The process of considering outsourcing warehousing is a big one. FMi is continually engaged with a wide variety of customers and businesses looking for warehousing and distributions solutions. The need for expert guidance and assistance is a need that unites all of our customers, whether their businesses are small, medium, or large.
In our experience, it is not just smaller companies that lack experience in selecting an outsourced logistics partner; FMi Logistics routinely helps mid-sized and larger clients with warehousing and distribution in Alberta and beyond. Many mid-sized or larger clients self-manage their warehousing and distribution. When they make the decision to outsource, often regardless of size or scope of their business, it’s usually their first time choosing a logistics partner. While there are countless items to consider, choosing a partner that will transparently work with a customer to ensure that a full scope of consideration is explored is the first strong step in planning to outsource.
Some customers have significant experience outsourcing their needs, so two things are generally in place when they make their enquiry with a company like FMi Logistics:
1. Their specific processes and key performance indicators (KPIs)
2. Their understanding of a preferred pricing and engagement structure. FMi refers to these first two key items as ‘the Art of the Deal’, and no—Donald Trump does not work here.
We’re going to deal with those two items in this article as a useful reference for our customers who may not have experience choosing a warehousing and distribution partner. Regardless of the size of your business, it’s critical to you and to your entire supply chain—including your customers and your supporting vendors—that you can measure your success. You’ve likely built into your business processes several KPIs or business measurements that govern how you manage your performance; outsourcing your business to a 3rd party logistics firm should be no different.
It’s essential that your logistics partner understands your critical KPIs. It’s standard practice for FMi to work with our customers and ensure that synergy exists between our execution of your business needs and alignment to meet your critical objectives. It’s true that every business is different, but there is generally a consistent set of performance indicators that apply to all. Taking the time to ensure these are clearly understood is critical to all of our successes.
Pricing structure—this is another key piece of the puzzle. Many options exist for types of charges, how and when they are recognized and levied. Generally, the cost structure looks like this:
·a fee for storage services (both the receiving of new inventory and the monthly charge for keeping it on hand)
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a fee for the handling activity (usually charged when the product is received and again when it is shipped out)
· an administrative cost per transaction or per ‘period’ or per ‘volume’ of transactions (often requested by customers to be separate for transparency, although many customers don’t wish to see it and it becomes buried inside of the other charge items)
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Labour beyond the normal handling rates for inventory is usually a known rate, although not a regular cost except where extra services may be required such as an annual inventory count or a non-typical breakdown or examination of your product is needed. Options such as fixed retained square footage area, or alternatively, a floating arrangement based on your activity into and out of a facility for storage charges are but two of the options
While opting for an outsourced logistics solution may seem like an obvious time-saving and money-saving choice for your business, choosing the right provider is not always as obvious. If you’re considering outsourcing your warehousing and distribution in Alberta or beyond, talk to the friendly and knowledgeable team at FMi Logistics. Call us today.
