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Common Industries That Use 3PL Services

August 3, 2023 John Griffin 3PL, E-commerce, Logistics, Order Fulfillment, Transportation, Warehousing

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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Understanding 3PL Warehousing Costs

May 23, 2023 John Griffin 3PL, Order Fulfillment, Warehousing

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 a Warehouse Location

How to Choose the Best Warehouse Location for Your Business

January 30, 2023 John Griffin 3PL, Warehousing

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

 

Unlock unparalleled efficiency and productivity by selecting the perfect warehouse location for your supply chain.

 
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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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Types of warehouse automation

Top Trends in Warehouse Automation for 2023

January 1, 2023 admin Warehousing

What Is Warehouse Automation?

Warehouse automation is the process of moving products into, out of and within a warehouse with minimal handling by people. Automation takes advantage of technology to complete repetitive tasks, track inventory and increase efficiency.

For example, an automated distribution center may use radio frequency identification (RFID) tags to map inventory movements or locate goods. When a worker moves products from storage to shipping — or vice versa — automated trackers detect these changes. Once items pass by sensors, a software program automatically logs their journeys. As a result, stock counts are current and a warehouse operator can pinpoint product locations with a few clicks.

Today’s warehouse automation solutions offer significant benefits and options like robotics, blockchain technology, big data and more. These alternatives enable businesses to lower expenses, improve productivity, advance safety and maintain accurate records.

Benefits of Using Automation in Warehouse Operations

Automating warehouse operations provides businesses with advantages like reduced outlays, efficiency, security and more informative stock logs.

Lower Costs

A primary benefit of automating a distribution center is its direct impact on a business’s bottom line. Investments in automating technology lower a company’s overhead by replacing inefficient human processing with advanced solutions. As a result, labor costs and energy usage decrease. Options like automatic product retrieval enhance revenue by reducing picking errors and the time associated with manual methods.

Higher Workforce Productivity and Safety

Attract and retain the best in industry talent by embracing technology options that increase employee satisfaction and workplace safety. Automation solves heavy lifting and repetitive motion challenges, reducing injury risk and increasing output.

Crown LSP Group provides comprehensive on-site warehouse services in your facility with crews experienced in the latest automation technology.

Inventory Accuracy Increases

Using automation for your warehouse stock optimizes your efforts to support your customers. Robust applications track, pick and ship products with greater accuracy, simplifying inventory management and auditing. Crown LSP Group offers integrated warehouse management systems with our customized storage solutions to help your company capture these benefits.

benefits of using automation in warehouse operations

Types of Warehouse Automation and AI

Warehouse automation examples span the landscape, from robotic options to devices that communicate online to analytical data and blockchain technology.

Robotics

Robotic warehouse automation has grown significantly recently, for good reason. These solutions help improve job satisfaction and productivity while reducing errors. Common types of robotic automation include:

  • Automated guided vehicles (AGVs): Many use AGVs for goods transportation, either moving products between storage locations or from one department to another. These robotics require assistance with movement execution, usually via preprogrammed pathways.
  • Automated storage and retrieval systems (AS/RS): This complete system processes the entire order from picking to delivery. Since workers remain stationary, AS/RS automation delivers safety and efficiency with little potential for error.
  • Autonomous mobile robots (AMRs): These robots are more complex machinery, able to undertake movement on their own using sensors and maps. Their advanced programming makes them ideal for inventory scanning and tracking applications.

Blockchain Technology

Blockchain technology rose to fame with the advent of Bitcoin as a secure method to link blocks of data together and prevent alteration. In warehouse applications, blockchain joins various stakeholders along the supply chain with an accessible, secure platform for management and communication.

The technology pairs well with the Internet of Things (IoT) to check conditions at different points along a product’s journey, creating an immutable ledger. Blockchain can also ease vendor payments via its Smart Contract functionality. For example, once a distribution center receives goods and confirms their condition, the purchasing agent verifies it through the system. The embedded code then self-executes and releases payment directly on the blockchain, completing settlement quickly and with high degrees of transactional security.

