Reducing Warehousing Costs: Relocate or Outsource?
January 26, 2012In today’s economy, companies are continually faced with how to reduce operating costs without compromising their products, supply chain and bottom line. Already, many have addressed warehousing opportunities. However, increasing transportation costs and a weak economy have executives now considering warehouse relocation to less expensive markets, but outsourcing managed services in-house is a viable alternative.
Warehouse Relocation
As a recent article in DC Velocity points out, when it comes to warehousing, it’s all about location, location, location. As it turns out, warehousing in a high cost metro market, including those in California, New Jersey and New York, are the priciest to operate in the country…and nearly twice as much as locations in the Southeast and Midwest. While there are many variables to consider, including environmental and “right-to-work” legislation, global trade corridors, transportation hubs, and favorable economic development climates, some companies, including Ocean Spray, are relocating warehousing operations to take advantage of economic, legislative and other opportunities.
Still other companies are reluctant to move an entire operation. Mindful of the immense capital and other costs involved and concerned about the potential for legislation to change in the future, some companies are opting to retain warehousing operations but seek ways to further reduce operating costs.
Outsourcing
Companies like FLS provide corporate executives of both mindsets with yet another option—warehouse outsourcing.
With FLS, companies retain their warehousing facilities, but FLS experts “take ownership” of the customer’s warehouse space to improve safety, quality, efficiency and reliability, which often translates into significant reductions in fixed costs. With this outsourcing solution, customer companies can truly focus on their core business at hand while FLS’ experienced warehousing professionals manage facilities, providing the flexibility to meet ever-changing warehousing needs without increasing overhead.
Whether a company retains a warehousing operation or moves for strategic reasons, outsourcing is an often overlooked option, which can provide for greater efficiencies than the self-management model….regardless of warehousing location. And, in today’s fast moving business climate, it’s even more critical for executives to stay focused on their firm’s core competency.
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