Storage is one area of costs for a 3PL provider. Efficient storage methods of products creates strong space utilization, decreased costs and improved productivity. But there are a lot of elements in ensuring that product is stored properly where a balance of utilization, cost and productivity is met.
Many shippers don’t understand this BALANCE needed. Many believe that they ship their merchandise to the distribution center and it’s stored . . . end of story. But, then, that’s why they outsource to a 3PL – this isn’t their core business! But it’s good to know what all goes into storage methods and there is a method to the 3PL’s madness!
- Maximizing space ONLY can make the picking process inefficient and less productive.
- Large storage areas can INCREASE travel distances . . . which INCREASES time to pick . . . which INCREASES labor cost.
- Enhanced picking strategies with specific “pick” areas can INCREASE storage space needed.
- If pallet racking or any specialized racking is used for storage, there is a INCREASED cost associated to that in the rate structure.
- Different forklift equipment is used depending on if the product is racked stored or floor stored.
- Velocity of inventory must be reviewed during the outbound order process as the design of the layout is configured.
- SKU count can determine how much honeycombing occurs in your storage which may INCREASE space.
- How wide does your aisle need to be based on layout design and storage method.
- Inventory turns must be considered in the layout.
The goal for a 3PL is to have a full capacity building, productive work flows and a fair cost to customers. For a 3PL that has a multi-client environment, this is another element to add when considering a balance to these areas. Logistics efficiency is a focus of all third-party logistics providers. Providing service and delight to customers is the goal but there is a lot that goes into accomplishment that mission. Storage or Space is one area of concentration and designed based on your business characteristics which is then reflected in your storage costs. Just remember, your 3PL approach to managing your logistics business is to have a balance of utilization, cost and productivity. Hitting the trifecta!