IoT

Robotics represents only one component of the IoT. Many other devices — such as sensors, GPS units and temperature-monitoring equipment — fall into this category. Other typical connected device applications include:

  • Employee monitoring: Outfitting employees with wearable IoT devices allows center management to gather production data, pinpoint worker locations and provide extra safety measures, such as alerting the employer to a fall.
  • Equipment maintenance: Smart equipment uses an internet connection to report its condition. These machines can issue scheduled upkeep reminders and send error codes directly to qualified personnel for faster repair service.
  • Transportation: One of the most vital segments of the supply chain gets a big boost from IoT in GPS devices. These units ensure a driver follows the most efficient travel routes and provides real-time arrival estimates for better inventory management. Partner with Crown LSP Group for comprehensive transportation services with the latest in IoT transportation technology.

Big Data

Big data helps more than retail organizations — it supports best inventory management practices in warehousing. Ways analytics benefit the inventory management process include:

  • Demand prediction: Rely on customer behavior metrics to more accurately anticipate and adjust to shifts.
  • Efficiency boosts: Use your analytics to identify underperforming employees or machinery.
  • Replenishment management: Examine overstocked and understocked items to effectively manage product availability and turnover.
  • Loss prevention: Investigate and prevent shrinkage by using metrics to pinpoint the locations that need more security measures.
  • Recall acceleration: Get proactive with product recalls by using data to track inventory from its production to the end-user, enabling quicker contact and better brand perception.

Conclusion

Available options for automation and AI in warehouse operations today include big data analysis, blockchain programs, robotics, and the IoT. The advantages of an automated warehouse provide significant opportunities for businesses to increase their workers’ production, maintain a safer work environment and improve recordkeeping while lowering costs.

Crown LSP Group welcomes the challenge of devising an ideal solution to your business’s warehousing needs. We’re a family-owned company with over 30 years of experience as a full-service third-party logistics partner. Discover how our expertise benefits your organization’s bottom line while solving supply chain issues. Contact a Crown LSP Group representative today and experience what a can-do attitude can do!

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How to Calculate Warehouse Space Needs

December 7, 2022 John Griffin 3PL, Warehousing

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.

Outsource to a 3PL and Optimize Your Warehouse Space

 

Take the leap towards warehouse space optimization by partnering with a trusted 3PL.

 
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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 3pl

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

July 21, 2022 John Griffin 3PL, Logistics, Transportation, Warehousing

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.

contact Crown LSP Group for 3pl services

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How Does Pick and Pack Fulfillment Work?

July 1, 2022 admin Logistics, Order Fulfillment, Warehousing

Fulfilling orders placed by your customers involves multiple processes associated with both receiving and shipping customer orders. Picking and packing is one of the earliest and most essential processes in order fulfillment. If you own a small business or an e-commerce company, you may be wondering how outsourcing the warehouse pick and pack process can benefit your operations.

Logistics companies can promise speed and efficiency because of the pick and pack process. But before you outsource this crucial process, you should understand pick and pack fulfillment, learn some picking and packing best practices and know the benefits of e-commerce pick and pack fulfillment.

Continue reading to learn more about pick and pack fulfillment with Crown LSP Group.

What Is Pick and Pack Fulfillment?

The pick and pack process is a part of the supply chain — the process that moves goods from the supplier or retailer to the customer. Picking and packing in a warehouse is the process that takes place after orders are placed at a store online. The fulfillment center finds products from shipments and re-packages them for distribution.

  • Picking: Warehouse picking means using a picking list for identifying and retrieving the right quantities of every product from the facility.
  • Packing: Packing means placing items in the correct box and choosing the appropriate documentation and packing materials. The package is then ready for labeling and shipping.

Pick and pack fulfillment is popular among internet or e-commerce businesses with customers across the nation or even around the world.

Types of Pick and Pack Strategies

As your company grows, you may need to adopt other strategies for picking and packing your orders. A warehouse that offers pick and pack services should use best practices and strategies that reduce errors and returns and save you money. These strategies include piece picking, zone picking, batch picking and wave picking.

Piece Picking

This picking and packing method is pretty straightforward — warehouse workers pick each item for an order by hand as they are received. The worker will take the order’s packing slip and move around the warehouse to pick the order’s items off the shelves. After the worker finds every item for the order, they will take the items to the packing station. There, the order will be packed for shipping.

For small businesses that receive just a few orders each day, piece picking may be the easiest strategy to use for picking and packing.

Zone Picking

For the zone picking method, areas of the warehouse are divided into zones. Workers assigned to these zones pick items from the assigned areas. If the order calls for items from multiple zones, workers pass items from one zone to another. Once an order moves through every zone where the items on the packing slip are, the order will go to the packing station.

This method is best for larger fulfillment centers. Since complex coordination is required for this method, you’ll need warehouse management software.

