There are several warehousing solutions you can use to make your business run efficiently and successfully. However, not all solutions are right for your business. When deciding which warehouse solution to implement, keep in mind the following criteria if you want a smooth operation.
1. Type of Products
What products do you sell? Are they sensitive to certain conditions? Are they perishable? Can they melt? If so, you need a warehousing solution that will provide you with the conditions your products need. If your products are likely to overheat, melt, or perish, a warehouse that provides refrigeration and/or is temperature-controlled will be necessary if you don’t want to lose your products and business. Different warehouses have different restrictions and rules regarding the products they store as well (such as alcohol and dangerous goods), so keep that in mind when looking for a warehouse that fits your needs.
2. Single and Multiple Warehouses
Growth will bring new challenges to your business such as what warehousing locations favor your business the most. To reduce shipping costs as you expand, think about the size and geography of your warehousing solutions.
If you find a warehouse only thinking of your immediate needs, you will eventually outgrow your warehouse and have one more problem to think about. Instead, find a warehouse that will fit your current and future warehousing needs. Keep track of where your products are generally delivered to. If you notice your shipping zones are far away from your warehouse, there are two options: find a warehouse closer to your shipping zones or face higher shipping costs and transit time.
If your customers are spread across multiple regions then it makes sense to have multiple warehouses in those different regions. By having warehouses near your customers, you can offer warehouse packing services such as 2-day shipping at affordable prices, enticing your customers to buy from you instead of other competitors. If you do decide to use multiple fulfillment warehouses, make sure you have full visibility into real-time stock levels across each location; knowing this will help ensure that the warehouse closest to the delivery address will receive and ship the order.
3. SKUs and Storage Costs
SKUs (stock-keeping units) are not only good for keeping track of your inventory but also for calculating how much space is needed and the potential cost of storage. To give you an idea, let’s say you sell t-shirts– specifically 10 at the time. You might think that a separate storage unit is needed for each of the 10 t-shirts– and you’re right. However, it doesn’t stop there: a storage unit is necessary for each size that the t-shirt comes in (XS, M, XXL, etc.), in every color variation, and style variation (regular, long-sleeved, with pockets, etc.). Individual storage fees will need to cover every variation. Your costs just grew exponentially.
Storage costs will be lower the fewer SKUs you have. Another thing you want to keep in mind if you want to work with third-party logistics companies (3PL) is their ratio of orders per SKU. For example, you might have 500 SKUs and sell 1,000 orders a month, but the 3PL company you’re looking into might require a higher ratio (3,000 orders for 500 SKUs, for example) in order to work with you.
If you’re looking for a cost-effective solution and you have a large amount of inventory and SKUs, then warehousing as a standalone solution might be the path for you. All-encompassing fulfillment services have separate fees for receiving, shipping, warehousing, and storing inventory.
4. Warehouse Location
What are your shipping and storing needs? Are you planning on storing products in bulk over a long period of time? If so, you can cut costs by using a warehouse in a rural location or one that’s near a transportation hub. Do you expect to ship products to your customers as quickly as possible? In that case, you will want to use a warehouse that is as close as possible to your customers and their delivery address.
One of the advantages of using a warehouse in a big city or urban area is how fast they can deliver to large populations. By reducing transit time and travel distance, big city warehouses can expedite shipping and meet customer expectations. Centrally located warehouses are perfect if your customers reside in different regions.
5. Warehouse Fulfillment Software
Warehouse management technology plays an important role in today’s warehousing packing services, whether you manage your own warehouse or work with a 3PL. Fulfillment software makes it easier for customers and fulfillment centers to come together and be aware of orders, shipments, and inventory levels. Once you have connected sales channels, your warehouse associates will receive orders and can begin picking products from the floor and your customers will receive their products’ tracking information.
6. Seasonal Variations
Seasonal variations affect multiple businesses, making warehouse leasing costs vary between the months when there are low sales to when they’re high. When sales are low, warehousing becomes a costly expense. When they’re high there might be a shortage of space especially if the holidays affect your business. If you’re feeling the effects of seasonal sales, working with a 3PL might benefit your business to avoid these extremes.
7. Additional Warehouse Packing Services
Traditional warehouses will offer services such as picking, packing, and shipping. If you’re looking for additional services such as kitting and assembly, cross-docking, refrigeration services, B2B orders, find a company that will fit your business needs and helps your company grow efficiently and successfully.
ESM Fulfillment and Distribution
ESM offers many different warehouse packing services, including warehouse inventory, kitting and assembly, order fulfillment, and much more. To find out more about our services, contact us here.