Everything You Should Know About Third-Party Warehousing & Distribution For Retailers

A third-party warehouse is similar to any other warehouse except that fact that it is owned by an entity outside your company. Due to the increase in sales, many companies choose third-party warehousing and distribution to manage their inventory and sales efficiently. One of the major benefits of choosing it is that it eliminates any rental charges and saves up construction capital.
Warehousing is one of the central operational processes, wherever goods are moved. A 3PL warehouse is designed to maximize speed and efficiency for your order fulfillment.

Storage Space Systems

In the case of fixed storage space allocation, fixed storage spaces (e.g., via the GLN – Global Location Number) are provided for each item (e.g., via the GTIN – Global Trade Item Number), which are only reserved for these items (“same to the same”). The advantage lies in the simple determination of the storage location. However, due to the fluctuating stock levels for each article over time, part of the fixed storage space allocated is not used, which results in poor utilization of storage capacity.
The articles are stored in a free storage bin at the dynamic Storage bin allocation (open warehouse system). The storage takes place arbitrarily or according to given parameters. An advantage of this warehousing method is that if, for example, a fault occurs in one storage aisle, the same material can be taken from another storage aisle. However, the most significant advantage is the very high utilization of the storage capacity. The storage locations must be precisely documented to ensure later access to the stock items. This must be system-supported by using an ERP or warehouse management system. Furthermore, in the case of chaotic storage of hazardous substances (e.g., certain adhesives, process chemicals), restrictions and prohibitions on joint storage must be considered.

Economical Warehousing

Short distances, minimal search times, more cost efficiency and the associated competitive advantages: Economic warehousing is based on efficient processes that work even with a very high workload. In other words, the processes involved in warehousing must be grasped quickly by every employee (even the temporary worker) so that the required goods can be found quickly. The prerequisite for this is standardized processes such as the uniform labeling of storage locations and transport units (e.g., in GS1-128) and the use of a warehouse management system.

Approaches To Optimize Warehousing

1. Eliminate information gaps in the warehousing processes.
2. Lean warehouse processes from goods receipt through picking to goods issue.
3. Reduce the search effort and shorten walking/picking times through standardized labeling.
4. Introduce efficient control mechanisms in outgoing goods.
5. Minimize inventory differences and avoid wrong loads.
6. Increase inventory accuracy.
7. Prevent out-of-stock situations and increase the quality of goods provision.
8. Discover energy-saving potential.
9. Optimizing the use of forklift trucks.
10. Reduce communication effort by switching to electronic data interchange (EDI).

Priority Criteria for Warehousing

Small and medium-sized companies are well-advised to create an individual action plan that shows how to get from the actual process to the target process in warehousing. Together with your employees, first describe the most important measures, the expected effort and the potential. And then coordinate this with the responsible management. In this way, medium-sized companies can also improve their warehouse management in a much-targeted manner.
Third-party warehousing and distributing channels put significant effort and expertise to offer smooth services to the companies. They assist in providing customers with extreme satisfaction and an optimal experience. All you need is to find the right and most suitable 3PL warehousing partner for you.