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Times When Third-Party Distribution Warehousing Makes Sense

Monday, May 4th, 2015

There was once a time when warehouses only stored items for customers. These days, however, warehouses offer businesses of all sizes a host of distribution services. Most third-party distribution warehousing companies offer order fulfillment, picking and packing, custom labeling, and other value-added services in addition to product storage. Despite all the services offered, many business owners are unsure if outsourcing their warehousing and distribution will benefit them. Here are three times when it makes the most sense.

In the Start-Up Stage

Start-ups are in a precarious situation when it comes to planning for the future. On one hand, the business plan lays out specific steps for growth, on the other; it’s unlikely that everything will go exactly as planned. In addition, they rarely have the experience, capital or real estate necessary to provide for adequate distribution and warehousing of products. In these situations, a start-up partnering with an experienced 3PL is a sound decision with several benefits. Highly trained employees, well-maintained facilities and a solid reputation are just a few. In addition, it allows a startup to spend their time focusing on their core competencies, instead of venturing into a business landscape they know little about.

During Periods of Growth

If you find that your company is experiencing a sudden growth spurt, you’ll have to scale up your warehousing and distribution as well. Just because you have more revenue coming in, doesn’t mean that you’ll be able to afford a new warehouse space and outfit it to suit your needs. Not only that, but you’ll also have to hire and train employees to run it. Even if you do have the capital, it may not be possible to find an appropriate space fast enough to meet the demand. Third-party distribution warehousing is a great short-term and long-term solution, providing the space and employees necessary to continue the growth pattern.

Geographic Expansion

It’s not uncommon for a company to decide to expand to a new geographic area. Despite having reached success in one area, there is no guarantee that the same rate of growth will be experienced in a new location. It may not make sense to use capital to buy the real estate, hire and train employees and get the new distribution center online. It’s similar to the situation that start-ups encounter. Even if the end-goal is to buy, rent, or build a dedicated warehouse and distribution center, outsourcing to a third-party distribution warehouse is a viable interim solution.

Whether your company is in the start-up, growth, or expansion phase, carefully consider your distribution and warehousing options. Maintaining your own facilities and employees may be a good option for you, however, outsourcing has many advantages as well. It really comes down to choosing the best route for your company today, and into the future.

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