Whether you're an OEM short on space, with expanding inventory needs, or requiring better stockholding and components management, using a 3PL warehouse service is often the best answer. Meeting the demands of inventory growth and complex component management is challenging for any OEM.
Finding the right partner to integrate 3PL warehousing solutions into your supply chain with the correct mix of services on-site and off-site unlocks efficiencies in your OEM operations, and offers a ready way to scale manufacturing capabilities.
Outsourced warehousing is a go-to solution because the expert functions required in managing your own warehouse can be a challenge that isn't given the thought it often deserves in-house. Managerial attention and OEM expertise is rightly focussed on core competencies surrounding design, build and assembly of actual core manufacturing product.
The production line takes all the attentional gravity as the key mission of an OEM: making great (and often highly complex), high value products. A third party logistics partner can put all their focus and attention on the supply chain and inventory, and offer easy scaling of warehouse operations, expansion of existing warehouse space, free up existing warehouse and stockholding for higher value production line use, while also optimising other upstream logistics operations.
Own warehouse capacity by manufacturers averages 68%.
Space goes to waste and is not used effectively.
Is using a 3PL warehouse right for me? In-House vs Outsourcing
OEM warehousing requires precise inventory and fulfilment processes tuned to handling precision components, with specialised SKUs, assembled parts and QA processing and custom picking/packing/labelling requirements. Any in-house/outsourced operational model for warehousing needs to be designed to minimise disruption and maximise resilience and procurement-production-delivery flow.
Every manufacturer has a unique profile from which to assess their logistics and production requirements and how to calibrate the specialised supply chain logistics within this. Deciding which aspects of your business are outsourced versus in-house isn't necessarily a binary decision though, it can be staged and optimised in different ways.
Warehouse management models can range from in-house to fully outsourced, a hybrid arrangement of managed storage solutions, or external servicing on-site (with external 3PL service elements, or managed by a third-party).
In-house warehousing
Functions handled in house.
Pro: Full control of operations, components near at-hand.
Con: Partial focus, and strained resources. With possible overwhelm from complex procurement, and sub-optimal inventory management. Internal operations may be sub-par operationally in contrast to expert provider.
Outsourced 3PL warehousing
Fully managed by a third-party logistics partner.
Pro: Expertise leverages experience, efficient design, skilled personnel, optimised facilities.
Con: Building trust and relinquishing control. Tuning integration and communication.
Hybrid storage and warehousing
Partially managed, covers particular procurement area. Often used to expand limited in-house warehouse capacity.
Pro: Focus generally on low value generic parts so in-house procurement can focus on higher value supply relationships.
Con: Still have inventory management concerns and integration to production line.
External servicing on-site
Management of existing warehousing through expert partner when space cannot be easily disposed of or repurposed for another function.
Pro: Leverage specialised third party logistics expertise, personnel and global supplier network (external servicing on-site).
Con: Existing space may be sub-optimal and need redesigning. Optimises processes, but still have premises resource burden.
These offer different ways you can focus on your core business activities while upgrading warehouse operations and scaling your company logistics. The best warehouse consulting service won't lock you into a prescribed solution but will work with you to create a bespoke plan around your company's needs and resources.
Why use 3PL warehousing?
The most direct way 3PL warehousing benefits your business: providing a cost effective solution to inventory management that alleviates a company from paying for their own warehouse and resourcing of inventory management, technology and skilled personnel that goes along with it. Focus on core manufacturing while you hand-off warehouse execution to a a provider with specialist 3PL expertise.
Warehouse storage costs are reduced while concurrently planning flexibility is increased and enjoyed.
You reduce warehousing costs, ensure on-time delivery, and increase supply chain visibility.
We can look at the supply chain advantages of an outsourced warehouse through these various domains:
Warehouse space and storage
Acquisition, maintenance and upkeep in warehouse space and property are significant investments, and an expensive overhead. Warehousing in the UK is at a premium as availability is at historic low levels.
Using your own premises for warehouse storage may not be the best use of space if better ROI can be had from increased production space, and better value and management can be had through a dedicated storage expert and specialist provider.
A 3PL warehousing specialist will have custom designed premises configured for optimal use. They are focussed on client logistics servicing as core business activity. You have greater flexibility in renting of space (reduce underutilisation) and savings with shipment and storage (reduce overstocking).