Batch Picking

The batch picking method refers to picking orders in batches rather than individually. This strategy is most efficient if you have a large number of orders. Every batch is comprised of items located within the same zone of the warehouse. Warehouses utilize the batch picking method so pickers have the most efficient path possible through the facility. This saves time that would otherwise be spent walking back and forth, so orders will be packed and shipped faster.

Batch picking can be an effective picking and packing strategy for businesses of all sizes. All of the orders can be picked at one time every day, so this method will be more efficient than the piece picking method, which involves picking the items for each order as you receive them.

Wave Picking

Wave picking combines the zone picking and batch picking methods. For this strategy, employees stay in a designated area but pick orders in batches in those zones rather than picking items for a single order at a time. The batch is then passed to the next area in the warehouse for picking.

Benefits of Pick and Pack Fulfillment

Should your business implement pick and pack fulfillment into your operations? To help you make your decision, consider the benefits of pick and pack fulfillment:

  • Cost-effectiveness: Pick and pack fulfillment can handle any order, so you can avoid minimum order charges. Additionally, items don’t need to be gathered from various storage facilities. This practice reduces time and costs associated with labor, streamlining the process and making it more cost-effective.
  • Quicker turnaround: Another benefit of pick and pack fulfillment is the increased packing and shipping speed. Orders will arrive to customers sooner with pick and pack methods that utilize organized and well-managed handling strategies. Warehouse employees will be trained to work efficiently and will know what goods to search for to fulfill orders and how to pack these items properly to prevent damage.
  • Organization: Any successful pick and pack system relies on an organized warehouse. Groups of items will be clearly labeled to make workers’ jobs easier and every worker will know where to find the items they need, avoiding wasted time.
  • Customer satisfaction: When performed correctly, pick and pack fulfillment ensures orders are filled properly and reach customers on time and without damage. When you work with a pick and pack company, you won’t have to worry about the wrong items being sent to your customers. Properly trained workers and an organized warehouse will ensure orders are accurate and your customers are satisfied with their experience.
  • Efficiency: A proper process for picking and packing streamlines order fulfillment by removing the middleman needed when items are collected from various storage facilities before being sent to another location for packing and labeling. This makes the entire process more efficient.

Pick and pack fulfillment can help your business manage order fulfillment and increase profitability. To enjoy these benefits, you should work with a company that provides pick and pack services.

Choose Crown LSP for Pick and Pack Service

At Crown LSP Group, we provide distribution and supply chain solutions, regardless of whether we’re warehousing raw materials or finished goods. In the current environment, many companies realize they need more safety stock beyond what they were previously keeping on hand, which is where our services come in. Additionally, our transportation department can provide shuttle service from the customer’s facility to Crown LSP Group and vice versa.

We are a proud, family-owned third-party logistics provider that is happy to offer flexible and scalable solutions to our customers. If you are interested in outsourcing picking and packing services, request a quote from Crown LSP Group today.

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guide to warehouse safety

Warehouse Safety Checklist, Tips & Best Practices

May 3, 2022 admin Warehousing

Warehouse safety is an essential cornerstone of warehouse management. With e-commerce rapidly increasing in popularity, warehouse services are in demand more than ever. To ensure your workforce is safe and productive, you must have experienced safety staff and create effective safety procedures.

In this guide, we will look at the main safety challenges in warehousing and provide a comprehensive warehouse safety checklist to ensure that your employees and managers abide by industry standards.

The Importance of Safety in Warehouse Management

Understanding the importance of safety in warehouse operations is the first step towards maintaining your workers’ health and increasing awareness of the potential dangers involved. You can avoid incidents by following warehouse safety guidelines from the Occupational Safety and Health Administration (OSHA) and integrating checklists for various warehouse safety issues.

With online purchasing seeing a record increase, merchants are turning to third-party logistics companies and their warehouse facilities to store, package and ship their goods.

To accommodate the demand, warehouses are hiring more employees to perform a wide variety of tasks. Providing a safe work environment for a growing staff is vital in retaining workers and creating a culture that looks after everyone. Injuries ranging from personal injury to falls and crushing accidents put a significant strain on both the safety culture and employee-employer relationship.

Top Warehouse Safety Challenges

Warehouse operations can become dangerous quickly if the proper safety actions haven’t been addressed. Inadequate training, failure to heed hazard warnings, and improper manual lifting are among the most common safety issues that lead to warehouse injury and death every year.

