Finding Quality Warehouse Space When Space is Limited

Finding quality warehouse space can be difficult.  Oftentimes companies spend too much time and resources searching for warehousing providers that meet their ever-changing needs. To complicate matters, most logistics managers do not have the expertise or an established network of outside warehouses to do so efficiently.

With constantly changing storage requirements, companies need an efficient way to manage their outside warehouse networks including food safety requirements, insurance coverage, rate negotiations, and transportation. One solution to finding quality storage space when space is limited it to utilize a managed warehouse service provider. Utilizing a managed warehouse service provider can deliver value through:

Simplified operations—Companies who provide managed warehouse services will essentially manage all of your outside warehouse relationships. This will leave you with just one invoice to pay for your entire network of suppliers.

Established Networks— A managed warehouse service provider will have a vast database of warehouses in various locations.  They have already built relationships with these providers and have verified them for quality.

Team of Experts—Companies who provide managed warehouse services will have a trained team of experts in operations, engineering, warehouse legal liability, rate negotiations and food safety requirements. This is something most companies simply do not have in-house.

Reduced Risk—When you work with a managed warehouse service provider, you’ll have access to warehouse legal expertise that can protect your products from being lost, stolen or damaged, which requires an understanding of loss limits and insurance coverage.

Standard operating procedures (SOP)—A managed warehouse service provider will have SOPs to address food safety and FSMA requirements for outside warehouses. Their network of storage providers will be trained on these SOPs to ensure the integrity of your products.

When warehousing is outside of a company’s core business, it makes it difficult to find the time, resources, and expertise to efficiently manage everything that goes into locating and managing outside storage networks. Enlisting the help of a managed warehouse service provider can allow companies to focus on their business, while saving time and reducing risk.

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.

Know Your Transportation Terms

Transportation seems like a simple concept. It’s about moving products and supplies from Point A to Point B. But there many options to get the job done and knowing the key terms will help you better understand each offering and the industry as a whole.

Take for instance “Transportation Brokerage” and “Managed Transportation.” The two often are used interchangeably, but they are radically different services. Brokerage involves a third party acting as a conduit for a company and the motor carrier to move loads – a very tactical assignment.

Managed Transportation is far more strategic and involves a company outsourcing all transportation functions to a third party. The provider uses detailed analysis and technology to determine the most efficient way of meeting supply chain goals. Managed Transportation is much broader in its scope, looking at a variety of modes as well as warehouse locations.

Other important terms to know include:

• Freight Forwarder. An expert in supply chain management that moves cargo for companies, often utilizing multiple carrier types for a single shipment. Shipments typically travel internationally.

• OTR. Over The Road. Also referred to as TL (Truck Load), these shipments typically travel greater than 350 miles. 

• Shuttle. These are short runs (less than 100 miles) of raw material from a warehouse to a production facility, or finished goods to a warehouse. 

• Regional. Truck loads that travel less than 350 miles within a geographical region. 

• LTL. Less-Than-Truckload. Refers to a shipment that is less than a full truckload. 

• Intermodal. A method of moving freight through multiple modes of transportation, such as rail, ship, and truck. Freight itself is not handled; the shipping container is transferred between the modes. 

• CTB Certified. The Certified Transportation Broker (CTB) program was developed by the Transportation Intermediaries Association. A CTB designation signifies that the professional has undergone rigorous training and testing to ensure they are an expert in the transportation industry. 

How Will FSMA Impact Carriers and Food Transportation?

While the Food Safety Modernization Act (FSMA) continues to be a work in progress, one thing is for certain – it will generate greater accountability. That accountability will extend through the supply chain to include carriers transporting food products for humans and animals.

The Food and Drug Administration’s (FDA) goal is to develop standards to ensure the safety and integrity of food products. Building off the Sanitary Food Transportation Act, FSMA will test carriers’ documentation skills. In addition, the new rules will bring equal accountability to shippers, carriers, and receivers of food products.

Setting standard operating procedures for tasks such as cleaning trailers, locking and sealing loads, and properly refrigerating products isn't particularly challenging. However, developing a process of collecting, organizing, and storing this information for easy retrieval at a later date is where carriers may face an obstacle.

New standards will make technology almost a prerequisite for carriers.

For instance, document management systems likely will be the norm for linking inspection paperwork to bills of lading. Likewise, the industry could see GPS systems in trucks become standard for carriers, as regulations demand tighter tracking and traceability of food products while they are on the road.

As FSMA approaches, it’s important that food manufacturers review the standard operating procedures of their logistics providers. Questions to ask are:

• Do they have established criteria for inspecting trailers before loading?
• How are these records maintained?
• How quickly can they be produced for review?
• Do they have standards for inspecting products upon arrival?
• How do they ensure trailers maintain the proper temperature for products?
• Do they have real time/GPS tracking and tracing capabilities with their equipment? 

How Managed Logistics Can Improve Performance

Imagine if, when building a house, owners went out in search of each specialist alone – finding an electrician, plumber, painter, etc. The sheer time and effort required to do this would be astronomical and easily double the time necessary to complete a project. A general contractor makes much more sense.

Yet many companies choose to design and manage their logistics “house” internally. They pick this carrier for a specific line, another carrier for that line, and task an internal resource or department to manage it all.  Like the building example above, it accomplishes the same job, but not efficiently.

This is the thought behind why companies turn to managed logistics. One major advantage is a much more complete approach. Instead of parceling out tasks, businesses gain an expert who can simplify logistics by providing a total solution.

Other advantages include:

• One point of contact. Instead of managing multiple carriers, sources, and schedules, one company now takes care of all of logistics, and the substantial paperwork that comes with it.

• Improved efficiency. Often a logistics network develops organically through the years. As a result, nobody takes a wider view of the system as a whole. By outsourcing the function, an expert can provide an independent view.  Using their experience and network analysis tools, a logistics provider will develop an overall strategy, identifying efficiencies to yield the best performance. 

• Better allocation of resources. Companies no longer are tasked with recruiting and managing logistics staff. Time can be focused on managing talent in more key areas of the business. 

• Savings. Volume discounts a logistics provider can leverage from carriers, combined with better overall efficiency, should net a cost savings for companies.

What Is Contract Operations And What Value Does It Bring?

Business is all about focusing on your core competencies to deliver value to customers. Savvy owners know this, and can quickly determine what functions to keep in-house and which ones to outsource to an expert. This is why companies choose contract operations.

Contract operations basically means turning over warehouse or distribution center operations to a third party — someone skilled in such activities. This distribution expert will take on recruitment and management of staff; purchase of MHE and racking; implementing warehouse management systems; and is responsible for all storage, handling, and shipping. Contract operations could be provided at a company’s own facility or delivered at an off-site warehouse.

Advantages of such an arrangement include:

• A lower, more predictable cost structure. Capital expenditures (MHE, racking, etc.) are built into a fixed rate schedule that simplifies budgeting.
• Improved warehouse performance. An expert approach, well-defined and implemented SOPs, and advanced technology in warehouse management systems combine to yield better efficiency and greater productivity.
• Location assistance. Often, providers can assist in identifying the optimum location for a warehouse to help reduce transportation costs. Such a service is valuable as transportation is the biggest supply chain expense, at five times the cost of storage.
• Better allocation of resources. By not having to manage warehouse operations, companies are able to focus on their core competencies that deliver value to customers.

For many companies, contract operations is a good fit. However, they must select a service provider who understands their unique needs. This is particularly important if the stored items are food products, which require specialized knowledge and SOPs.