Running a business can be difficult, exhausting, and full of never-ending surprises. Decisions such as warehousing, inventory management, and fulfillment can make or break a company’s growth, not to mention cut into operations efficiency if not managed well. When choosing a third-party warehouse, it is important to start by clearly defining your objectives and operations. Issues often arise when there is a misalignment between your third-party provider and your objectives.
Perhaps the first question to ask yourself is: What is the role of a third-party warehouse?
A third-party warehouse is simply using someone else’s warehouse to store and distribute your product. Because logistics and supply chain management can be essential to an efficient operation, organizations use third-party businesses to outsource such distribution, warehousing, and fulfillment. This can allow a business to cut extra storage and supply chain costs. Third-party warehouses aren’t just for using their storage. They can also provide much-needed support for a business. Along with offering consulting services, third-party warehouses can pretty much store, outsource, and distribute for businesses.
Possible advantages of using a third-party warehouse for your organization:
- No direct warehouse costs. Using a third party eliminates the need to invest in owning, staffing, and managing your own warehouse
- Partnering with supply chain management experts. Partnering with experts in supply chain management will help you with the ins and outs of distribution in the most efficient ways.
- Your products can also be inspected, transformed, fixed, packaged, and consolidated with other products.
- Economical shipment
- Scaling opportunity
As stated above, when choosing a third-party warehouse, it is important to start by clearly defining your objectives and operations. Below are some key elements to consider when deciding if a warehouse is in alignment with the needs of your organization.
- Location, Location, Location – Is the warehouse close to your customers? Close to your suppliers?
- Are the facility operations up to your standards?
- Does the facility meet all of your requirements?
- Do they have the appropriate registrations and food safety plans?
- Do they have pest control, and maintain clean facilities?
- Do they have the type of storage you need (dry, refrigerated, frozen)?
- WMS – What system do they use to trace product lot and date codes and ensure the inventory method you use?
- Potential for growth – will the provider have room for growth as you continue to grow?
- Does the warehouse invest in technology improvement?
- What kind of support does the warehouse provide? And is it robust enough for your needs?
- Do they care about you and your ingredients?
In our experience at Ingredient Exchange, caring about the customer has been the biggest differentiator between good and bad third-party warehouses.
Price is important, but you can save yourself dollars by investing in a third-party warehouse that is getting it right. Do they fix any errors in weight? Will they pull samples? Do they make shipping products in and out easy?
The most important part of selecting a warehouse or any business partner is: do they make it easy to do business?
Let’s face it, we all want growth in business and we want the most efficient process with the best pricing, but if our partners are not easy to work with, then what kind of costs might a business incur because of this. Find partners who meet your criteria while making your life easier, and maybe even a lot more fun!
Ingredient Exchange has been serving the food ingredient market for 27 years. Schedule a call with one of our product specialists to discuss your particular ingredient and inventory surplus needs, and let us help you come up with a plan for you to make your business operation a whole lot easier!
