for businesses across many industries, let’s explore what companies use 3PL, why and how.

E-Commerce and Retail

E-commerce skyrocketed during the pandemic, when shoppers didn’t have access to traditional marketplaces. In 2021, the industry generated over $5 billion in sales. The trend shows no signs of slowing as consumers continue to enjoy online shopping’s convenience. Economists predict the market will grow 56% by 2026 and generate over $8 billion in revenue.

This increase drives demand for e-commerce order fulfillment services and more efficient logistics. A 3PL partner can carry out tasks like last-mile delivery so that customer products arrive on time and in good condition, regardless of where they are. Plus, these providers can help with reverse logistics and returns processing to maintain great customer service.

Online retailers also rely heavily on their 3PL providers for inventory management solutions. The insights a 3PL firm provides into product stock let e-commerce pros know the status of the goods at a glance. As a result, companies get the data they need to place supply orders and schedule production to avoid stockouts, keeping their customers happier.

Third-party logistics companies help traditional retail stores support their operations, as well. Businesses providing 3PL solutions offer short-term storage and long-term warehousing services to meet seasonal demand changes. They also supply cost-effective solutions like cross-docking, simplifying goods distribution and increasing delivery speed.

Manufacturing and Distribution

Goods manufacturers and distributors face many pain points in the supply chain. Manual processes and in-house storage and shipping operations can be expensive, and inefficient transportation further increases operating costs. Effective raw material movement is vital to promoting continuous production and preventing downtime that may result in unsatisfied customers.

An experienced 3PL provider like Crown LSP Group is an ideal solution, serving as a strategic business partner that offers solutions such as:

  • Warehouse storage: We can accommodate your long- and short-term storage needs to help you gain the redundancy just-in-time manufacturing requires.
  • On-site warehousing services: Our team provides on-site operational support for your facilities, eliminating the high labor costs of staffing and managing it independently.
  • Transportation services: Crown LSP Group is an expert in freight brokerage and specialized shipping to help you cost-effectively ensure accurate and timely raw material deliveries.
  • Order fulfillment services: We streamline last-mile distribution with fast delivery that improves customer satisfaction and prevents you from having to hire and manage ground-level fleets countrywide.

We also offer end-to-end inventory management services that help you optimize your stock. Our technology includes automated solutions that end manual processes, boosting accuracy, visibility and time savings. Crown LSP Group has a demand forecasting system for better planning, as well.

Health Care and Pharmaceutical

The health care and pharmaceutical markets represent two of the most common types of companies that use third-party logistics to solve their unique challenges.

Health care and medical supply companies frequently serve worldwide markets where patient lives and clinical outcomes depend on timely deliveries. A delayed shipment can leave an organization without the necessary supplies to deliver care. Further, these products often need specialized shipping to protect them against potential damage during transport.

Experienced 3PL providers play a critical role in health care and medical logistics by helping solve these complex issues. Warehousing services keep products strategically located for faster order fulfillment, and transportation services like less-than-truckload shipping ensure quick delivery for smaller orders. Additional solutions, such as drayage shipping, keep intermodal journeys on schedule.

Pharmaceutical companies face similar challenges when storing and shipping essential medications and treatments. They frequently need controlled atmospheres to preserve product safety and integrity and cold chain solutions to maintain those conditions throughout shipping. Those who do business with the European Union must also follow the Good Distribution Practice (GDP) framework, which contains the minimum guidelines for the industry’s supply chain.

A knowledgeable and reliable 3PL firm can manage these complexities with services like temperature-controlled storage and transloading, supporting product safety and compliance.

Food and Beverage

Food and beverage companies have numerous regulations applying to their supply chain management. For example, the Food Safety Modernization Act (FSMA) requires product traceability to help contain food-borne illness outbreaks. These businesses also need ways to manage stock rotation to ensure that products arrive fresh and safe for consumption.

Inventory management services from a 3PL provider solve these issues and support compliance. The right partner will have the technology to track goods at every step, like Radio Frequency Identification (RFID) and bar code systems. With real-time visibility, 3PL companies can also support just-in-time deliveries of perishable goods to cut waste and meet specific customer needs.

Food producers and distributors must focus on preserving their goods’ flavors and maintaining availability for out-of-season items, as well. This requirement often necessitates a well-controlled storage and shipping environment.

Full-service food and beverage logistics providers have solutions for these challenges, too. Temperature-controlled warehousing and specialized cold-chain shipping expertise help companies supply their customers with fast product delivery at the peak of freshness and taste while conforming to food safety laws.

Automotive and Transportation

Automotive and transportation professionals are among those who use 3PL services to drive organizational value. Thanks to the nature of their business, these companies serve multiple customers, from individual consumers to dealer partnerships.

The supply and distribution challenges of these companies include storing and shipping large, expensive items, smaller replacement components, and care or repair kits. The latter results in a greater need for inventory control to minimize waste, maximize efficiency and meet customer expectations for fast delivery.

An agile 3PL partner like Crown LSP Group has the expertise and resources to help with automotive logistics, with services like:

  • Short- and long-term warehousing: We’re close to the eastern North Carolina ports and can scale with your changing business needs.
  • Vehicle shipping: With our freight brokerage services, we leverage our relationships with a deep network of transportation partners to find you competitive rates for large deliveries.
  • Asset-based transportation: We can use our contacts for asset-based transportation services that provide the peace of mind of owner-operated equipment.
  • Kitting and assembly services: Our team adds extra value to the process with kitting and assembly services that improve the consumer experience.
  • Other value-added services: Crown LSP Group is also an expert in inventory management and rapid order fulfillment.

Other Industries

Firms providing 3PL services customize their services to streamline storage and distribution operations for various other crucial economic sectors, including technology, energy, construction and fashion.

Construction and Engineering

A successful construction project requires numerous materials that often arrive from different suppliers at various locations. Seasoned 3PL providers can combine these deliveries to help ensure all materials come on-site together and are ready to use, which allows you to please clients with jobs that move forward on time.

Technology and Electronics

Modern technology is highly sensitive to damage during storage and transport. A 3PL provider understands what’s involved in protecting these delicate and often expensive goods. They take the extra steps to develop specialized storage and shipping strategies to safeguard the products.

Energy and Utilities

Oil, gas and other energy companies have multilayered, complex supply chains with many moving parts to coordinate. Partnering with a 3PL firm lets them outsource the variables to a knowledgeable business that provides access to the latest technology and support services, such as intermodal transportation expertise.

Fashion and Apparel

The fashion and apparel industry is a high-SKU, high-turnover environment. As a result, businesses in this field have frequently changing storage needs. A 3PL company offers flexible storage, fulfillment and inventory management based on individual needs, and these customized approaches allow businesses to use their resources more effectively.

Trust Crown LSP Group as Your 3PL Partner

Companies in many industries regularly turn to Crown LSP Group for tailored supply chain management solutions. From automotive and consumer packaged goods to life sciences and food, we help companies optimize efficiency and allow them to focus on their core operations.

Request a personalized quote, or contact a specialist online for more information.

