The benefits of multi-user 3PL warehousing

Given the uncertainty in global supply chains, many businesses requiring warehouse space are looking at multi-user 3PL warehousing (also called multi-client warehousing or shared warehousing) as a way of reducing risk and improving efficiencies in their logistics operations.


Defining multi-user 3PL warehousing


Multi-user 3PL warehousing can be defined as outsourcing the management of warehousing operations to a company or space that contains multiple clients and also offers additional value services such as:


  • bulk packing (packing a container, which may also include a lorry or shipping container, with non-hazardous materials)
  • cross docking or intermediate docking (unloading a lorry or other transportation system, sorting the contents and reloading directly into other transport on the next stage of the supply chain, without any intervening storage time)
  • kitting (the process of bringing together separate but related SKU items to create a single bundle, for example you can kit wool, needles and an instruction leaflet to make a woollen garment, or a CPU, hard drive, motherboard and RAM to build a computer)
  • order consolidation (the assembly of different products into a single order both rapidly and efficiently)multi user 3pl
  • returns/reverse logistics processes (handling returned goods and expediting them back onto the shelves or reselling or repurposing them if not fit for resale)


Obviously these services can be expensive in terms of personnel and also administratively, which means that for small to mid-sized businesses, multi-user 3PL warehousing can be cost-effective. It’s a service that also works very well for companies with seasonal peaks.


Discovering if multi-user 3PL warehousing is the right solution for you requires a clear understanding of your goals and how warehouse space fits into achieving them.


So what are the benefits of multi-user 3PL warehousing?


Reduction in financial exposure


Financial risk is a major component of all business planning – the responsibility for covering costs in a business is always a factor. Businesses that use warehouse rental or own their warehousing but manage their own operation, including staffing, technology and equipment have a highly variable set of cost centres in these areas. One benefit for those using multi-user space is that costings for personnel etc are all built into the pricing for using the space, so businesses can plan much more effectively as costs are more predictable.


Increased flexibility


For businesses that are growing, such as SMEs and start-ups, where predicting demand can be difficult and the organisation may head in unexpected directions based on customer feedback or trends that the company needs to respond to/capitalise on, multi-user 3PL warehousing has undoubted advantages. As organisations mature, they find orders and activity is inconsistent, but they don’t have enough data to chart seasonal or other peaks and troughs – scaling operations is much easier when you are partnered with a logistics provider that can add in personal, productivity and even space to help the company achieve its goals.


Higher business expertise


Again, especially for SMEs and start-ups, a major bottleneck to growth and profitability can be the lack of expertise in the organisation, or the inability to hire in necessary expertise because turnover doesn’t yet support more recruitment. This can become a vicious circle, as lack of expertise causes the organisation to fail to grow, therefore inhibiting further growth! An effective 3PL partner has in-house expertise on which to call, especially in areas like customer service, pick and pack and order processing. They also have skills in maximising storage space, possibly including pallet storage and racking upgrades and knowing when to implement the right technology to improve growth. This kind of expertise is not only difficult to obtain, but can also be needed only for relatively short periods, until your business matures enough to build its internal capacity. Working within a multi-user 3PL warehouse space can mean that this expertise is on hand at little additional cost and also allows an organisation to easily dispense with additional support when it is no longer needed.


Variable contracts


There’s a lot of evidence to show that multi-client warehousing offers a major advantage in terms of contract flexibility. It’s commonplace for this kind of warehouse space to be offered on a year by year contract basis, and some operators even allow month-to-month contract changes. Because the 3PL partner generally owns or leases the facility, and its infrastructure and systems, this allows users to opt into, or out of services, and extra space, as and when they are needed.


Better shipping charges and extended shipping cut-off times


This is an advantage that isn’t always recognised or clearly stated, but because multi-user 3PL facilities have much greater user volumes, they are also equipped to negotiate advantageous rates when it comes to charges, and later cut of times for shipping. Many facilities pass these savings on to their clients which means that working with a 3PL partner can have the opposite effect to the standard process which is that cheaper shipping = slower delivery.


Wider access to on-site services


When people operate their own warehousing, they rarely have in-house expertise for rarely needed services like deep cleaning or repairs. However, these services may also be essential, either to maintain plant and equipment or to ensure that contract/insurance requirements are met. This means that many companies end up outsourcing such activities which is effective but can be expensive. Where there are several clients in a multi-user 3PL facility, their combined demand can be significant enough to either get such services built into the 3PL package, or to allow the 3PL partner to negotiate a much better package deal for all their clients than each client trying to arrange such services on their own.


Better security


It’s just a fact that a company that provides share warehousing services will probably have more sophisticated security than a small company that is limited both in terms of cost and experience. 3PL partners tend to make substantial investments in security to protect their clients, and may have more state-of-the-art security equipment and processes than individual companies can usually afford.

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