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Inventory and Third-Party Logistics

Inventory and Third-Party Logistics

There are many ways to structure the way that your inventory is handled when you contract with a 3pl entity. The decisions that you make about how your contract handles inventory can affect your bottom line and also your shipping schedule. You will want to pick the right inventory solution for your needs before engaging a 3pl company.

You cannot engage with the right 3pl, if you don’t know what your inventory handling needs are in advance. If you are ready to make the switch to 3pl to scale your business, inventory management is a major decision that needs to be made first.

Inventory Storage

Inventory StorageThere are various ways that you can utilize the storage function of a 3pl that you have engaged for your business. There is a hybrid method which many companies use during the middle of their scaling process. This means that you will have some of your inventory at home and fulfill orders yourself to local clients, while the 3pl holds the rest of the inventory for a fee and ships orders that are not local.

You can also choose to have the 3pl entity hold all your inventory which will cost more, but if you are using the 3pl for all your delivery needs, this may be the most efficient. Make sure that you do thorough research into the warehouse fees and rules for your 3pl because these costs can affect your bottom line if you are not ware of the fees that are being charged.

Common fee arrangements are per-item-per-bin, or per-pallet.

Inventory Packaging

The other major issue that needs to be decided upon when you engage a 3pl, is how the packaging of your products will be handled. If you are shipping heavy items or fragile items, the packaging that you require for shipment may not be generic packing materials.

Many 3pls can work with custom packaging needs, but these will cost more than using basic packaging. This is another area that you will need to be careful to check out costs before signing a contract. Knitting of the items into the packaging will also cost more if you have arrangement needs, or excessive packing material needs that must be met to ship orders safely.

Inventory Management is EssentialInventory Management is Essential

Many companies think of their 3pl as a means for efficiency but forget that they are also your inventory managers once you sign a contract. Make sure that you know what the rules of this contract are and how the contract will affect your bottom line and your company’s presentation to your customers.

There is nothing worse than signing a contract with a 3pl, only to find that the inventory management they are offering will cost you too much money and will not package your items in the way you desire.

We are experts at supply chain logistics and we can help you streamline your 3pl needs to scale your business. Contact us today to improve your customer satisfaction and to streamline your order fulfillment processes!

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