Inadequate Employee Training 

When it comes to power equipment operation, warehouse employees must be sufficiently trained and licensed, even if a third party needs to be hired to perform the task. Without proper training in place, warehouse managers run the risk of seeing injuries and even death increase substantially. 

Lack of Awareness About Safety Protocols

Awareness of safety issues and dangers around a warehouse is the best way to proactively tackle workplace accidents. The better safety coordinators can identify dangerous situations, create a plan and communicate the plan to the workers, the safer everyone will be. This means the right people must be selected for the warehouse safety management team, and they must be able to instruct others on the dangers of warehouses and proper safety procedures.

Heavy Equipment 

Forklift and other heavy equipment accidents make up a large portion of warehouse incidents that result in serious injuries. Therefore, training and licensing should be taken very seriously when it comes to operating heavy equipment.

Physical Strain on Employees

Modern warehouses require workers to perform many repetitive movements quickly throughout a shift, including standing, twisting, crouching and reaching for objects. If not performed correctly, these movements can lead to repetitive strain injuries, including muscle, tendon and ligament damage.

Ignoring Hazardous Warning Signs

Hazard warnings indicating danger along with barricades to prevent workers and equipment from entering areas or going over ledges are critical in warehouse environments — ensuring all areas are adequately lit falls under this category.

forklift driver loading trailer

OSHA Warehouse Safety Standards & Guidelines

To ensure that safety is a priority in warehouses, OSHA provides a detailed list of required guidelines that break down the ten most accident-prone areas most frequently cited for violations. Below is a breakdown of the guidelines outlined in OSHA’s warehouse safety document.

Forklifts

About 100 employees are killed and 95,000 injured every year while operating forklifts. Forklift roll-overs account for the majority of these accidents. OSHA stresses the importance of training forklift drivers adequately and evaluating them regularly. Additionally, drivers should routinely inspect and maintain their forklifts.

Hazard Communication

OSHA states that hazard communication constitutes a large percentage of warehouse safety managers’ responsibility. Covering holes and wall openings to ensure equipment and workers don’t fall through is essential. OSHA also recommends clearly labeling and organizing dangerous goods and chemicals and correctly displaying Material and Safety Data Sheets.

Personal Protective Equipment (PPE)

most common ppe graphic

Employees should be supplied and equipped with the proper personal protective equipment (PPE) required for their tasks and should be routinely trained in the equipment’s proper operation. The most common PPE required in warehouses include:

  • Respiratory masks
  • Hard hats
  • High visibility safety vests
  • Safety gloves
  • Steel toe boots

Electrical Wiring Methods

OSHA includes electrical system design and wiring, mechanical power transmission, and portable fire extinguishers as areas for warehouse safety managers to pay particular attention to. It’s critical that licensed professionals, such as electrical and mechanical engineers, perform all electrical wiring and system design. The dangers posed by improper wiring can lead to severe injury or death of warehouse workers.

Fire Safety & Evacuation Plans

Having proper fire extinguisher locations and training employees on how to use them is especially important in warehouses that store flammable materials. Additionally, warehouse managers need to develop evacuation procedures and ensure workers understand the plan in the event of an emergency. To make sure that everyone understands and follows the plan correctly, conducting evacuation drills is a good habit to adopt in all warehouses.

Warehouse Safety Checklist

Checklists are a convenient way to ensure your warehouse facilities are operating efficiently and employees are performing their tasks safely. To uphold safety standards, warehouse operators need to understand the rules and procedures that cover general safety, forklift operation, and manual lifting.

General Warehouse Safety Checklist

Every warehouse has a different layout, stores different materials, and requires different types of employees. To operate efficiently, you must tailor your general warehouse safety policy to your specific needs. This means focusing on safety issues that stand out as the most dangerous or require additional attention to address. Below is a list of items that you can use to develop a general warehouse safety checklist:

  • Warehouses should be well ventilated, and the temperature kept comfortable for all occupants.
  • Hazards should be clearly marked, and leading edges blocked off to prevent falls or roll-overs.
  • All equipment should be equipped with emergency stops or power-downs.
  • Employees should receive ergonomic training and coaching to maintain realistic work expectations and take sufficient breaks to prevent overwork.
  • Employees should be trained to operate fire extinguishers and be thoroughly familiar with emergency safety procedures and evacuation drills.

