How To Identify Opportunities For Warehouse Expansion

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The supply chain and logistics industry are growing and evolving at an ever-increasing rate. What was once, in large part, a B2B-focused industry, is now moving into the realm of B2C fulfillment. With all sorts of innovations, technologies, and competitors entering the world of logistics, 3PL warehouses are starting to play a larger and more important role for their clients. In most cases, 3PL warehouses are not just selling their services but also offering their expertise, providing useful technology, and a host of other features that are required for their clients to gain a competitive edge.

When we are talking about warehouse expansion, we need to consider the two main objectives that companies strive to achieve with their warehousing processes. First, they want to provide value-added services, like product customization. Second, they are looking to move those products through the warehouse and into the hands of their end-customers as quickly and efficiently as possible. By understanding how to achieve efficient operations and these internal warehouse optimization goals, we can then begin to talk about tips and best practices for external opportunities and warehouse expansion.

Focusing on Value to the Customer

To keep in line with the ever-changing customer demand and achieve improved productivity, businesses need to incorporate flexibility into their warehouse processes. This way, they can be ready to give their customers what they want at the moment they want it. As such, product customization has become a pivotal element in the functioning of today’s successful warehouses.

In some respects, many businesses look at the warehousing stage of the supply chain as one of the last places where they can provide additional product customization. However, we can include elements such as compliance labeling, floor-ready packaging, and product postponement among the options for customization at the warehouse stage. In fact, planning to postpone products in the warehouse presents companies with the opportunity to actually have enough inventory to fulfill customer demand, while still keeping the buffer stock relatively low.

Consolidating Warehousing Operations

Over the past several decades, the practice of warehouse decentralization has been in full swing. This implied setting up multiple small regional warehouses close to local markets. Yet, in more recent years, companies are rediscovering the value of consolidating these multiple warehouses into a single large facility. Such warehouse centralization was shown to increase cost savings because there’s less overhead and less inventory to carry.

Some organizations that choose the warehousing consolidation path will also be able to lower cost early on by striking a good balance among warehouse workers, warehouse locations, and freight cost advantages. On the other hand, others manage this by partnering their consolidated warehouse with other carriers. In either scenario, a centralized information system is needed to ensure accurate data collection.

Streamlining Warehouse Operations

In order to keep up with customers’ demand, organizations are also looking into ways of speeding up the product flow of their supply chains. Most leading companies recognize that warehouses are a critical part of this process and are seeking ways to improve warehouse operations. Ideas to improve your warehouse operations include efficient warehouse strategies, such as utilizing optimal slotting logic as a means of directing the put-away and picking activities. They are also adjusting this logic based on the inventory mix and customer orders.

Leading companies also streamline their operations by minimizing their storage needs. They do so by making use of cross-docking, as well as packing inventory in standard-sized containers whenever possible. The order fulfillment process is also optimized by picking several orders at the same time, rather than making multiple trips across the warehouse for each individual order.

Using a Warehouse Management System (WMS)

For the majority of warehouse operations, a comprehensive warehouse management system (WMS) will serve as a pivotal link between production, scheduling, shipment planning, and other fulfillment systems. In general, a WMS will manage most warehouse resources, such as space, equipment, labor, and material flow in order to move the stock to market in the most efficient way possible. When coupled with other technologies, such as automatic identification, radio frequency data communication, and barcoding, the WMS will also become an effective inventory-tracking tool.

Therefore, a WMS will improve warehouse efficiency and reduce downtime as it can alert the warehouse manager and other workers about tasks that can be performed simultaneously or in quick succession. Many businesses also improve their warehouse’s productivity and efficiency by integrating their WMS with other logistics technologies, such as a transportation management system (TMS) or order management system (OMS). These integrated systems don’t just help with increased productivity, but they can also help maximize warehouse space, overall efficiency, and reduce costs. In addition, they can also improve communication between warehouse providers and their customers while providing better storage strategies and shipping accuracy.

Identifying External Opportunities for Warehouse Expansion

Once all the aforementioned internal opportunities for warehouse expansion have been identified and implemented, it’s time to seek out new business. One of the most effective ways of doing this is by expanding relationships with current partners and customers. The major benefit of your existing customers is that they can also provide you with referrals that can drive long-term growth. Both your partners and customers will already be aware of your value and will be familiar with your offering and quality of service. Those who are happy with your services will also be more willing to expand their relationship with your warehouse.

Using your WMS efficiently allows you to position yourself as a key source of information for both partners and customers alike. In a sense, you will be acting as a central hub through which all supply chain information flows. And as the demand for capturing, analyzing, and forecasting will continue to grow, particularly in light of the current COVID-19 crisis, a 3PL warehouse will become the ideal collaborative partner in any supply chain ecosystem.

Identifying and Expanding Customer and Partner Relationships

The first step will be to make a list of all known clients and partners with whom you already have a relationship. This list may include everyone from eCommerce platforms and vendors, B2B providers, shipping companies, retailers, supply chain manufacturers, TMS providers, EDI providers, last-mile partners, other 3PLs, etc. The second step will be to make a similar list of all promising partners, customers, and providers with whom you don’t yet have a relationship but would like to target for future business opportunities. With these two lists in hand, you will need to analyze which targets will be the best to pursue. To do so, you will need to:

  • Analyze Your Partners and Customers – Determine which among them will provide you with the most benefits in terms of leads, expanded business, or other opportunities you are seeking.
  • Analyze Their Satisfaction Levels – Analyze your clients’ and partners’ satisfaction levels with your services and address any weakness areas prior to reaching out.
  • Reach Out – Initiate meetings with your targets to establish standards, identify issues, and ensure total satisfaction. Approach these encounters by always thinking of their needs first. Look for opportunities to help them guide their plans for the future. By knowing this information, you can ensure that your operations will be ready and in line with what they need.
  • Provide Consistency – Position your organization as the growth expert in the field by showcasing consistency and commitment. Do so by establishing a regular meeting schedule.
  • Reassess Your List – After every several meetings, reassess and rerank your list of prospective targets in terms of the progress made, their level of satisfaction, and the number of identified opportunities. 

With the rapid expansion of eCommerce and logistics industries, 3PLs will have tremendous potential for expansion in the near future. By focusing your efforts on building deep and meaningful relationships with customers and partners, as well as optimizing your own processes, you will be well on your way to establishing yourself as a leading provider in your area.

If you need help with improving existing supply chain operations, Redbird Logistic Services is the supply chain partner that can help you become more efficient and productive, while managing supply chain disruption. Contact us today!

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