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 very likely be your best option.
What Is a Flex Warehouse?
Commonly known as “public warehousing,” flex warehousing offers your company a flexible amount of warehouse space and services that expand and contract as you need them to. Imagine a big square warehouse with (hypothetical) wall-divided sections inside. But, instead of being set in stone, the walls have wheels under them. Some months, the walls are rolled outward and give your section more space, while other months they move inward, giving you less space and your fellow occupants more. This is the flex warehouse.
Using the Flex Warehouse 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. If your sales volumes fluctuate, then your warehousing needs should follow suit with flexible warehousing. Ideally, you want your warehousing and logistics costs to parallel your company’s revenue stream.
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. Flex warehousing 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 “borrow” them between facilities as needed to meet project demands.
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 as opposed to short-term temporary workers. You simply need the stability that full-time employees give to flex distribution operations, while then augmenting those employees with temporary labor. Operations that run mostly on temporary labor may not be the best fit for you as inaccurate orders, poor productivity can result if inexperienced workers are recruited and thrown into projects with little training.
Warehouse Management Systems (WMS). When your items are stored, you’ll need to rely on the warehouse management system of your chosen partner. Such systems are designed to provide you with real-time visibility into the status of your inventory along with shipment status, parcel tracking and more. You will want to ensure that your warehousing provider’s system can handle the specific needs of your business.
At Kanban, we specialize in flex warehouse services from our campus in Eastern North Carolina – a perfect central location 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.