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Why Logistics Management Is Key to Business Success

Managing logistics with Crown LSP Group promotes an organized flow of inventory operations from start to finish. It helps you efficiently fulfill the demands and expectations of both customers and people in your organization. In this post, you’ll learn about the importance of logistics management for businesses and the benefits it provides for your operations.

What Is Logistics Management?

Logistics management is the process of planning, organizing and executing an operation. It ensures the effective receiving, storage and transportation of inventory from its origin to its destination. That way, customers can receive their products at the right time and location.

For example, managing logistics in a warehouse might involve tasks like:

  • Material handling and storage.
  • Incoming and outgoing transportation management.
  • Fleet management.
  • Supply and demand planning.
  • Logistics network design.
  • Order fulfillment.
  • Inventory control.
  • Product packaging.

Logistics management entails everything from information flow to materials and production. It helps keep all product phases running smoothly and prevents operations from crumbling.

An experienced logistics management company like Crown LSP Group can work with you to optimize your inventory, cut costs and overhead, improve efficiency, and ultimately boost revenue and customer satisfaction.

The Importance of Logistics Management

Logistics may focus primarily on inventory, but it goes much further than that. Successful logistics management leads to numerous long-term benefits, including:

  • Increased efficiency.
  • Higher production rates.
  • Reduced operational costs.
  • Streamlined inventory control.
  • Better use of warehouse space.
  • Improved customer experience and satisfaction.

All of these factors contribute to successful business operations. Below, we’ll look at the advantages proper logistics management can offer your organization.

1. Efficient Supply Chain Management

Logistics management plays an essential role in supply chain management optimization. It helps facilitate the flow and storage of products. Additionally, it helps oversee the documents and reports regarding these movements. Logistics also help control the different transportation methods that move products from point A to point B.

An efficient supply chain reduces the need to maintain inventory. In turn, it decreases overhead costs associated with storage and security. These factors collectively help streamline your flow of goods and services. A more efficient supply chain and product management system can result in a more positive experience for the customer, increasing their overall satisfaction and retention.

2. Cost Reduction and Profitability

Part of logistics management is understanding major expenditures associated with inventory warehousing, distribution and transportation. Analyzing your costs can help you find opportunities to reduce unnecessary spending and use funds more resourcefully.

Effective logistics balance inventory levels, give you more control over inbound freight, help goods reach the correct transportation modes and organize the reverse flow of goods. All of these can reduce costs considerably.

Logistics management can decrease overhead costs by automating and optimizing different tasks, like storage, packaging and shipping. By managing inventory levels based on supply and demand, you can avoid purchasing excess or inadequate logistics supplies.

Here are some specific ways logistics management can help cut costs and increase profitability:

  • Optimized storage: Knowing the dimensions of forklifts allows you to organize storage by the aisle dimensions needed for forklift access. Using tall, narrow racks reduces the required square footage, helping you cut storage costs.
  • Inventory protection: In the United States alone, about $163 billion worth of inventory is tossed annually due to damage and oversupply. Proper inventory control and storage can help minimize damaged goods, misplacements, theft, overstock and understock.
  • Enhanced product transfer: Logistics planning ensures more efficient product movement and distribution, which helps decrease costs. For example, cross-docking is the process of unloading inbound delivery vehicles, then loading them directly onto outbound delivery vehicles. It reduces the need to store products in a warehouse, eliminates the need for large warehouse spaces and cuts down on packaging, saving time and money.
  • Vehicle performance: Logistics management can help your organization save money by planning and optimizing preventive vehicle maintenance. Routine maintenance helps prevent costly breakdowns, repairs and replacements.

3. Improved Customer Satisfaction

Logistics optimize internal and external communications, promoting transparency in your operations. As a result, customers have more insight into when their order will be delivered. They can also receive more efficient customer service and answers to their questions regarding delivery.

Additionally, an effective logistics strategy helps inventory reach the customer in quality condition, improving the buyer’s satisfaction with the product and company. Logistics management plays a pivotal role in timely deliveries, accurate order fulfillment and effective communication, all of which foster a positive customer experience and brand loyalty.

4. Risk Management and Mitigation

A supply chain disruption occurs when an external force hinders your organization’s ability to receive, assemble, store, ship or distribute products. These disruptions cost large companies about $184 million in lost revenue annually. Furthermore, nearly 60% of small and mid-sized business report losses of 15% or greater due to supply chain delays.

Some examples of supply chain disruptions include:

  • Demand drops and surges.
  • Labor shortages.
  • Storage and access restrictions.
  • Raw material shortages.

Crown LSP Group can help you analyze the market and plan for these potential disruptions. Developing a risk management and contingency plan helps you prevent and address these disruptions to your operations. Besides supply chain disruptions, you’ll want to plan for other risks and hazards, such as:

  • Slips, trips and falls.
  • Falling objects.
  • Fires.
  • Harmful substance exposure.
  • Equipment malfunctions.
  • Floods and water damage.
  • Product loss, theft, damage, understock or surpluses.

Proper logistical planning can help you identify and mitigate supply chain risks, responding effectively to disruptions. Additionally, it teaches warehouse staff the correct procedures for safe product and equipment handling, helping prevent unwanted incidents and injuries.

5. Competitive Advantage

With the increasing digital demand, customers expect more efficiency than ever before. Warehouses must provide fast, quality service to get ahead in the highly competitive market. Logistics management helps companies optimize inventory processes, reduce disruptions and ensure timely deliveries, all of which influence customer satisfaction.

Better customer service and product quality build a positive image for your brand, generating more business and giving you a competitive edge. Implementing technology and software to improve your logistics helps you keep up with industry trends and consumer demands, differentiating yourself from competitors.

Choose Crown LSP Group as Your Logistics Management Company

Logistics management is essential to business success and growth. If you’re looking for a comprehensive logistics services provider serving the east coast, turn to Crown LSP Group for assistance.

Our trusted distribution solutions company has been helping businesses streamline their operations since 1987. We can provide the resources and strategies you need for more cost-effective, efficient inventory processes. Committed to serving our customers and local community, we aim to ensure the best possible service for every job.

Our solutions include warehousing and storage, transportation and logistics, order fulfillment and more. No matter your unique requirements, we’re ready to meet your logistical needs so you can better serve your customers. Contact us today to learn more about how we can help you succeed!

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Top Challenges of Managing Your Own Logistics and How a 3PL Can Help

The Top Challenges of Managing Your Own Logistics and How a 3PL Can Help

In-house logistics might sound appealing initially, but when you see all the complications associated with it, outsourced services often emerge as the more effective option. A third-party logistics (3PL) provider specializes in areas of distribution, fulfillment, warehousing and transportation, bringing industry-specific expertise and sophisticated systems to the table while helping you focus on growing your business.

Logistics is a complicated field, especially when you consider the necessary resources, evolving compliance requirements and scalability of your approach. Doing it yourself can be difficult, if not impossible, and 3PL providers often give better service at lower costs. They have skilled teams, sophisticated systems and plenty of expertise. Let’s take a closer look at some of the biggest challenges in transportation and logistics and how 3PL providers address them.

