Here's Why Outsourcing Warehousing Makes Sense

18 Nov, 2021

There are many debates that go into deciding whether warehousing should be in-sourced or outsourced. Both have their pros and cons but here we would take a look at how outsourcing warehousing outweighs in-sourcing and how it makes a lot more sense to go for the former.

Service and expertise: 3PL logistics companies in India and across the world have the much-needed expertise that they bring to the table while delivering warehousing services to a company that has outsourced this work to them. Great service comes from great expertise. Furthermore, their service is backed by professionalism and service excellence. They work with a comprehensive agreement in place because they know what warehousing is all about.

Less capital expenditure: Setting up in-house warehouses requires a lot of capital investment. Taking properly on lease is a huge cost, moreover, the costs associated with warehouse manpower and equipment add up to quite a hefty investment. This is one of the biggest reasons why outsourcing warehousing acts as a cost saver and many companies find it budget-friendly as well as a hassle-free mode of getting the work done.

Risk-free option: With outsourced warehousing, the third-party logistics service provider shoulders all the risks associated with managing people as well as processes. Therefore, there is hardly any chance for the company outsourcing its warehousing to be affected by peaks and troughs in demand and thus it is completely devoid of any kind of risks which could otherwise leave it with an over or under-sized workforce and facility.

A top 3PL company in India would take care of all the aspects associated with warehousing so that its client could instead focus on the core of their business. Companies that are planning to scale up, diversify, or offer warehousing as one of their services could still consider outsourcing partially while retaining the rest in-house until it is completely confident of investing all that is required.

There are certain situations where companies are compelled to consider a mix of in-sourcing and outsourcing warehousing. Let’s delve into those situations to understand outsourcing even better:

If a company is already holding some warehouse assets and has plans to expand geographically, outsourcing warehousing in the new business areas or regions is the wisest thing to do initially because investing in assets in those new places might not prove worth. This can be done simultaneously with in-house operations where the existing assets are in place.

In another situation where a company is planning to add an e-commerce channel to their existing model for retail sales, outsourcing warehousing to a 3PL logistics provider who specializes in e-commerce logistics could be considered ideal. In this case also, in-house warehousing for in-store retail could still be retained and done simultaneously.

Different businesses have different requirements and the decision to in-source or outsource should ideally be based on extensive analysis. There are success stories and case studies across the globe that reiterates the fact that many businesses have benefitted from warehouse outsourcing without compromising on their competitive advantage.

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