What Is Contract Operations And What Value Does It Bring?

There is a difference between getting things done and getting them done efficiently. One example is running a distribution center in-house. Because the operation appears to run with no major roadblocks, many companies aren’t aware of their true costs and don’t focus the time or resources to drive out inefficiencies and unnecessary expense. This results in a distribution center that is operating sub-optimally and negatively impacting the company’s bottom-line profit. Additionally, allocating resources to an in-house distribution center only diverts attention from the company’s core competencies, priorities, and business purpose.

Turning over distribution center operations to a third party can often reduce costs, improve operational performance, and customer satisfaction, and ultimately help companies better focus on their business priorities.

Use the topics below to determine if your company could benefit from a contract operation.

• Staff recruiting and management. Is recruiting, training and managing warehouse staff an effective use of company time? Could that time be better focused on the company’s core competency.

• Upfront investment. Purchase of racking and material handling equipment is expensive. What is the lost-opportunity cost to tying those dollars up in a major capital purchase? Could they be better deployed in other areas of the business?

• Layout and design. Is your warehouse designed to perform? The efficiency of a distribution center is determined before the first loads are moved. Make the wrong decisions on layout, racking, and design, and the inefficiency will burden a company with overtime and additional personnel costs.

• Management systems. Distribution is driven by big data. Does your facility have the systems in place to collect it? Do you know what the data means and how to act on it? Without a quality warehouse management system, companies operate in a vacuum. Real-time access to this information is critical to the overall performance of the facility and, ultimately, customer satisfaction.