Forklift Operation Checklist

Forklift operation and storage, including loading, unloading and stacking checklists, can include the following items:

  • Forklift operators must be appropriately trained and licensed.
  • Forklift operators must always wear seatbelts, operate the forklift in approved, well-lit areas and not let anyone else ride on or in the forklift.
  • Forklifts should not be operated in any way other than their intended use. This includes ensuring the lift is not overloaded and not lifting loads too high.
  • Forklift operators must ensure other workers in the area are aware of their presence by using lights, horns and backup alarms as necessary.
  • Place heavier items on lower shelves and ensure they are straight and evenly stacked.
  • Store dangerous goods in designated areas.
  • Clearly indicate maximum stacking distance on shelving and adhere to height limitations.
  • Distribute loads on shelving to balance their load across the shelving unit.

Manual Lifting Checklist

Manual lifting causes a significant number of worker injuries every year. Workers should learn proper lifting techniques to complete these tasks safely and effectively. Some points on an ergonomics lifting checklist can include:

  • Use power equipment to lift materials whenever possible.
  • Teach workers proper lifting techniques and remain diligent in coaching them.
  • Use your legs to lift and keep your back in a neutral position.
  • Ask for assistance if a load is too heavy.
  • Ensure all areas of the warehouse are appropriately marked and well lit.
  • Enforce the wearing of proper personal protective equipment at all times.
  • Allow injured workers to take sufficient time to recover and return only when fully ready.

Warehouse safety management is an essential part of a site safety program and can help supervisors and managers quickly make sure their workers perform their tasks safely with all appropriate measures in place. Simply having a brief list of safety tips for your warehouse can aid supervisors in maintaining safety as they perform their daily tasks.

Improve Warehouse Operations With Crown LSP Group

Crown LSP Group is a full-service third-party logistic provider that is here to meet the needs of any business. Whether your business needs additional storage space with temperature control and security systems or shipping at a moment’s notice, Crown LSP can provide a tailored solution to meet your needs. In addition, Crown LSP Group can assist you in your efforts to improve your warehouse operations.

Located in Rocky Mount, North Carolina, Crown LSP is strategically positioned to freight any shipment to three-quarters of the U.S. population within 12 hours. This means you can rely on Crown LSP to store your materials or products while you use your commercial floor space for more productive means. Contact Crown LSP Group today for more information or request a quote.

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What is a contract warehouse

What Is Contract Warehousing?

April 21, 2022 admin 3PL, 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.

Discover the Benefits of a Contract Warehouse for Your Business

 

Unlock operational efficiency and cost savings by exploring the benefits of a contract warehouse for your business.

 
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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.

Request a Quote Today

 

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How Do Value-Added Services Add Value?

Value-Added Services in Logistics and Warehousing

April 14, 2022 admin Logistics, Order Fulfillment, Supply Chain, Warehousing

Value-added services in logistics allow businesses to provide more comprehensive benefits, which has become an essential tool in increasing customer satisfaction. Using these services is especially vital in operations based on customer trust. Supply chain and logistics are some of the most competitive sectors and adding value can give your organization an edge.

What is a Value-Added Service (VAS)?

The term value-added services refer to the additional distribution and warehousing services offered by third-party logistics providers to business looking to outsource their supply chain operations.

Whenever logistics providers add value the right way, it affects the level of customer satisfaction, while indirectly increasing their bottom line. Service providers know the ins and outs of the business and they can assist companies in responding to customers’ needs. Companies partnering with value-added logistics providers can focus on their core business and work on being more competent in the market. Value-adding is not a one-time task — it requires continuous maintenance and 3PLs are working toward providing value-added services in conjunction with their more traditional offerings.

Adding value to your packaging and transportation process can give your company an edge in the market and enable you to stand out from the competition. Service providers offer a range of contributions that add value to your brand, but how do they do that? And is it advantageous? Let’s look at some offerings and how they can benefit your organization.

Enhance Your Supply Chain with Value-Added Services

 

Elevate your supply chain performance by leveraging value-added services that deliver exceptional value to your customers.

 
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How Do Value-Added Services Help Improve the Supply Chain?

Forward-thinking companies use their supply chain to gain market share and get ahead of their competitors. Spending time and resources to keep this supply chain smooth has become a notable trend in the logistics industry. Forward-thinking entrepreneurs work toward maintaining supply chain excellence, and it has become a widely accepted business strategy in today’s market. Value-added logistics services are not only for customers but also for management. Consider these reasons behind the importance of common supply chain value-added services.

