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Contract Warehousing: The Variable Cost Model Optimizing Supply Chain Management

by
Patrick Greene


The goal of the supply chain model, in particular contract warehousing, is that it offers clients a variable cost solution to their fulfillment services & to the warehousing and distribution of their goods. The ultimate goal to the variable third party logistics (3PL) approach is to provide the client with an excellent warehousing & fulfillment services process at the lowest overall cost. The variable contract warehousing solution squeezes costs out of the fulfillment services and warehousing a nd distribution side of the clients operation and maximizes their overall profits. Contract warehousing is used by many of the Fortune 500 companies as it meets a number of key goals including:

Responsiveness to Business Cycles:
Most customers experience highs and lows in their business cycles, especially within their fulfillment services & warehousing and distribution areas. The ability for logistics companies to manage this irregularity is crucial to the profitability of their clients. Contracting a 3PL that can provide seasonal storage of your products is a valuable asset to your organization. The right firm will provide many options for seasonal fulfillment services.

Changes in Inventory:
When there is growth in your business, logistics companies manage the increased volumes. At the same time, the expenses that the client absorbs for the warehouse services provided will increase due to the expanded business. When business is slower, logistics companies handle the decrease in volumes and order fulfillment. The corresponding expenses associated with the fulfillment services decrease as well for the client as the clients expenses are adjusted to meet the current demand being processed by the 3PL. Knowing what logistics companies are out there and finding the right one will lead your organization towards a variable cost model for fulfillment services.

Offer Transportation Services:
A great 3PL team will provide a single source solution to warehouse services, fulfillment services, and transportation requirements. Logistics companies with transportation divisions often provide a more economical way to complete the sale between you and your customer by proving a single source solution to the supply chain side of your business.

Supply warehousing expertise:
A local fulfillment warehouse will become your local & regional expert in that market. The team of local professionals that become your 3PL partner will become an invaluable asset to your team. A warehousing and distribution company that not only is located in a market but understands the market will help to decrease your order cycle times, expand your local market, and provide a very cost effective solution to your 3PL.

Reduced Risk:
Having a 3PL partner managing the logistical aspects of your supply chain including the contract warehousing, pick and pack, parcel distribution, kitting, packaging, assembly, order fulfillment, pool distribution, and consolidation, you have reduced the initial risk and on going risk associated with getting your goods to market. The capitol expenses associated with entry or continued operation are all assumed by the logistics companies that are managing your supply chain operation.

Multiple Points of Distribution:
Since "Risk" is reduced by using a 3PL, companies are able to expand into multiple markets in very short periods of time. With a variable cost model for your 3PL, you can afford to expand your business and increase your fulfillment services. More business in a larger market allows for more profits to clients that use and understand the 3PL model.

Quickness & flexibility:
The key to all great business models! Make your operation extremely flexible by choosing the right 3PL team. Easy entry or exit from a market, variable pricing based on flexible cost programs, risk reduction on capital, local expertise, and the ability to operate your supply chain side of your business efficiently and cost effectively is what creates a great business model. In choosing the right 3PL firm, your business will be successful.

3PL IT technology:
Let the 3PL own and operate the latest technology in order fulfillment & contract warehousing technology; your business will run with the most effective technology at a limit risk.

For additional information on “Benefits of Using one Warehouse Company in Chicago,” visit our website www.publicwarehousingchicago.com or contact us via email mike@morandist.com or telephone 847-439-0000.




Moran Distribution Centers facilities are located in city of Chicago area, Illinois, midwestern, United States.

Services include contract warehousing, public warehousing, pick n pack, distribution and consolidation, order fulfillment and parcel distribution. Specialty warehousing is provided for paper products, auto parts, retail, electronics and consumer products.


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Chicago Public And Contract Warehousing Locations At
Elk Grove Village, Il. and Bensenville, Il.

(312) 328-0254

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