If your company is considering its warehousing options, you know that you can invest in the necessary space and labor and handle it yourself. Or you can partner with a contract warehousing provider and pay for a set amount of space and labor in its warehouse(s). But what if there is no “set amount?” What if your volumes fluctuate? When that’s the case, partnering with a flex warehouse provider may be your best option.
What Is a Flex Warehouse?
Commonly known as “public warehousing,” “shared warehousing,” or “flexible warehousing,” the flex warehouse offers your company warehouse space and services that expand and contract to match your sales volumes.
You share this warehouse with your 3PL’s other ‘tenants,’ each of you scaling your space and services up and down as your needs change.
Compared to dedicated or contract warehousing, the terms of flex warehouse agreements may be shorter term – allowing your spend to flex right along with your warehousing needs.
Using the flex warehousing model to reduce risk and costs
For most companies, sales volumes fluctuate throughout the year. They may be fast and furious in certain months (e.g., leading up to the holidays) and much slower during other periods. When you need to scale up, your 3PL provider can simply expand your existing warehouse footprint, move you to another location within the warehouse, or – if it operates a campus of logistics warehouses – move you to a nearby location. If your volumes decline, the inverse can occur.
The following are some key benefits of flexible warehousing services.
Secure warehousing space. A lot of the above implies that you have several warehousing options to choose from. However, we currently have historically-low warehouse vacancy rates. So, depending on where you’re looking to base your operations, warehousing may be extremely scarce. By partnering with a 3PL provider that already has warehouse space to offer, you can secure as much space you need, where you need it, without having to worry about acquiring a building or lease yourself.
Reduce Risk. If you are set on acquiring a warehouse yourself, you are going to take on a high amount of risk. Take on too much square footage, and you’re stuck wasting money on unused space and labor. Take on too little, and you may find that you need to pay for additional space during peak periods – thus dramatically compounding your expenses. These long-term considerations are important in this low-vacancy market where leases often require a commitment of 7+ years at signing. The flex warehouse removes these risks and allows you to fill a slot in an existing infrastructure that’s as big or as small as you need it to be.
Reduce Space Costs. Along with low vacancy rates, warehousing is currently more expensive than it’s ever been. In the go-it-alone model, you’re not only committing yourself to a set amount of space for 7 years or more, you’re also committed to paying record amounts of money for that space. This not the case with a flex warehousing provider that will charge you only for space and services you actually use each month. Just like a parking meter, you only pay for the time and space you need.
Secure associates. Too often overlooked in warehousing decisions are the people who make the warehouses function. As with space, warehouse labor is harder to come by than ever. If you choose to go it alone and lease your own warehouse, you need to make sure that you have the ability – and the deep pockets – to attract, hire and retain employees on an ongoing basis. With the flex warehousing model, your 3PL takes care of this for you as staffing is one of its core functions. Furthermore, some 3PL providers – like Kanban Logistics – have multiple facilities and can cross-train associates and “share” them among facilities as needed to meet project demands.
Enjoy location flexibility. Flex warehousing providers are often in strategic locations, such as near transportation hubs or key markets. This can provide businesses with the flexibility to store and distribute their products in the most efficient and cost-effective manner. It also enables companies to “try” distribution from a new location without the cost and commitment associated with contract warehousing or with running their own operation.
What to Look for In a Flex Warehouse Provider
Flex or otherwise, warehousing is much more complicated than simply placing goods inside a large building. It helps to work with experienced 3PLs who understand how to manage costs for companies with demand peaks and valleys. Key items to consider include:
Full-time vs temporary labor. The right 3PL for your business will have a good mix of full-time associates and short-term temporary workers. You need the stability and performance that experienced, full-time employees bring, with the ability to augment those associates with temporary labor. Operations that run mostly on temporary labor may not be the best fit for you as inaccurate orders and poor productivity can result if inexperienced workers are recruited and sent to the warehouse floor with little training.
Access to technology. Flex warehousing providers often use advanced technologies, such as inventory management software and automation systems, to optimize their operations. This can help you improve supply chain efficiency and reduce errors, while taking advantage of state-of-the-art systems that may be cost prohibitive if you were going it alone
Specialized services: Flex warehousing providers often offer a range of specialized or “value-added” services, such as packaging, labeling, kitting, and rework services. This can help you to streamline operations and reduce your overall logistics costs.
Turn to Kanban for flex warehousing on the East Coast
At Kanban, we specialize in flex warehouse services from our campus in Eastern North Carolina – a perfect central location just of I-95 that is halfway between Miami and Boston. We also can combine warehousing with a host of value-added services such as rework, kitting, packaging, returns processing, cross docking, and North Carolina eCommerce fulfillment. To see if our services are a match for your needs, contact us today.