1. Increased Price Pressures and Competition

Previously, brand recognition and product features were more than enough to set companies apart but things have shifted. After commoditizing several products in the market, organizations need better methods to stand apart.

Brand equity and product innovation are no longer the only tools that can allow a business to set a higher selling price. Staying in the competition and emerging on top will require a redesign of supply chains and traditional methods.

Companies are using two methods to adapt to this trend. First, they assess cost-reduction strategies and create new techniques to build a more efficient value chain. These changes will allow them to retain a competitive edge. Second, companies are searching for strategies to provide value-added services that will enable them to meet savvy customers’ demands.

2. Outsourcing

As the market evolves, many companies are taking a step back to evaluate their core competency and some organizations realize that outsourcing part of the supply chain can be beneficial.

The marketplace continues to revolve around three pillars:

  1. Cost and quality of global manufacturing and distribution
  2. Information mediums and systems
  3. Product design capabilities

By outsourcing their supply chain and logistics operations, companies can breathe new life into their business. Still, without the correct systems, processes or organization management, the risk can rise to unmanageable levels. When their business model relies too heavily on outsourcing, companies must implement solutions to make up for off-site supply chain capabilities. The need for details becomes the foremost priority in an outsourced logistics environment.

Staying in the competition and emerging on top will require a redesign of supply chains and traditional methods.

3. More Complex and Shortened Product Lifecycles

Companies are under significant pressure to develop cutting-edge products and launch them to market quickly, without maximizing or compromising the integrity of their high-demand existing products. To meet this ever-growing need, companies require streamlined product lifecycle management processes, which emphasize new product launches, product discontinuation and design.

The primary benefit of product lifecycle management technology and processes is that it helps companies design products that can share components, operations or materials — reducing the risk of obsolescence write-offs, ensuring optimal use of all infrastructure investments and limiting increased costs when buying essential materials. In addition to all these benefits, it will also shorten the time to market. Companies can focus on product lifecycle management efforts in all these areas and buffer themselves against the risk of any unexpected cost increases, spontaneous obsolescence write-offs and underwhelming product launches. These practices will also enhance customer perception of your company and establish yourself as an innovative reformer.

Top benefits of using value added services

Top Benefits of Using Value-Added Services for Your Business

You can find several positive reasons to consider a 3PL provider for value-added logistics services. Here are a few notable benefits of value-added services that can readily translate to a competitive advantage for your business.

1. Flexibility

The most significant benefit of using a 3PL provider is flexibility. Partnering with them will allow you more flexibility in labor, space and equipment. They can offer all these components to enable you to meet your customers’ requirements more effectively. Some 3PL providers also offer extra physical space for a specific time as a value-added service, which could be a warehouse for storing rush inventory or a meeting space for discussing on-the-fly software updates. Labor resources are also available as part of value-added services. If any of your product campaigns require a more hands-on approach to attract your audience’s attention, a 3PL can quickly shift their staff to your project and keep your labor cost to a bare minimum.

2. Quality

A 3PL’s added-value services department is primarily a team of specifically trained staff who can assist you in executing specialized projects. With the assistance of a dedicated professional team working or overseeing any customization, you can focus on quality and work efficiency. The value-adding team provided by a trusted 3PL provider might collaborate with customers. They can outline the project, ensure accuracy and precision and take the necessary steps to complete the project on time.

3. Ease of Integration

Partnering with a 3PL provider’s value-added services enables the seller or company to work with one partner for all their logistics needs. A reliable 3PL can assist you in managing warehousing, transportation and all the value-added services you need. This help can make the process more seamless to integrate any updates or changes along the way. Keeping the product in a single fulfillment center can also minimize the cost of moving products and transportation.

Types of Value-Added Services That Improve Your Competitiveness

Types of Value-Added Supply Chain Services

In warehousing and distribution, value-added services go further than normal operations and can set you apart from your competition. Among these types of activities are cross-docking, transloading, palletizing, kitting, and return processing.

Here are some value-added service examples that decrease your costs and impact your business operations.

Cross-Docking

A cross-docking system allows companies to move products directly from the receiving dock to the shipping dock. This streamlined method saves space and eases manual handling in the distribution center. Cross-docking requires close synchronization of all outbound and inbound shipping movements and reduces the cost by decreasing stockpiling. Cross-docking also involves re-packing, inspection and labeling.

