3 Ways a 3PL Can Decrease Your Warehouse Management Challenges

Managing a warehouse on your own is challenging. You’ve got to keep track of all the inventory on the shelves, make sure it’s easy to find for picking, and keep the space running, all while dealing with the unique issues that come with employing people.

Rather than tear your hair out trying to keep everything going, partner with a third-party logistics (3PL) company to handle your warehouse management tasks. Here are 3 ways choosing a 3PL can help you overcome warehouse management challenges and boost your business:

Reduce Labor Costs

More than half of companies have trouble finding and keeping skilled, qualified, dependable workers for their warehouses and distribution centers—a problem that’s only gotten worse with global labor shortages in all industries. And when you are able to keep workers, the costs of paying them wages and benefits, as well as training costs, can make your budget balloon out of control.

A 3PL maintains all the necessary warehouse workers for you, and you benefit from their skill and training. You never have to worry about who’s taking a vacation day or who didn’t show up for work; you just see the results of your 3PL’s hard work and dedication.

Additionally, spreading out the costs of employing and training a labor force among all of a 3PL’s clients means that you’re paying just a fraction of the amount you’d pay if you handled your own warehouse labor.

Improve Standardization

When you handle all your warehousing yourself, it can feel as if you’re just cobbling together systems and ideas without any real plan. You may have one way of organizing a set of shelves, but then someone else comes along and organizes it a different way.

This lack of standardization means you’re wasting your time and money every moment of your working day.

Over their years in business, a 3PL has become a master of their craft. They use data collection and analysis tools to help find the most efficient, quickest, and most cost-effective methods in all areas of their business. They’re always evaluating their processes and making adjustments, and your business benefits from all this time, effort, and expense.

Better Responsiveness

Shopping seasons shift quickly, and experiencing an unexpected upturn in demand for your products (or a downturn in demand) could spell a huge financial issue for your business. Managing all your warehousing and inventory management yourself means you’ve got to be constantly on your toes, ready to respond to shifts in demand.

A 3PL, however, can help you determine the right amount of stock to keep at any given time. And, their larger amount of storage space means you can manage a little bit of overstocking without a huge issue for your space.

Through months and years of collecting demand data and tracking trends, your 3PL works with you to help you figure out just how much of each product you need to have in stock, and when to ramp up production in anticipation of a boom in demand.

Your Warehouse Management Partner on the East Coast

For more than 30 years, Cannon Hill Logistics has been helping small businesses just like yours with all their warehouse management and logistics needs. We can help you custom-design a solution to meet your needs and budget. Call today for a quote!

Auto Parts Logistics: Costs of Internal Fulfillment vs. Using a 3PL

Managing your stock of auto parts can be done in-house, which makes it easier to quickly grab items your customers need. However, as your business grows, you may reach a tipping point where handling things on your own may not make sense.

When your inventory of stored parts outgrows your current storage space, or your demand for parts exceeds the amount of labor you have dedicated to picking the items, it may be time to consider outsourcing your auto parts logistics to a third-party logistics company (3PL).

If you’re considering outsourcing your auto parts logistics, here are some things you need to keep in mind:

Calculate Your Cost Per Order

The first step toward evaluating whether it makes financial sense to outsource your auto parts logistics is calculating how much each order costs you.

Some things to include in this calculation include:

  • Cost of goods sold
  • Shipping costs
  • Storage costs
  • Marketing/advertising costs
  • Custom packaging

You’ll add up the total costs for groups of orders, then divide by the number of orders, to determine the cost per order. The higher your cost per order, especially when compared to the price of each order, the less profit you’re making overall.

Calculate Your Overhead Cost Per Order

While your cost per order includes some of the variable, tangible costs of fulfilling orders, the overhead cost per order includes some of the intangibles of doing business. Some of these expenses include:

  • Salaries
  • Benefits
  • Training
  • Insurance
  • Infrastructure costs
  • Specialized IT
  • Utilities
  • Rent

You may not have a concrete number for this metric, but it’s important to do your best at estimating how much overhead each order requires so you can get a more accurate accounting of your profit margins. The higher your overhead, the less you’re making on each order.

Predict Future Costs

Costs change from year to year and, sometimes, week to week depending on the cost of energy, real estate, and other factors. While it can be difficult to predict these fluctuations, it’s important to attempt to at least get a round number you can use when you’re future planning.

This number allows you to create a budget and understand whether or not it’s feasible for you to continue handling all your order fulfillment in-house.

Compare to Costs of 3PL

When you get a quote from a 3PL company, the number can feel high because you’re used to all the smaller costs hiding in your books. But by calculating the cost per order, adding overhead, and then predicting potential future costs, you can better see that working with a 3PL for your auto parts logistics may actually save you money in the long run.

Your East Coast 3PL Partner

At Cannon Hill Logistics, we understand how difficult it can be to balance cost and the needs of your business’ growth. Whether you need some extra warehousing support or you want someone to handle the entirety of your auto parts logistics, we’ve got the skill and experience to take your business to the next level. Get your quote today!