Challenge 1: Limited Expertise and Resources

Most businesses don’t have unlimited funds lying around to create a high-caliber team of logistics experts or buy the latest and greatest software systems and tools. Solving common logistics problems calls for many different resources and professionals who understand the various aspects of transportation, warehousing, compliance, etc. Hiring these professionals and buying resources yourself can be expensive and time-consuming. Consider the costs of hiring new employees, for example, and making room for large pieces of equipment.

A 3PL provider will usually offer their services through affordable, recurring costs without any capital investment on your part. Since logistics is all they do, you can expect a 3PL provider to have a team of highly skilled, well-trained professionals offering expertise in different areas for a fraction of the cost of in-house hiring. Working with a 3PL can significantly reduce the strain on your team and business resources.

Challenge 2: Increasing Complexity and Scale

The supply chain is always evolving, and your business will likely grow. Adapting to these changes is hard to do in-house. If your logistics operations need to scale up, you may need to hire more professionals or buy more equipment. If a new sales channel or technology appears, you may need to modify your approach. These tasks take time and money, and keeping pace with them can be incredibly challenging.

As an outsourced service provider, 3PL partners are ideal for scalability. They can generally accommodate high capacities, and all you need to do is talk over the changes with the provider. Whether your business grows or you want to tackle a spike in sales near the holidays, 3PL providers can adjust accordingly.

Since they offer a wide range of services, a 3PL partner can help you branch out into new areas or try new things without high capital investments. These flexible, scalable solutions can allow you to make business decisions more freely, even in the face of a complicated landscape.

Challenge 3: Operational Inefficiencies and Costs

With so much complexity, it may not be a surprise that in-house logistics are prone to inefficiencies. They often lack the proper technology and infrastructure to move products efficiently. Manual processes, for example, can be much slower than automated systems, and strained budgets can keep businesses from obtaining the necessary automation equipment. Inefficiencies like these can cause delays, bottlenecks and higher costs associated with slower operations. Managing the varying costs of logistics, such as chaotic fuel prices, can also be difficult.

3PL organizations are especially interested in working efficiently and reducing costs. After all, those metrics affect their success, too. They also have the support of expert logistics professionals and sophisticated resources. A 3PL provider continuously optimizes for efficiency and low costs. They may even be able to help you save money by accessing lower rates through their large network of partners. With these partners, you can expect products to move more efficiently for reduced costs.

Challenge 4: Compliance and Risk Management

Staying up to date with compliance and risk management requirements can be a monumental task. Regulatory requirements are always changing, and you must continuously conduct assessments and evaluations to mitigate risks in the supply chain and your business. As requirements change, you’ll need to respond accordingly. Compliance and risk mitigation become increasingly difficult and expensive as you scale and expand a business. For example, some countries prohibit shipping certain items, and you cannot risk violating these laws as you branch into new regions.

Violations can be expensive, both through fines and the additional work required to rectify the situation. They may also be detrimental to your reputation. Avoiding compliance issues is crucial and usually requires an expert. Risk management is similar and often calls for a skilled professional with a pulse on many different industries.

Naturally, a 3PL provider pays attention to regulations and standards and has people on hand to tackle compliance problems and reduce risk. Outsourcing logistics shifts some responsibility onto the 3PL partner while leveraging their expertise in other areas to help you avoid risk and stay compliant. They can be especially helpful in tackling the volatility of the supply chain industry.

Challenge 5: Customer Service and Satisfaction

Logistics plays a major role in the customer experience. While in-house logistics can provide more control over the customer experience, they also create many opportunities for errors and inefficiency. Without an accurate, streamlined system, you will likely introduce delays and inconsistencies, leading to negative interactions with your company.

Sophisticated systems are also essential for providing visibility, which many customers now expect. They want to know when their order will arrive and be able to see its location in real time. Implementing such a system can be difficult, time-consuming and costly. For a 3PL provider, these programs are a central part of the job and solve major logistical challenges. 3PL partners understand them and have the IT support to keep them running smoothly.

3PL partners also run their services like a well-oiled machine, so you can expect fewer delays and errors that would affect your customers. This dependability can provide big dividends for your customer satisfaction ratings.

Additionally, 3PL providers can support your customer service goals with expert guidance. They can work with you to develop a plan that improves the customer experience through direct communication or optimization in areas like efficiency and accuracy. 3PL partners and their long-standing knowledge of the field can be significant assets for impressing your customers.

Overcome Your Biggest Logistical Challenges With Crown LSP Group

In-house logistics may work for some organizations, but those companies often have massive budgets and resources to spend. Taking the job on yourself can entail some significant logistics problems, like scaling the operation, minimizing costs, staying compliant and appealing to your customers. A 3PL provider takes the legwork out of logistics so you can focus more on what you do best. We leverage a skilled team dedicated exclusively to logistics and distribution solutions to help your business thrive and avoid these challenges.

At Crown LSP Group, we have decades of experience in the field and insights across many industries. We work as an extension of your business to reduce costs, improve quality and provide a stellar customer experience every time. Whether you need to scale, accommodate unique products or customize your approach, our knowledgeable professionals can help. Learn more about our approach online, or request a quote today to get started!

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How to Choose the Right 3PL Provider for Your Business

Third-party logistics (3PL) providers can be an incredible resource for businesses, handling the complex nature of distribution with sophisticated and efficient systems. Where a small organization might struggle to respond to shipping demands or adapt to market volatility, a skilled 3PL provider can easily accommodate these factors, allowing the business to focus on other things like stimulating growth or reducing costs.

But not all providers are created equal. How do you know which is reliable and best fits your organization’s unique needs? Before you pick a 3PL provider, take some time to dive into the following tasks and understand your needs on a deeper level. These steps on how to choose a 3PL provider should help you find a capable partner for years to come.

1. Assess Your Business Needs

Start by finding your must-haves and collecting the information a good 3PL provider will need before offering its services. Map out the scope and scale of your operations and the level of service you need from this new partner. Will you need them to provide value-added services like kitting, fulfillment or pallet displays? Do you have products with unique demands, like hazardous materials or fragile items, that they can accommodate? Make sure your provider can meet these demands and has experience with them.

Consider what you want your customer experience to look like and how your 3PL provider can help you get there. You may want to personalize the customer experience with unique freebies or packing slips, or maybe you just want to ensure reliable, mistake-free deliveries. 3PL partners function as an extension of your brand, so make sure the company can meet the standards your customers expect.

Another aspect to consider is your organization’s plans for growth. If you intend to scale your business, your 3PL provider should be able to scale with you. Understand your requirements for capacity, speed, throughput and other relevant metrics that will help you grow and maintain quality.