Warehouse operations and management
Operations can be scaled to meet demand more easily due to assembly scheduling and changing production orders. Recent world events have highlighted the need for agile supply chains, resilient supplier networks, and the ability to scale and work around supply chain challenges.
Inventory management is an involved process and leveraging a 3PL provider with extensive and existing supplier networks and experience with optimal order fulfillment and efficient storage unlocks savings from inappropriate order frequency/size or inventory hold, obsolete or damaged stock.
Operations and workflow are managed at a level that would be hard to replicate as an in-house function, with an embedded culture of logistics service and efficiency.
Warehouse technologies and personnel
All company performance and technology upgrades are pulling in this direction. Advanced tracking and inventory technology along with adherence to best practices and processes by skilled personnel trained in logistics operations are the key to better, error-free, order fulfillment.
Ultimately companies are likely to receive better customer service from 3PLs than an internal department, as responsiveness in this area is a key differentiator and performance factor. With a shortage of warehouse personnel available in the UK, 3PLs who have nurtured a staff culture with logistics experience and operational skills development, have a significant performance advantage compared to non-specialists.
Warehouse operations ready to go
The infrastructure is already in place with an experienced OEM warehousing partner to offer a variety of core services as well as wrap-around logistics functions to match your business needs. Having a partner attuned to the provision of core and complementary services provides the scalability and flexibility that are key to success in modern manufacturing.
The best 3PL companies for you will have specialisation in servicing OEM manufacturing and a track record to go with it. They will have the necessary experience in inventory management, demand planning, and supplier management.
From sourcing new or alternate suppliers, having structures to work with existing ones, to experience of goods receiving, handling and storage procedures, picking/packing accuracy, QA quality assurance and testing facilities, kitting, box build and assembly, to timely and transparent delivery and order fulfillment, everything has to be in place and functioning like clockwork.
Once you've decided on the level of outsourcing and general scope to explore third party logistics services as part of your warehousing operations you can use a checklist to assess and choose providers: The Definitive 3PL Warehouse Checklist for OEM Manufacturers.
Outsourced warehousing to 3PL: what to watch out for
Entrusting a 3PL logistics partner with warehousing operations means delegating control to a trusted provider you can work with in a mutually beneficial long term way.
So over and above anything else you need to consider when outsourcing to a 3PL, they need to have the right …
Company culture and ethics — Have they the authenticity, business values and ethical stance infused in their business which means you can rely on them to service and be a partner in building your business?
Other make or break factors include:
Cost structure — Does the level of solution you require deliver the value you need to outweigh internal costs? Are warehousing costs transparent and fair for all parties?
Service mix and performance levels — Are the services around my warehouse operations provided for with room to grow, alongside a track record of superb delivery and performance?
From the answers to these questions a deep dive into other areas can take place to shape the relationship and operating parameters: fashioning a comprehensive SLA (service level agreement) that takes into account changing market conditions; addressing cybersecurity measures and the importance of data security (becoming increasingly pertinent with the rich data that needs to be shared in efficient logistics); location and accessibility needs to be right for delivery and distribution needs; technology infrastructure and upgrades need to be integrated, complementary, and fit-for-purpose for modern warehouse facilities.
At Acorn, we strive to be more than just a service — we consider ourselves a strategic ally and partner. We take the time to understand your unique operations and aspirations. Then use our expertise proactively. Whether customising solutions, expediting critical deliveries or sourcing alternative suppliers from our extensive global supply network when issues arise, we work seamlessly behind the scenes.
Issues are inevitable. How a company responds is what separates the good from great, the dedicated from the disinterested. If you decide you want to upgrade your warehousing or need warehouse consulting to help plan what model to move to we're ready to help at Acorn. Take the next step toward consistent execution, streamlined processes and increased productivity.
Further reading: — The Definitive 3PL Warehouse Checklist for OEM Manufacturers — Warehouse Optimisation Essentials: Ensure Peak Performance — Solve these major warehouse challenges to add supply chain value
Learn about our 3PL warehousing expertise
Acorn work with OEMs (including UK critical manufacturers) to actively manage, store and delivery essential inventory to them as 3PL warehouse partners.
We specialise in providing the ultimate 3PL and warehouse experience for OEM manufacuring, adapting our key services such as kitting and assembly to their needs.
