Contract Warehousing As A Profitable Arrangement
A brief background
Contract warehousing is an arrangement whereby a third party that owns a warehouse provides a variety of special services to its clients. These clients could be from various manufacturing sectors such as pharmaceutical, cosmetics, food and beverage, apparel manufacturing, electronics, and so on. The unique selling proposition of such warehouses would be that they provide services over and above the regular just warehousing. Contract warehouses provide a number of allied services such as inventory management, logistical support, and as well as pick-and-pack services.
In short, they provide an integrated service to a manufacturer. There are several reasons why firms prefer to partner with a contract warehouse. They are as follows:
First of all, these warehouses help manufacturers to focus their energies on their core business. This means that if a firm deals with manufacturing electronics, they dont have to worry about building a separate warehouse to stock their goods and invest in expensive inventory management systems. All of these things will be taken care of by the contract warehouse firm.
Core manufacturers can save a lot of time and energy that they would otherwise invest in warehousing and distribution. Since a contract warehouse specializes in these services, they have a better idea of dealing with logistics and shipping companies.
These services are especially useful in the case of high risk goods or highly perishable goods. Contract warehousing firms are required to get themselves accredited in order to store perishable food products or high risk goods.
Where import and export operations are involved, a contract warehousing is a definite value addition. These firms are familiar with all the intricacies involved with federal agencies, transport bodies, and other quality control requirements.
Guidelines to choose the right warehousing and distribution partner
When choosing a contract warehouse, it is important to do some ground work. First off, you might want to find out the most reputable contract warehouses in your area. In order to narrow down, there are certain important factors that you should expect from your chosen firm. Here are a few desirable attributes of a contract warehouse:
Check if they offer all the standard solutions that are required for effective inventory storage, management, and control. For instance, you should ask for pick-and-pack services, container stuffing, pallet storage, shelving storage, dangerous goods handling, fragile goods handling, and so on.
In addition to all the basic standard services, you might want to check if the contract warehousing firm offers a number of specialized services such as HAZOP accreditation for clients with special needs, online ordering systems, a clean and dust-free warehouse, and so on.
Many such firms also offer the services over and above the ones you would expect from a 3PL logistics firm. These firms offer services based on the 4PL model. As compared to 3PL logistics, 4PL offers clients better value for money
by: Abharim Nel
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