Proven Benefits of Using Warehousing Service Companies

The use of 3PL companies in India has certain proven benefits which would prove to be of great advantage to organisations. Let us have a look at the benefits that these companies have on offer.

The global market has become so competitive that there is a huge pressure on companies, manufacturers and organisations to enhance productivity thereby increasing their sales volumes and to cut down on costs and expenditures. This can only be done by improving production overflow and efficiently managing processes related to:

·        o   Procurement of goods,

·        o   Storage for a time period,

·        o   Distribution to the wholesalers, retailers and end-customers and

·        o    Logistics so that establishment costs can be lowered.

These can be successfully and effectively managed at lowered costs by employing the services of 3PL companies in India. Employing their services would enable the manufacturer to lower the costs involved in both inventory and warehouse storage management by ensuring they get the following benefits, namely:

·         Production support: The only way to reduce production lead times is to get consistent support during the production process. Managed warehousing facilities as offered by third-party logistics companies facilitate the same by offering:

o   Storage space in their warehouses,

o   Expert transport logistics,

o   Transportation of raw materials, finished goods and equipments as and when required.

·         Opportunity to increase business: Offloading the entire responsibility of warehousing and logistics will enable manpower and finances to be freed. These can be used effectively to bring about an increase in the volume of business thereby ensuring higher productivity.

·         Goods processing: Today warehousing services are involved in much more activities than just storing and delivering products. As part of inventory management, they also offer services related to the:

o   Picking of goods,

o   Properly packing them up and

o   Ensuring that they are shipped to their destinations.

  o  This again frees up space in the manufacturing unit which can be further used for process improvement and development of products.

·         Price stabilisation: The availability of large amounts of space for storage of materials enables manufacturers to store products in huge quantities during times when the demand for the same lessens and releasing them when demand increases. This maintenance of consistent stock levels help in price stabilisation and makes business forecasting with regards to production, profit and loss much easier.

·         Financing: Using third party warehouse services enables a manufacturer to borrow money from the banks and other financial institutions by keeping the stock maintained at these warehouses as collateral. Furthermore, when government licensed bonded warehouses are used to store goods they further help by:

o   Enabling the storage of imported goods until such time as the customs duty for the same can be paid and the materials released and

o   Facilitating the proportional payment of customs duty of goods to be exported by storing them.

·         Spot stocking: This is a unique feature of most warehousing services wherein seasonal products are stored in small warehouse units close to markets where they are in demand. This helps reduce their in-transit time and also service customer demands as and when they arise. Spot stocking is of great use to the production of agricultural products.

·         Minimisation of risks: It is mandatory for the warehouse owner offering warehousing services to companies, manufacturers and organisations to insure the warehouse along with its goods. Thus using the services of an off-site storage space minimises risks due to theft, loss of goods, damages incurred by goods due to fire, natural calamities etc., and transfers them to the warehouse owner. Simply speaking, the company will be claiming insurance in these cases and the warehouse owner will be paying for the compensation.

With the kind of benefits that are associated with using third party logistics, especially those that use a warehouse management system, companies who do not have tie-ups with them are actually missing out on a lot of opportunities including experiencing efficient expertise in handling logistics. Thus it is high time that they reconsider and start using third party warehousing facilities.