2. Evaluate 3PL Providers

Once you know what you’re looking for, you can start assessing specific providers. Gather up a list of potential partners and do some digging. Look into their position on aspects like:

  • Reputation: Learn about the provider from different sources, including customers, carriers, vendors and even employees. A good reputation signifies a good track record. It can also point toward a provider with strong industry connections. For instance, they may be able to solve problems more easily or negotiate better rates.
  • Experience: A provider that’s been around for a while understands the details of distribution and logistics. They can provide reliable insight, and you can rest easy knowing they’ve been there before. Experience can also point to a provider that knows how to handle the ups and downs of an ever-evolving industry.
  • Locations: You may want a 3PL provider with specific locations to better serve your customers. Consider where the company places its warehouses and whether they sit close to ports and highways.
  • Technology and infrastructure: Today’s supply chain relies on sophisticated technology and systems. Ask your 3PL provider what kind of software they use and how they achieve efficiency and quality in their processes. Look for a partner that integrates with your chosen e-commerce platform and has a good support team in place.
  • Pricing and contracts: Of course, your 3PL provider should fit within your budget. Analyze potential contracts and consider whether the prices they’re offering you are competitive without being suspiciously low.
  • Safety, security and compliance: Warehouse work environments can be a hot spot for safety issues, so dig into your potential partner’s approach to safety, including their track record with regulatory compliance. Look for their information and product security credentials to ensure they can protect your assets. Some certifications to look for include those from the Payment Card Industry (PCI), the Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA) and any industry-specific organizations.

Empower Your Supply Chain with the Ideal 3PL Provider

 

Unleash the full potential of your supply chain by partnering with the ideal 3PL provider.

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3. Consider Industry Specialization

A partner with experience in your industry can address unique and specialized requirements. For example, pharmaceuticals may require extensive monitoring, tracking and cold storage, while food and beverage products need exceptional speed to reach customers before going bad. Talk to your potential partner about their prior work in your industry, and ask for specific examples of how they can meet your unique demands. Pay special attention to their handling of regulations and compliance.

4. Learn How They Communicate and Collaborate

Communication and collaboration are crucial in any partnership. As you read reviews and talk to the 3PL provider, look into their approach to communication and what tools they use for it. What is your 3PL partner’s method of responding to issues? Do they keep you in the loop through integrated software and real-time product insights?

Good communication often points toward better service since the company can quickly identify and resolve problems. They may even offer more support by providing insights into your products and costs. A strong 3PL partnership should help reduce the stress associated with logistics while giving you more freedom to grow your business.

5. Review Performance Metrics

Key performance indicators (KPIs) provide valuable insights into a provider’s performance over time and in specific areas. Figure out which KPIs are most important to your needs, and obtain them from your potential partner. Understand how they measure and report on these KPIs, and evaluate their performance history to learn more about their track record.

While every KPI indicates something different, watch for signs of stability and overall quality. Stability shows that the 3PL provider has adapted to changing industry demands. Aspects like accuracy, on-time deliveries and customer satisfaction naturally suggest a higher-quality operation that can support your goals.

6. Finalize the Partnership

Once you’ve found the right 3PL partner, you can finalize the partnership. You must negotiate your contracts and agreements and conduct due diligence for legal compliance and insurance coverage. These administrative tasks are essential, but you’ll also need to focus on establishing a good working relationship with the provider. Get to know your point of contact, and build a communication plan so you understand what to expect moving forward.

Establishing expectations upfront can save a lot of headaches down the road and set you up for a more successful partnership.

Find the Right 3PL Provider to Help You Grow

Regardless of your goals or industry, the right 3PL provider will significantly impact your organization. This partner can be the difference between on-time deliveries and costly shipment delays. They might help you reach more markets, gain more customers or reduce your expenses considerably. Take the time to make this decision properly and understand the characteristics of your operation, the provider and the partnership. By prioritizing your evaluation, you can decide on a partner that aligns best with your business plans.

If you need 3PL services in the eastern United States, Crown LSP Group offers family-owned support from North Carolina. Our convenient locations sit near several East Coast ports, major roadways and large cities, and we have experience in many different industries. We also have the flexibility and customization to accommodate unique requirements while keeping costs low. Request a quote today to learn more about our 3PL services and see how Crown LSP Group can help!

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Understanding 3PL Warehousing Costs

Third-party logistics (3PL) solutions are a value-added service for companies, including manufacturers, retailers and other businesses. Organizations often turn to us at Crown LSP Group to outsource warehousing and transportation services so they can focus on what they do best. Explore what you need to know about 3PL warehouse costs so you can get the most value for your budget.

Order Fulfillment Fees Explained

Understanding 3PL warehousing costs starts with considering the fees you might face when outsourcing the packing, picking, shipping and receiving of goods sent to fulfillment centers. These can include fees for warehousing and account setup in addition to the costs you’re paying for labor, storage space, services and more.

Warehousing fees are usually charged in one of the following ways:

  • Monthly flat fee: A 3PL might estimate your service costs based on your inventory and the services you may need and charge you the same fee every month. Flat fees make it easy to budget. This model is best if your order fulfillment needs change very little month over month.
  • Variable pricing: This pricing model is usually based on the cubic or square feet you use in storage, plus any service fees.
  • Rate card pricing: In this type of pricing model, you pay based on the weight of your inventory and where it is shipped. While this type of cost is associated in some warehousing fees, it is much more common in less-than-truckload shipping.

If you’re unsure about 3PL pricing and need to work with real numbers based on your current needs, Crown LSP Group can help. Our transparent and cost-effective solutions are flexible, so we can often find a great option for you that fits your budget. Contact us to talk about how much you may be able to save.

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Common Types of 3PL Fees

Total 3PL costs can go beyond the price of storing, packing and shipping your products. The following fees are common, though what you pay will depend on your needs:

  • Transportation fees: These fees cover the cost of transportation for your inventory, from origin to destination. The fee is usually based on the weight or cubic feet of the products. If you’re forwarding products from one destination to another, additional fees may apply for unpacking, inspections, sorting and labeling.
  • Warehouse receiving fees: You will be responsible for fees charged by distribution centers or warehouses when they receive shipments from 3PLs.
  • Fulfillment center storage fees: Also known as an inventory storage fee, this is what you pay to store your products in a fulfillment center. The cost is usually based on the pallet space, cubic feet of storage space or bin space.
  • Pick and pack fees: These fees cover the cost of getting items from inventory and packaging them for shipment. Fees usually apply per item, and you can expect to pay extra for heavy or large items. If you have a large inventory, you may be able to seek a lower per-item rate.
  • Fulfillment fees: This is the shipping fee, which is often based on weight and volume. Sending inventory over long distances can also impact your rates.
  • Return fees: Also known as reverse logistics, these fees cover the costs incurred when a customer returns one of your products.
  • Inventory audit costs: You may pay this cost for an audit to make sure your records match your actual inventory. This additional fee is usually optional and can be helpful to ensure no mistakes have been made in shipping your products.
  • Kitting fees: These costs may apply if your shipments include a need for your 3PL to group or ship products together. For example, if you have a subscription box service, your 3PL team may build boxes every month by combining different products in one package. This assembly will cost an extra fee, which will depend on the number of products assembled as well as your order volume.
  • Setup fees: When you first start working with a 3PL provider, there may be a fee to open your account. The cost can vary depending on the services you need, the provider you’re working with and the size of your company. These one-time fees cover the admin and other costs associated with starting a new account.
  • Account management fees: These costs are ongoing and usually charged per month. The cost may vary depending on the 3PL service provider, your business needs and the services you are receiving. Account management fees cover the miscellaneous expenses not covered by other fees. For example, they can cover reporting, shipping labels, document storage and related costs.

