Realistic Reasons For A Business To Outsource Warehousing

Enhancing productivity and lowering overall costs are growth goals common to all businesses. While one is in the hands of the manufacturer, the other is best achieved by using outsourced Warehousing S

Business growth can only be effected if there is a constant, smooth and planned rise in productivity. This growth results in profitability if the products themselves are sold at a higher sale price and the overall operational costs of the company are lowered. It has been statistically proved that of all the aspects of a business namely procurement, manufacture, storage, sales, distribution and fulfilment, logistics which involve storage, distribution and fulfilment account for the highest expenses incurred by the company. Lowering of the same has the potential to turn around business profits in a big way and this can only be facilitated by the use of the services offered by 3PL Companies In India.

The benefits which these logistic companies offer are multifarious and affect different facets of the business like:

·         Production: It is easy to enhance production when there is no dearth of space. The use of logistics companies ensures the availability of increased space as and when required. They also enable effective use of the produced goods by facilitating efficient systems for inbound and outbound flow of the same which further results in an increase in production levels. The complimentary effect of the two can thus lead to consistent production support with a dramatic reduction in production lead times.

 

·         Expansion opportunities: Having self-owned warehousing facilities needs a dedicated staff and consistent expenditure to ensure proper end-customer fulfilment of orders. In instances of an increase of production, instances of paucity of space is a common problem since expansion of warehousing space needs a monetary allocation which again results in an increase in the company expenditures. Thus expansion opportunities get thwarted and profitability of the company suffers. Since expansion opportunities help realise growth goals, they should never be wasted. The use of outsourced warehousing and fulfilment facilities presents companies with a lucrative and viable alternative to achieve expansion and growth.

 

·         Removing processing-packaging hassles: Using outsourced Warehouse Services enables companies to use their full manpower and resource in increasing productivity and achieving sales targets. Once the order is confirmed and the invoice generated the hassles of processing, packaging and delivering the same accurately is taken over by these third party logistics companies thereby enabling the company staff to concentrate on generating the next lot of sales orders.

·         Stability in prices: When the supply exceeds the demands, third party warehousing companies have the required space to store them till such time as the demands rise. This prevents companies from having to lower their profitability and sell off the excess stock due to lack of storage space. Thus products are able to maintain price stability thereby increasing their popularity and ultimately resulting in an increase in their demands.

 

·         Financing: The amount of stock maintained can be kept as a security when securing loans from banks and other financial institutions. When third party logistics companies are used, the amount of stock that can be stored can be increased as and when required thereby enabling easy disbursal or financial loans for the company concerned.

 

·         Spot stocking: This facility offered by logistics companies, especially those that offer public warehousing services, are of great help to companies and manufacturers who deal with seasonal products. Spot stocking enables them to hire warehousing facilities on a month to month basis thereby reducing the overall costs of the company.

 

·         Minimisation of business risks: 3PL companies using a good Warehouse Management System, ensures minimal loss in instances of damages incurred due to theft, fire, natural calamities etc. This is done by having the required insurance policies in place wherein claims made by the company incurring stock damage get compensated by it. This ultimately results in the minimisation of business risks thereby contributing to the overall profitability.

There are many other additional benefits provided by outsourced warehousing companies which help to enhance growth and profitability of their client company. Thus hiring them and availing of the services that they provide is a decision that is completely without any regret or financial loss, provided the warehousing company is chosen with careful deliberation.

Author's Note

Logistics is that aspect of a business which has a direct influence on customer satisfaction. This results in a positive feedback and word of mouth publicity directly translating into an increase of sale orders at no extra cost. This is just one benefit of using 3PL Companies In India. Let us look at the others.