When should you outsource your warehouse?
What are the advantages of outsourcing your warehouse? And when should you outsource your warehouse rather than run your it yourself? Fredrik Krysén gives you the answers here.
As part of our two-piece series of articles on in- and outsourcing the warehouse Transport Director, Fredrik Krysén, from Aditro Logistics gives you an overview of the benefits of an outsourced warehouse, as well as guides you to when you should outsource your warehouse. In the first article Steffen Larvoll from Lager & Industrisystemer (Warehouse & Industrial Systems) revealed the advantages of an insourced warehouse as well as factors in the decision process, which you can read here.
According to Fredrik Krysén the biggest advantage of an outsourced warehouse is that it allows for companies to focus on their core business in a greater degree, because they do not have to spend time managing warehouse and transport.
“For most companies, logistics are not part of their core business, and are not prioritized by the management and if they choose to run their own warehouse themselves, this can be a both costly and time-consuming part of their business. Outsourcing logistics allows for savings for up to 10-20%, and release time and opportunity for the company to focus on its core competencies, ” says Fredrik Krysén, who lists the savings of an outsourced warehouse in the following bullets:
- Lower costs thanks to economies of scale in warehouse and transport
- More efficient logistics processes
- Reduced capital tie
- Reducing the administrative burden
According to Fredrik Krysén, companies with outsourced logistics also release resources and increase potential revenues in several areas:
“Companies can focus on increasing sales and gain a competitive advantage over competitors as they do not need to spend time and resources on logistics. An outsourced warehouse will also increase customer satisfaction due to an improved delivery reliability, as a 3PL player is able to provide through economies of scale and logistical experience. Finally, an outsourced warehouse grows in line with the company, so the company do not have to worry about lack of space in the warehouse in case of increased sales. ”
Fredrik Krysén brings together the benefits and points to three rules of thumb for when you should outsource your warehouse. Outsourcing is a good idea, if you:
- consider new markets or products: New markets, products or just seasonal fluctuations are easier to manage through a third party who handles the storage and transport of your goods. This reduces the otherwise higher costs associated with new carrier agreements and varying inventories. This way your logistics becomes more scalable and flexible.
- want more efficient transport: A 3PL operator consolidates multiple companies’ shipments in order for the transport to become cheaper and more effective than sporadic shipments.
- want logistical experience and expertise: Many companies don’t have logistics as their core business, but by utilizing 3PL players’ industry knowledge and logistical expertise, the company will stand stronger.
If you want the above advantages and the reasons for outsourcing match your business and strategy, then outsourcing of the warehouse might be the best option for you. If you are in doubt, you can read about the benefits and considerations in relation to an insourced warehouse here.
- Companies such as Bjørn Borg, Lexington, Cervera, Hemtex, Silva and Venue Retail Group has chosen to outsource their warehouse to Aditro Logistics.
- Aditro Logistics is the Nordic region’s largest carrier independent 3PL operator.
- 3PL means third-party logistics, and is when a company allows another company to handle its warehouse, logistics and transport of goods.
- Aditro Logistics has four giant warehouses and 10 smaller branch warehouse across Norway and Sweden.