Fees can vary widely, which is why you want to choose a 3PL service solution carefully. When you partner with Crown LSP Group, we provide bespoke solutions that meet your needs — so you don’t pay for services you don’t require. We’re also transparent about pricing, so you can budget accurately and understand any fees that apply.

Factors That Impact 3PL Costs

To keep 3PL costs low, it’s important to understand what could affect the price you pay:

  • Your 3PL provider: Every 3PL solution charges fees. Crown LSP Group is committed to saving you money and finding custom solutions that meet your service and budget needs. We’re your partner in offering value and exceptional services.
  • Special requirements: Unique needs, like eco-friendly packaging or special services for very heavy, large or fragile items, can affect your costs. Products that need special temperature control will also cost extra because of the added utility costs and special warehousing requirements. In general, the simpler your needs, the less you can expect to pay.
  • Distance: If your items need to travel far, prices may be higher — especially if your items need to pass through multiple hands or across international borders.
  • Services: The services you need beyond warehousing, such as assembly services, will affect your costs. Should you need fewer services, you can expect to pay less.
  • Volume and weight: Heavy and oversized inventory takes more space and is more difficult to move, so it typically incurs additional costs. The amount of inventory you have will also have a big impact on 3PL costs because volume determines how much storage or warehouse space you need.
  • Shipment volume and size: The number of shipments and orders will impact labor costs — and your fees. The average order size can impact your costs, too.
  • Hazardous materials: Hazardous materials need to be stored and shipped with extra caution and in special environments, which can add to your costs.
  • Special shipping considerations: Specialized transportation equipment incurs additional costs. If your inventory requires temperature-controlled trucks, for example, a fee may apply.
  • Inventory values and insurance needs: The value of your inventory can impact insurance costs and result in additional fees.
  • Stock rotation: If your inventory needs to be rotated, the extra work adds to labor costs and the amount you pay.
  • Cross-dock shipments: Cross-docking saves you time by allowing your inventory to move directly from one truck to another in the transportation process, reducing the amount of time your products spend sitting idle. This process is often an extra service with its own fees.
  • Other special considerations: Labor shortages, weather and other unpredictable events can all have an impact on costs and your shipments.

When considering 3PL costs, don’t forget to factor in what you’re saving by outsourcing. The costs of building warehouse space yourself or trying to maintain raw materials or finished products on your premises can add up.

Storing materials and products on-site can also increase your insurance costs and can harm your bottom line if anything gets damaged or goes missing. If you don’t have enough product to start manufacturing or shipping, the costs of keeping production lines idle can be significant — and unhappy customers who don’t get their items on time can slow your business growth. Keep in mind that you can save on these costs when you outsource 3PL solutions to a trusted provider.

Control Costs and Enjoy Quality 3PL Solutions With Crown LSP Group

Costs for 3PL service can vary widely depending on your service needs. At Crown LSP Group, we understand order fulfillment fees affect your bottom line. We offer custom solutions so we can bring you competitive pricing for the services you need.

Crown LSP Group is your partner in warehousing and transportation services. Contact us today to request a quote.

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How to Choose the Best Warehouse Location for Your Business

Selecting the right location for your company’s warehouse operations creates more affordable and efficient storage and shipping. Plus, the ideal site helps you meet customer expectations better, leading to higher satisfaction and a healthier bottom line.

Top 7 Considerations When Choosing a Warehouse Location

Here are seven practical warehouse location strategies to help you find the perfect spot for your business.

1. Check How Close You Are to Your Suppliers

The distance between you and your vendors contributes directly to your overhead and risk. The closer you are, the more money your company saves on freight. Plus, you’ll mitigate the risks associated with transportation disruptions, which can be especially impactful for perishable goods.

For example, if your company receives goods at ports in Norfolk, Charleston and Wilmington, one regional warehouse facility will likely serve your needs. Conversely, receiving goods in geographically diverse locations requires a different approach — multiple facilities closest to your receiving areas. You can save more time and money with numerous warehouses than you will by transporting your goods to one location farther away.

2. Map the Possibilities to Customer Locations

Proximity to your customers is equally as essential as being close to your suppliers.

Modern consumers have come to expect order fulfillment as quickly as possible. They want it to be economical, too. You generate additional customer loyalty and a competitive edge when you meet those demands. Locating a distribution channel nearby naturally reduces the time goods take to reach their destinations and the associated transportation cost.

If most of your customers are in the Southeast, a centralized storage and distribution facility in the region makes perfect sense. For customer bases throughout the country, investing in a multiwarehouse strategy is often the best solution. The lower fulfillment times create better customer experiences that can help offset any increased costs in the long term.

3. Evaluate Accessibility to Major Transportation Hubs

Regardless of which method you rely on most, you’ll want to be closest to it to boost your volumes and reduce costs.

For example, companies primarily using air cargo should look for space close to a major airport or with easy access via the local highway system. Those who depend heavily on less-than-truckload (LTL) transportation can save money with a warehouse located close to LTL carriers and common shipping lanes. E-commerce businesses can improve fulfillment with sites near major parcel centers.

Storage and distribution facilities close to multiple transportation options are essential if your company’s supply chain relies on intermodal shipping or transloading services.

4. Investigate Highway, Road and Traffic Conditions

In addition to proximity to major transportation hubs, you’ll also want to investigate the impact of local highway, road and traffic conditions.

How close is the potential site to major highway systems? Is there only one or two nearby, or is the area well-connected to numerous expressways that can facilitate multiple shipping lanes? You’ll also want to consider the typical traffic volume and busiest travel times. Shipments that are consistently delayed because of congestion drive up fuel costs and create a poor customer experience.

The local road conditions are also key. Substandard surfaces and improperly maintained roadways can create safety and accessibility issues. Likewise, evaluate accessibility regarding traffic signals. A well-placed site should have adequate red lights and cycle times to help control and improve the local traffic flow.

5. Examine the Markets and Local Factors

Ideally, your warehouse’s location should be close to the employees you’ll work with. Keep in mind that the surrounding area’s demographics impact the wages you’ll pay and the expertise available. If there aren’t enough skilled workers in the immediate area, your service levels may decline, and you might have higher labor costs to attract the most qualified talent.

There are two other vital local considerations — the rent costs and disruptive event potential. Some areas are more competitive than others, and comparing the higher price per square foot with the overall location benefits is crucial. Government incentives or favorable tax structures may help offset the increased expenses. Similarly, some regions have the built-in potential for significant natural events, such as earthquakes and hurricanes, that you must evaluate for risk.

6. Assess Building Potential and Associated Costs

Before choosing your warehouse site, look closely at the building’s potential to scale with your company. Opting for a place in a crowded area only to find you can’t expand as your business grows means you’ll start the search for space from scratch. If no warehousing is available in the immediate area, relocation is a must, and the impact can waterfall. For example, your company may see an increase in employee turnover, leading to increased recruiting and training costs.

You’ll also want to pay careful attention to utility availability and costs. Most modern businesses need robust telecommunications solutions and internet access with the required speed and bandwidth. Consult with your IT professional to ensure the site meets or exceeds the demands of your particular technology and systems.

