How Dedicated Facility Management Makes Supply Chains More Resilient and Businesses More Productive
Businesses have plenty to worry about in 2024: inflation, high interest rates, labor shortages, and geopolitical unrest. Although supply chains normalized operations in 2023, most lack the resilience to withstand another disruption. According to S&P Global Market Intelligence, executives are hesitant to invest resources in strengthening their supply chains in spite of recent events.
Yet, failing to act places organizations at risk. Even a slight disruption can result in significant losses. Businesses cannot ignore the problem but can look to third-party logistics (3PL) as an alternative to spending resources on in-house logistics.
3PL means outsourcing logistics and supply chain management to external companies. Dedicated facility management offers services such as warehousing, inventory management, order fulfillment, and transportation. They have the resources to ensure a resilient supply chain, giving executives more time to address uncertainties and increase production.
Not only do 3PL providers build resiliency, but they can also reduce the long-term costs of in-house logistics in areas such as warehousing, inventory management, and staffing. Many have invested in the latest technology for order fulfillment, transportation, and returns. Working with a dedicated facility management company allows companies to build a more resilient supply chain without capital investments.
Warehouse space is at a premium, with the average cost per square foot hovering at just below $10.00. Although the vacancy rate has increased to 4%, new construction is slowing, thanks to higher interest rates and inflation. As a result, companies need to maximize their inventory space to avoid leasing more warehouse space.
Dedicated facility management is part of a 3PL company’s skillset. They have the resources and expertise to maximize every inch of storage space. Many have special facilities for handling environmentally sensitive shipments. They also maintain fail-over systems in case of power loss, making for a more resilient supply chain.
Logistics companies with distributed networks have warehouses at distribution centers that allow inventory to be placed in multiple locations. This capability helps with same-day or next-day delivery costs while still meeting customer expectations.
Focused Inventory Management
Inventory management is an essential function of supply chain management. Without inventory control, businesses can’t respond to fluctuations in market demand. With multiple sales channels, tracking inventory needs more than a simple spreadsheet. For example, a retailer has a physical location, an online store, and a mobile application for selling more than 100 items. The inventory is spread across five warehouses.
Suppose warehouse A receives an order for an item that is not in stock at that location, although consolidated inventory numbers show the item is available. The centralized data does not provide sufficient detail to relocate inventory to fulfill orders quickly. Instead, employees contact each warehouse to see if the item is in stock. If it is, the item is either shipped to warehouse A or warehouse A processes the order. Poor inventory control means customers may not receive their orders on time.
3PL providers have invested in inventory management solutions that track products across multiple warehouses and from different sales channels. These solutions use predictive analytics to indicate when inventory is running low. Through accurate forecasting, 3PL businesses can maintain inventory to support a just-in-time delivery model.
Although warehouse jobs have declined slightly, projections through 2032 see continued demand for transportation and warehousing workers. Part of that demand will be because of retiring baby boomers. These veteran employees take with them years of experience that contribute to the knowledge drain that many companies are experiencing.
Couple the changing employment landscape with employee expectations, and organizations are faced with labor shortages. Finding trained staff can be challenging as more workers are looking for higher wages and better benefits. Even looking for temporary or part-time help can be time-consuming.
For 3PL companies, maintaining qualified staff is part of doing business. They have established relationships with others for adding staff during peak periods such as Black Friday or Cyber Monday. They have contingency plans for unexpected changes in labor availability.
Working with 3PLs saves organizations the cost of recruitment, onboarding, benefits, and other personnel-related expenses. It reduces the stress of trying to coordinate staffing to ensure packages can be delivered on time and in pristine condition.
Logistics is about delivering items on time and in good condition at the lowest possible cost. It is also about fast delivery. About 50% of shoppers will abandon an online cart if delivery times are too long or are not given. With more consumers expecting next-day, if not same-day, delivery, supply chains must have the ability to process orders quickly.
For example, orders can be processed in real-time or in batches. Many dedicated facility management providers have interfaces into major marketplaces, so orders can be processed as soon as they are submitted. Waiting to receive orders once per day complicates the ability to deliver orders in less than 24 hours. Given that 99% of retailers say they will offer same-day delivery by 2025, batch processing of orders only helps the competition.
Developing real-time interfaces or APIs is costly. If a business uses Amazon, Alibaba, and Walmart, that’s three development projects that can average hundreds of thousands of dollars. Technology-savvy 3PLs have the interfaces in place to receive orders as soon as they are placed. They can process the order in minutes and have it ready to ship from the nearest distribution center. If there’s a disruption in a planned route, they can reroute deliveries, creating a more resilient supply chain.
Invested in Technology
Technology is expensive, but it is essential for companies to remain competitive. Whether it’s on the factory floor or in the executive offices, businesses are finding ways to deploy technology that makes them more productive, reduces costs, and increases resiliency. 3PLs are no different.
They invest in the latest technology to manage inventory and maximize warehouse space. They have solutions for tracking, routing, and rerouting shipments to reduce delays and improve last-mile deliveries. They have the infrastructure to expedite order processing and facilitate return processing.
Elevate Your Supply Chain Resilience with Dedicated Facility Management
It’s no wonder executives are hesitant to invest resources in shoring up their supply chain infrastructure. It can be a costly endeavor that adds financial pressure and operational stress. Partnering with a dedicated facility management provider like Symbia Logistics means having a resilient supply chain that delivers a competitive advantage to customers. If you’re ready to reduce stress and improve resiliency, contact us to discuss your logistics needs.