The rise of warehousing: To build or to buy?

Several enterprises, which ran their own warehouses, suffered a setback during lockdown. This is causing a shift in customer mind-set to consider outsourcing their activities to reputable 3PL service providers, says Aditya Vazirani, CEO, Robinsons Global Logistics Solutions.

Priyanshi Bana

Warehousing has emerged as one of the most crucial aspects of the modern supply chain and has been a strong pillar, especially during the recent lockdowns. With faster technology adoption, leveraging emerging innovations in AI, ML and IoT, warehousing, today, has evolved to go beyond just a storage facility, and is a smarter, service-driven operation. While this advancement has helped the Indian logistics and supply chain to reach newer heights, for most manufacturers and distributors, it continues to remain an under-utilised logistic service offering. Even as India gears up to become the global manufacturing hub, it is important that industries and businesses understand the role and significance of efficient and cost-effective warehousing that can help accelerate the growth of the economy at large.

Here are the five benefits of outsourcing the warehouse operations that can help businesses adopt leaner and more effective profit models.

Optimised resources: This is one of the primary benefits of outsourcing at large and warehousing, in particular. Having a self-managed warehouse operation requires dedicated resources in terms of people, money, time, as well as other extra cost factors. Outsourcing warehouse operations can help business owners and internal departments to be leaner and focus on the company’s core competency. Companies can also divert their resources to research, innovation, training and driving new business acquisition, while safely enjoying the benefits of expert warehouse management at a cost advantage, and minimal initial time investment.

Optimised operations: Managing warehousing operations is an integral part of the supply chain. Whether it is for temperature-sensitive products like food and pharmaceuticals to automotive parts, electronics and garments, outsourced partner can provide optimsation across the various functions inside a warehouse, ensuring that each product and customer is treated with the differentiation they require. Working with an outsourced partner allows cross training and implementation of best practices across various product categories to ensure expert management of storage, put away, retrieval, inventory management, packaging and other customised value-added services.

Enhanced market reach: A self-managed warehouse setup necessitates significant CapEx investments and resources for ongoing management, which could be a roadblock for the company if not managed effectively. If this is not given priority, and additional investment in scale, operations will hurt the company’s top and bottom lines. Working with the correct outsourced partner can enable companies to leverage on the logistics partner’s existing and ever expanding network, thus, making the product available closer to the company’s end user and easier for quicker expansion without the investment and giving a better visibility of OpEx.

Agility and scalability: Depending upon specific market needs, businesses can choose to scale up or downsize their storage and distribution operations, gain access to long-term or project-based strategic warehouse locations, or even access sector specific expert warehousing solutions for specialised or customised needs, on a short or long-term requirement. This can go a long way in helping a business to manage its bottom line, optimise resources while enhancing market reach and meeting specialised consumer demands at a comparatively shorter turnaround time.

Access to latest tech-enabled services: Outsourcing warehouse operations and management to experts can help businesses to leverage the best in emerging tech innovations, which in turn, can help them enjoy effective and efficient warehouse service. This can mean better storage, packaging, kitting or accurate handling of temperature sensitive cargo, along with a more transparent and engaging business operations. From getting a real time update on cargo movement and storage, to having a dedicated dashboard with regular and well measured inventory status, tech adoption has helped clients to make better and faster decision making.

During the lockdown, a few businesses could operate, warehousing was one of them as it is considered an essential service. In many states, even the operations of non-essential items was allowed to operate inside warehouses. Several companies that managed their own warehouses were adversely affected as they could not deliver their products to customers. Hence, this is driving a shift in the mind-set of consumers to look at handing over their operations externally to reputed 3PL service providers, so that they can ensure that there are minimal hiccups in their supply chain.