7. Know the Rules and Regulations

Weather events aren’t the only factor that can impact and disrupt your operations. Local rules and regulations may also come into play. For example, municipal laws may impose access limitations to particular areas on specific days or times.

They may also restrict vehicle sizes. Underpasses or bridges along the delivery lanes may have height or weight limitations. At best, these regulations cause a detour and delay. At worst, your goods are now in the back of a 13.5-foot-high tractor-trailer stuck under a 12.5-foot-high underpass.

Municipal legislation can pose another potential risk. Changes to existing laws or pushes to limit truck traffic could leave you scrambling for a new location at an inopportune time. Check to see if there are any pending measures before committing to a site.

Optimize Your Supply Chain with the Perfect Warehouse Location

 

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Outsourcing vs. Buying Your Own Warehouse Locations

Perhaps the most important decision to consider when trying to find strategy warehousing locations is whether to outsource with a 3PL or purchase your own space.

Choosing to outsource your warehousing operations involves partnering with a third-party distribution company to handle your goods’ long- or short-term storage. This often comes with a contract warehousing agreement between you and the 3PL based on your distribution needs and the services required.

There are several reasons why choosing to outsource your warehouse location to a 3PL makes sense for your business. Here are some of the following benefits of this warehouse option:

  • Industry expertise and knowledge
  • Customized services and add-ons
  • Increased security and reliability
  • Ability to scale your business quickly
  • Keeps your operations cost efficient

That said, deciding to outsource or keep your warehouse locations in-house depends on whether you have the resources to purchase, rent or build a facility. Additionally, running a warehouse requires staffing and management, which will add to your overall cost of choosing to keep operations internal. Furthermore, if you calculate your warehouse size needs and find that your business will not fill an entire facility regularly, then choosing to outsource operations to a third-party is the most economical option to keeping costs down.

Partner With Crown LSP Group for Distribution Solutions

We’ve been eastern North Carolina’s choice for customized end-to-end distribution solutions since 1987. Our team is a trusted source for logistics, transportation, warehousing and value-added services.

Request a free quote online, or call an expert at 252-985-1070.

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How to Calculate Warehouse Space Needs

When you need to store inventory, whether for a short amount of time or in the long term, you must know how much warehouse space you need. If you overestimate, you’ll end up spending more than necessary. If you underestimate, you may not have enough room for all of your inventory.

Learn how to calculate warehouse space so you can find the right storage solution or contract warehouse for your needs.

Warehouse Space Requirements

Your company can sell or manage similar products to those of another business and still have differing warehouse needs. When calculating how much space you need in a warehouse, consider the following factors:

  • Pallet size: Pallets come in a range of standard sizes, with the most common being 48 inches by 40 inches. Square pallets are also available. Pallet size influences how much room your inventory needs on a warehouse shelf.
  • Number of pallets: You also need to know the number of pallets you have to store — or at least an estimate of the number of pallets.
  • Stacking height: You can stack pallets on top of each other to maximize vertical space. Keep in mind that stacks that are too tall can topple. It’s essential to know the allowable stacking height, which is based on guidelines from the Occupational Safety and Health Administration. The stacking height varies based on the size of the pallets, the materials being stored and pallet weight.
  • Warehouse space utilization: The layout of your inventory in a warehouse also influences the amount of space you need. Warehouse space utilization refers to how efficiently you make use of the area in a facility. It can be affected by factors that are beyond your control, such as the shape of your inventory.

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Warehouse Space Utilization Explained

Warehouse space utilization shows how much of the storage area in a warehouse is used. It’s the ratio of space in use compared to available storage space. A ratio of 100% would mean that all of the usable room in the warehouse is filled to capacity.

The ideal warehouse space utilization ratio for you depends on several factors. These include the shape of your inventory, its ability to stack, the expiration dates and the number of products you have. Some common ratios include:

  • 40%: Products that can’t stack neatly or that form unusual shapes on a pallet will naturally take up more space in a warehouse. You’ll need more room to maneuver around the products when picking them, so you won’t be able to use as much of the available space.
  • 50%: Some types of products have expiration dates, such as food or cosmetics. You need to be aware of the dates on these products and send the older ones out first. A maximum space utilization ratio of 50% should allow for adequate space to maneuver around your inventory and turn it correctly. If the products don’t stack neatly, you’ll need a lower ratio.
  • 60%: Your space utilization ratio can be slightly higher if your products turn frequently but don’t have expiration dates. The 60% ratio is also ideal for companies that have multiple product types and up to 100 stock-keeping units (SKUs).
  • 70%: If you have up to 100 SKUs that don’t have expiration dates and turn up to six times per year, you can use up to 70% of the space in the warehouse.
  • 80%: Companies that only have a few SKUs that don’t expire and don’t have much turnover can use up to about 80% of warehouse space without issue.

Note that you never want your warehouse space utilization ratio to be 100%. The higher the ratio, the harder it is for staff to move around the warehouse and pick products.

How to Calculate Warehouse Capacity

A warehouse space calculator will quickly crunch the numbers for you to let you know the area you need based on the number of pallets you have to store, the size of the pallets and your preferred utilization ratio. You can also do the math yourself to determine your storage needs. Follow these steps:

  • Add up the number of pallets you have to store. You can estimate this number if you’re not sure of the exact amount.
  • Divide the pallet number by the stacking height. If you plan to stack two pallets on top of each other, divide by two. If you can’t stack pallets at all, divide by one.
  • Calculate the square footage of the pallets. Multiply pallet width by length — often 48 inches by 40 inches — to find the square footage. If you’re using inches, remember to divide the product by 12 to convert it to feet.
  • Multiply the stacking height by the square footage. If you have 16 48-by-40-inch pallets that you can stack two high, multiply eight by 160 to get 1,280.
  • Divide by your desired warehouse utilization ratio. In this example, use a utilization ratio of 50%. The solution to 1,280 divided by 50% is 2,560 square feet.

When deciding how much warehouse storage space you need, give yourself room to grow. If you plan on adding more product types or storing more inventory in the future, increase the number of pallets in your calculation or adjust your utilization ratio accordingly.

We Can Help You Determine How Much Warehouse Space You Need

When estimating warehouse space, it is important to note that every scenario is different depending on the needs of your business. What’s more, each business warehouse capacity can vary depending on different factors, such as the type of inventory or the demand for your products.

While the requirements and process above are a good benchmark, it is best to work with an experienced warehousing professional to determine the appropriate amount of space you need. At Crown LSP, we can help you figure out an accurate warehouse utilization ratio and offer solutions to best store your business’s inventory.

Contact Crown LSP Group for Warehousing Services

Crown LSP Group is a distribution solutions company that offers contract warehousing arrangements. We can provide custom and standard arrangements based on your company’s needs. You can lease an entire warehouse facility or a designated area on a short- or long-term basis. To discuss your warehouse storage needs and request a quote, contact us today.

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Benefits of a Third-Party Logistics (3PL) Provider

Managing warehousing, order fulfillment, and logistics operations for your business can be challenging and leave you with less time to focus on expanding your customer base. One crucial element of any business is the ability to adapt and remain agile in ever-changing market conditions to meet consumer demand.