Transloading

The process of transloading requires more than one transport mode. Businesses primarily use this solution when one mode of transport, like land, air or sea, is insufficient to deliver the goods from the origin point to the destination. International shipments, which require multiple modes of transportation, are the best example of transloading. The international shipment process usually begins by air or sea, followed by a truck.

Transloading lets you arrange and sort the shipments before delivering them to the distribution center or warehouse. This streamlined process removes any expensive or unnecessary land transportation. All shipments get grouped upon arrival, eliminating the need for any distribution center.

Transloading also enables your business to save money by removing any less-than-truckload costs. In addition to benefiting the companies, the process is also speedier, thus bringing your customers more satisfaction. You can reach different areas with transloading by using various local and international shipment methods, increasing business possibilities and growth.

Palletizing

In palletizing, you place items or goods on pallets. Depending on the business and product, you may use manual, semi-automated or fully automated methods to put the shipments on pallets. Moving palletized products is more efficient, with a quicker delivery turnaround. With palletizing, you can move perishable goods faster and decrease the risk of spoilage. The palletizing process also reduces labor requirements.

With standard pallet sizes, you can optimize warehouse workflow and operations. Palletizing significantly reduces the risk of worker injury. Since the pallets are more durable than other shipping containers, they can allow you to carry more products at a single time.

Order Fulfillment Services

Order fulfillment services provide the highest customer satisfaction among all the value-added services, and it is one of the top value-added services in logistics. These services can simplify your supply chain and allow you to move your products faster. The order fulfillment services can help you delight your customers with a streamlined process and faster deliveries. This service includes in-house packaging with the latest technology tools. Order fulfillment services perfectly handle labeling and new product launches. When you employ a trusted partner’s help, you can increase your efficiency in handling operations and save a substantial amount of money on purchasing and maintaining expensive equipment.

Return Processing

Returns can cause financial and logistics problems, but they are an unavoidable part of doing business. Returns can require substantial effort and time and sometimes companies can get themselves in trouble trying to handle them. With value-added services, you can outsource your return processing. These service providers have dedicated warehouses and ample personnel to process and manage the returns as required. When a return arrives, workers scan it into the system to determine whether it’s possible to resell. Quick action can keep your business reputation intact and monitor the return patterns for insights.

Pick and Pack

Pick and pack is part of the order fulfillment process, but sometimes you need to pay some extra attention to ensure uniform packing and delivery of all products. A pick-and-pack service can streamline all your packages and deliver them before the expected date. Value-added service providers have the latest technology that assists them in finding the best route and double-checking the delivery address to reduce any chances of mistakes.

Kitting

The kitting process includes combining multiple products into a simple and easy-to-pick package. The process works in many ways, whether it’s banding two similar items or creating an integrated solution by pairing two commonly purchased products. This solution can significantly reduce transportation costs and delivery time. It can also slash your company’s combined costs.

What Are Customized Value-Added Service Solutions?

Value-added services can transform your supply chain, but it is not a one-size-fits-all solution. Service providers must understand a supply chain’s business model and weak spots. With an effective solution, you can optimize your supply chain’s operations.

Besides solving logistical challenges, an expert service provider can also provide other long-term benefits. Customized value-added services can build delivery models that will improve inventory and transportation costs, enhancing your operations and saving time and money.

Value-added service solutions can work on distribution channels to address your company’s trucking capacity and assist you with time-sensitive deliveries. Service providers can offer consultations and innovative solutions to address your trade landscape and warehousing requirements.

A significant benefit of customizing value-added services is an improvement of the supply chain by finding discrepancies in the process and taking corrective measures to improve them, so you can focus on customer satisfaction by providing optimum services.

Crown LSP Group Can Be Your One-Stop Solution for Managing Your Supply Chain

Choose Crown LSP for Managing Your Supply Chain

When you go toe-to-toe with your competition, it’s essential to partner with service providers who take care of your fundamental requirements while offering insights on distribution best practices to help you stand out from the competition. Being able to offer value-added services has become the latest norm in the constantly evolving market. Partnering with a reliable logistics service provider is paramount in optimizing your supply chain and distribution channel. Your partner should understand your business’s unique needs and deliver on them to achieve quantifiable results.

At Crown LSP Group, we can assist you with our value-added offerings and establish your business in the market. Take a look at the wide range of solutions we provide and get in touch with us for a customized value-added solution.

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