When Is the Right Time to Move to a 3PL Warehouse?
For many businesses, the decision to move from an in-house warehouse to a third-party logistics (3PL) provider does not happen overnight.
It often starts with a few warning signs.
Orders are increasing. Stock is taking over more space. Staff are spending more time picking and packing. Inventory becomes harder to keep track of, and warehouse costs continue to rise.
Eventually, businesses reach a point where managing logistics internally starts taking valuable time away from running and growing the business.
So, how do you know when it is the right time to consider a 3PL warehouse?
Your warehouse is running out of space
One of the most obvious signs is simply running out of room.
As your product range or order volume grows, your existing warehouse may no longer provide enough space to store stock efficiently.
When products begin being stored in unsuitable areas, walkways become crowded or additional stock has to be stored off-site, your current warehouse may no longer be the right solution.
A 3PL provider can provide access to additional warehouse capacity without requiring your business to commit to a larger commercial premises.
Your team is spending too much time on logistics
Warehouse tasks can quickly become a significant part of a business’s day-to-day operations.
Receiving stock, organising inventory, picking orders, packing cartons, arranging freight and managing returns all require time and resources.
If your sales, administration or management teams are regularly pulled away from their core responsibilities to deal with warehouse issues, it may be time to consider outsourcing.
A 3PL provider can take responsibility for these operational tasks while your internal team focuses on areas such as sales, product development and customer relationships.
Your order volume is increasing
Growth is a positive thing, but increased orders can expose weaknesses in an existing warehouse operation.
Processes that worked when you were handling 20 orders a day may not work as effectively when you are handling hundreds.
A 3PL operation is designed around repeatable warehouse processes and can provide additional capacity as demand changes.
This can be particularly valuable during promotional periods, product launches and seasonal peaks.
Stock accuracy is becoming difficult
If your stock records do not consistently match the physical stock in your warehouse, this can create significant problems.
Stock discrepancies can lead to:
- Incorrect customer orders
- Overselling
- Delayed fulfilment
- Emergency stock checks
- Time-consuming investigations
- Unnecessary purchasing
Professional warehouse systems and processes can help businesses maintain better visibility over where stock is located and how much is available.
Warehouse costs are becoming difficult to control
Running your own warehouse involves more than paying rent.
There are also costs associated with:
- Warehouse staff
- Equipment
- Utilities
- Insurance
- Software
- Maintenance
- Security
- Packaging
- Training
- Warehouse management
When these costs continue increasing alongside your order volume, outsourcing may provide a more flexible approach.
You need to grow without committing to another warehouse
One of the biggest advantages of moving to a 3PL model is flexibility.
Instead of signing a long-term lease for additional premises, purchasing equipment and employing more warehouse staff, businesses can use the infrastructure of an established logistics provider.
This can make it easier to respond to growth without making a large upfront investment.
Your customers expect faster fulfilment
Customers increasingly expect their orders to be processed quickly and delivered reliably.
If your warehouse is struggling to keep up with orders, fulfilment delays can quickly become a customer service issue.
A well-organised 3PL operation can help businesses establish consistent processes from receiving stock through to picking, packing and dispatch.
You are spending more time managing logistics than your business
Perhaps the biggest question to ask is:
Is managing the warehouse taking you away from running your business?
If the answer is yes, outsourcing may be worth considering.
A 3PL partner can take on the operational side of warehousing and fulfilment while your business retains visibility over inventory and orders.
Is 3PL right for your business?
There is no single order volume or turnover figure that determines when a business should move to 3PL.
The right time depends on your products, warehouse requirements, staffing, order volumes, growth plans and operational complexity.
For some businesses, outsourcing makes sense early. For others, it becomes necessary once their existing warehouse reaches capacity.
The important thing is to consider the decision before logistics becomes a major barrier to growth.
Looking at your warehousing options?
Rush Express provides 3PL warehousing, inventory management, fulfilment and distribution solutions for Australian businesses.
Our services are designed to provide businesses with the warehouse capacity, systems and logistics support they need as their operations change.
If your current warehouse is becoming harder to manage, talk to the Rush Express team about your requirements.