Outsourcing these important tasks to a third-party company will give you more time to spend on activities that are crucial to your business growth, such as streamlining your operations and building your reputation. Supply chain management is a necessity for your organization. Using third-party logistics can make these specific responsibilities less complicated, empowering you to innovate and take your business to the next level.

Let’s review some third-party logistics examples and how to choose a 3PL provider that fits your unique business needs.

What Is Third-Party Logistics (3PL)?

Third-party logistics (3PL) is the process of hiring a third-party business to outsource e-commerce logistics tasks to manage one or more facets of procurement and fulfillment activities. Some of these tasks include:

  • Warehousing
  • Storing
  • Distribution
  • Inventory management
  • Transportation services
  • Shipping and receiving

A 3PL company provides all the services you need to outsource your logistics operations and streamline your processes to expand your business and deliver your products to your customers faster. It’s common for 3PL warehouses to manage and ship inventory of multiple businesses at once in addition to their own inventory.

All 3PL companies specialize in different types of fulfillment for various materials, goods, and products. Some 3PLs offer different warehousing services for temperature-controlled goods and long-term needs. Many businesses will use a 3PL company to help them identify gaps in their supply chains. A 3PL company can also resolve challenges with comprehensive solutions and efficiently carry out tasks that make businesses more agile.

Working with an outsourced logistics provider is a partnership that allows you to spend more time growing your business and accessing the most effective methods for delivering orders to your customers.

What Is the Role of 3PLs in the Supply Chain?

3PL companies take on a critical, multi-purpose role in the supply, which is helping their customers grow their business and achieve sustainability while maximizing their benefits. Supply chain management covers many elements, as we briefly mentioned before, that primarily fall under logistics operations.

These operations include:

  • Logistics planning
  • Material procurement
  • Product sourcing
  • Maintaining inventory

Let’s give you an example of the role 3PL plays in the supply chain. Suppose a shipping company wants to expand its reach internationally but doesn’t know how to start the process. They decide to work with experienced professionals and hire a 3PL company to help them ship their goods. The 3PL partner will find the best carrier and shipping rates and manage the paperwork for the shipping company.

When the products are ready to be shipped, the 3PL partner will pick up the overseas order, book the carrier and deliver the goods. They also manage every other aspect of the shipping process, such as dealing with customs and ensuring your customers receive their orders.

Some 3PL companies also cover warehousing and fulfillment needs for businesses that require faster deliveries. Those providing these services will use innovative technology and software to find the most efficient delivery routes to maximize cost and time, helping businesses meet their supply chain goals.

Advantages of Working With a 3PL

Outsourcing fulfillment services to a 3PL provides endless benefits. Though every 3PL company varies slightly in its capabilities and advantages, they will help you maximize profitability by offering solutions for managing your inventory, packaging, shipping, and warehousing activities.

1. Cost and Time Savings

3PLs eliminate the need for renting a warehouse and paying for logistics and technology needed for fulfillment. Outsourcing these tasks also frees up more time on your end to focus on strategic initiatives.

cost and time savings of working with a 3pl

2. Industry Experience and Expertise

Relying on logistics and shipping professionals with more technical resources can give you access to the latest industry knowledge, trends, and complexities.

3. Flexibility and Ability to Scale

If you’re only selling your products in a limited region, working with a 3PL partner can help you expand your reach and access an expansive network of fulfillment centers to ship out orders from different shipping zones, allowing you to reach more customers.

4. Allows for Your Business to Grow

If your business does suddenly expand or has an increase in consumer demand, a 3PL partner can help you grow your business and handle operations to meet your goals.

5. Provides a Better Customer Experience

With access to the most advanced technology, tracking, operational transparency, and fulfillment solutions, a 3PL partner can ensure you deliver superior customer service every time.

6. Innovation in the Supply Chain

Outsourcing fulfillment means taking advantage of the competitive innovations a 3PL partner can offer for streamlining operations, such as additional offerings and services to improve supply chains and delivery methods. A 3PL partner like Crown LSP Group offers value-added services, including cross-docking and transloading to speed up delivery times and provide more flexibility.

7. Mitigates Risk

Your 3PL fulfillment partner will manage potential risks and maintain quality assurance for safety and damage. With someone to take responsibility for the detailed processes in your supply chain, you will feel a significant weight lifted off your company’s shoulders.

Considerations When Choosing a 3PL 

When choosing a 3PL company, keep in mind that you want to work with a partner who prioritizes operational efficiency, business relationships, safety, and the latest technology. Here are some things to consider before you choose a 3PL partner.

1. Reliability

Your 3PL partner should be able to handle disruptions, unexpected technical problems, and scheduling issues. It’s important to learn if they have a history of financial and relationship stability during an economic disturbance.

2. Customer Service

Confirm if the 3PL partner can match your communication needs. Do they have the ability to maintain professionalism and adequate responsiveness with accurate information? Can they identify issues and resolve them?

3. Safety Procedures

Your 3PL partner should have strict safety policies and procedures in place to protect assets, financial information, and personnel that they regularly update with the latest compliance regulations. They should also practice warehouse safety, particularly when dealing with heavy or hazardous goods.

4. Customization

Find out if the 3PL company provides customized solutions to integrate with your supply chain to help maintain long-term operations, quality of service, and efficiency.

5. Location

Verifying your 3PL company’s location will give you insight into their major shipping hubs and highways that can help you expand your customer base.

6. Technology and Automation

A strong 3PL company will have the latest updated logistics software and IT capabilities to help you make quick, informed decisions and enhance efficiency for your customers.

7. Experience and Reputation

A company’s reputation will tell you many things about how they run its operations. A 3PL company should prioritize its employees, vendors, and carriers to build a respectable and trustworthy reputation. Analyze the 3PL company’s relationships and see if they maintain a strong industry standing.

Choose Crown LSP as Your 3PL Provider

Trusting your business operations with an experienced 3PL partner enables you to focus on management processes with confidence knowing your facility’s operations are in expert hands. When you choose Crown LSP Group as your 3PL services provider, you get flexible, scalable solutions to meet your supply chain challenges and trusted personnel to manage your day-to-day operations.

As a distribution solutions company, we know every customer has unique needs. We will adjust and customize our operations to bring you cost savings and operational efficiency, giving you more time to focus on what you do best. We are ready to help you create a customized warehousing and transportation solution and get you moving forward.

For more information about our 3PL services, get in touch with us or request a quote today.

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What Is Contract Warehousing?

A contract warehouse is a third-party logistics (3PL) storage facility that stores goods on behalf of a client. The client and the warehouse enter into a contract, which can range from months to years. The agreement may have a fixed fee structure or operate on a cost-plus model. Contract warehouses can also perform many other services, such as handling, packing, labeling, fulfillment and similar activities. Let’s talk more about this potential solution for your long-term storage needs and how to find warehouse contracts that will work in your favor.

The Contract Warehousing Process Explained

Many companies need to store their goods or supplies for various reasons, and contract warehousing is one of the many dedicated storage options to choose from. Companies that don’t want to build, buy or rent their own warehouse space can enter into a third-party warehouse agreement with an outside provider who specializes in dedicated warehousing. This third-party warehouse provider will handle the storage, shipping and receiving of merchandise on behalf of their client. They can also add value by taking on more logistical tasks such as inventory management and making sure to follow distribution best practices.

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Differences Between Contract Warehousing and Other Options

One of the main differences between contract warehousing and other popular options like shared warehouse space or private warehousing is that a contract warehouse is dedicated to a sole client. All the dedicated warehouse’s resources and the entire facility go toward one company’s goods. The tenant commits to occupying that fixed space and relies on the contract warehouse to manage it. Because of this factor, contract warehouses usually require their clients to commit to a specific contract length, often months or years.

There are two other variations on the contract warehousing model. The first is when the contract warehouse company owns the physical facility and allows the tenant company to operate it with their own employees and equipment. In the other alternative, the client owns or leases the warehouse facility and hires a contract warehouse to staff it and handle all operations. Contract warehouses may also parcel out a larger facility for several contract clients. In this arrangement, the contract will dedicate a certain amount of square footage and resources to each client.

Contract Warehousing

 

Types of Warehousing Options Explained

When your business needs more storage capacity, you have three types of warehousing options. They include:

  • Private warehousing: When a wholesaler or manufacturer uses a private warehouse, it owns or leases the warehouse building and is 100% responsible for managing inventory and warehouse operations. This approach is highly involved and requires a hefty investment compared to other warehousing options. Typically, it takes 30 years to see a return on investment when a company builds a private warehouse.
  • Public warehousing: Under public warehousing or shared warehouse space, the client does not contract for a dedicated amount of space or resources. Instead, they share the warehouse with other clients. They pay a monthly bill based on the number of pallets that come in and out so they can occupy more or less warehouse space depending on their inventory needs. While the client only pays for the space they use, the warehouse operates on a first-come, first-served basis. A public warehouse may not always have the space you need if your inventory fluctuates often. Usually, these warehouses work best for short-term storage needs, such as seasonal inventory.
  • Contract warehousing: Contract warehousing, also known as dedicated warehousing, is when a company outsources warehouse operations to a larger facility or 3PL. Since a contract warehouse dedicates a certain amount of space on a long-term basis, it’s the best option for companies with a consistent inventory volume. Contracts usually last years so they work well for medium- and long-term storage needs.

 

Benefits of Contract Warehousing

For many customers, contract warehousing is the perfect balance between the total freedom and control of owning a private warehouse and the low cost and low involvement of using a shared warehouse. Some of the advantages of third party contract warehouse agreements include:

1. Lower Capital Investment

Consider that in New York City, it cost an average of $117 per square foot to construct a new warehouse or logistics center. The average newly built warehouse is just shy of 185,000 square feet, so constructing a new warehouse is typically a multimillion-dollar investment. While real estate costs are a little lower here in North Carolina, warehouse investments are too costly for most businesses to justify. Setting up an existing building for warehousing also requires investments in warehousing equipment like forklifts.

When you choose to contract your warehouse space, the warehouse space is readily available without the high cost of construction, renovations or equipment. When you hire a warehouse, you can use it for a shorter time frame to meet your current needs. When your contract is up, you can choose to contract for more space if needed without another significant upfront investment.

2. Lower Costs and Fees

Contract warehouse companies are experts at what they do. Often, they can develop strategies to make your storage, logistics and fulfillment more efficient, resulting in cost savings. For example, at Crown LSP Group, we can perform transportation and logistics services alongside value-added warehousing services. By keeping all these operations under one roof, where an expert logistics team can manage everything closely, you’ll save money and time.

Meanwhile, when leasing or owning a warehouse, the property usually comes with many fees and expenses. Utilities, building maintenance and property taxes can all add unpredictable costs to your monthly bills. When you choose a contract warehouse, all the costs you’ll incur will appear upfront in your written warehousing agreements. You can enjoy predictable overhead and share costs like utilities and maintenance with other contracted clients.

3. Value-Added Services

One excellent benefit of a contract warehouse over a public warehouse is that it can provide a dedicated workforce. While a public warehouse is mostly concerned with keeping its storage at full capacity, a contract warehouse knows it can rely on predictable storage needs and assign more resources to individual clients. For example, some companies need temperature-controlled storage facilities, which require expert monitoring from dedicated staff members. When you have a contracted staff committed to managing your goods, they can also offer other valuable services such as:

  • Cross-docking: Cross-docking improves supply chain efficiency by reducing the time products spend in storage. It helps you get products to your customers faster and is extremely effective for companies in the consumer goods industry. For example, at Crown LSP Group, we can build personalized cross-docking solutions for your shipments. We’ll receive deliveries at our warehouse, organize them or break them down into smaller shipments right away, and send them out on the next available outbound trucks. That way, shipments spend less time in storage, which reduces handling, storage costs and inventory management needs.
  • Pick-and-pack: Pick-and-pack is a complex e-commerce order fulfillment strategy where warehouse workers will pull items for many customer orders at once and then pack them all for shipment. This method lets you prepare e-commerce orders and get them ready to ship quickly, so you can guarantee faster delivery times. An e-commerce order fulfillment company like Crown LSP Group can develop an effective pick-and-pack solution for your warehoused products.
  • Rework: If you ship in products from a manufacturer in another country, it costs a lot of time and money to send back damaged items that need to be reworked. Entering into a third-party warehouse agreement can help mitigate minor rework issues, such as reprinting labels or instruction manuals, replacing broken or missing components or repackaging items. This improves supply chain efficiency by taking care of product quality concerns right from your stateside warehouse.
  • Palletization: A contract warehouse can also organize incoming shipments onto pallets or break down and rearrange products on existing pallets. Depending on your needs, Crown LSP Group can store your products on pallets for long-term storage or prepare them for their next destination.
  • Advanced inventory management: E-commerce businesses and manufacturers that frequently ship goods in and out of their warehouses need to track what’s in stock and what they need to reorder. Contract warehouses can record valuable inventory data like real-time available quantities, current locations, serial numbers and manufacturing dates to streamline inventory management operations. Dedicated warehouse providers add value to inventory management with advanced warehousing support like helping you set a sustainable safety stock level for your products. Many companies find they need more safety stock to get ahead of potential supplier delays, and we can advise you on an amount that makes sense for you.
  • Greater reliability: Many businesses choose to work with a contract warehouse so they can continue focusing on their core strengths. You can leverage the expertise of a dedicated warehouse, which can develop personalized solutions for your business. This partnership eliminates the growing pains of learning how to operate a warehouse internally. A contract warehouse dedicates a set amount of warehouse space and personnel to your business, so you can rely on having the storage space you need at all times.

 

Resolved your contract warehousing concerns

 

Resolve Your Warehousing Concerns With Crown LSP Group

Crown LSP Group is flexible, reliable and committed to finding the solutions that work best for you. We recognize that while most businesses benefit from using a 3PL contract warehouse, every company uses these services a little differently. As your expert warehousing partner, we’ll act as an extension of your staff and personalize our solutions to serve your operation best.

We have the contact warehouse capabilities to accommodate several locations across the east coast. These include contact warehouse space near:

Learn more about contracting warehouse space through our third-party logistics services and reach out online to request a quote.

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