The food industry is very competitive.
To stay ahead in the business, you must enhance your operational efficiencies. Otherwise, it might be a struggle, with high costs and inefficiencies affecting your food business.
Third-party food storage warehouses can help you cut costs, maintain quality, and streamline operations.
On-demand storage services are a great option where you don't need to maintain storage warehouses in-house. It comes with several advantages too.
Cost savings
You will likely incur substantial operating costs if you run a food business by maintaining an in-house warehouse.
The costs of setting up and running an in-house warehouse can be significant.
You have to consider the cost of renting warehouse space, paying for utilities and electricity, buying equipment such as trolleys, hiring and training personnel, getting insurance, and complying with regulations.
If you need specialized equipment like cold storage or freezers, it can add to the overall costs. You must also factor in regular servicing, cleaning, and painting expenses.
Outsourcing food storage eliminates capital expenditure to set up the warehouse and optimizes the budget.
When you avail storage as a service from a third-party warehouse, the fixed costs mentioned above become variable. You pay only for the space and services you actually use.
The costs incurred can be easily attributed to the cargo or food stored and billed accordingly. Also, the third-party warehousing provider leverages relationships and offers volume discounts unavailable otherwise.
You also reduce your staff count, saving considerably on HR costs.
Flexible warehousing is a much more practical and cost-effective solution for food storage.
Ready access to expertise and best practices
When you run a food business, setting up and maintaining a warehouse is not your core focus. Warehouse operations distract you from your main business of manufacturing or distributing food.
But for a third-party warehouse operator, maintaining the warehouse is their core focus. They have vast experience and expertise in handling, storing, and distributing a wide range of food products. They are familiar with the best practices associated with these tasks.
1. Advanced systems for storage, inventory management, order fulfilment, and transportation.
2. Temperature and humidity control, allergens management, and cleanliness to prevent contamination
3. Compliance with all mandates from the Food and Drug Administration (FDA) or local health departments. You can save considerable money by avoiding non-compliance penalties.
4. Less theft, spoilage, loss, or damage risks.
5. Robust security, including surveillance systems, access control, and secure physical locks.
6. Backup power and contingency plans.
Managing a warehouse alone can be pretty costly, as you may struggle to maintain the necessary standards. Moreover, you may lack the essential skills or time to meet industry standards consistently.
All of this could have been avoided with a third-party food storage warehouse.
Easy scalability
Expanding warehouse space is time-consuming and costly.
Availing of the services of third-party warehouses makes it easy to adapt storage capacity to changing business needs. This, in fact, is the whole concept of flexible warehousing!
As your business grows and changes, your storage needs will also increase. When you partner with a third-party food storage warehouse, you can easily take up more space when your business grows. You can also easily add space to cater to seasonal rush and surrender such space once the high-demand season ends.
When you set up your warehouse or consider taking one on a lease, you might end up investing in space you do not use most of the year.
And at times, when your business grows more than you expect, you face a severe space crunch.
Read more on whether you should lease or use on-demand warehousing.
The scalability benefits of third-party warehouse operators also extend to the time of operations.
Many third-party warehouses operate around the clock, allowing your business to process orders faster. These third-party warehouses enjoy economies of scale by processing orders from multiple businesses, making it cost-effective and viable for them to operate round-the-clock.
You need substantial business volumes if you plan for round-the-clock operations using in-house staff and a warehouse. For most food businesses, your costs will skyrocket to the point of making the service unviable.
Access to value-added services
Many third-party warehouses offer value-added services such as packing and labelling. These services save you further time and effort and speed up order fulfilment.
Outsourcing warehousing and logistics saves you time. You no longer have to bother about the operational details of warehousing and logistics. These are non-core activities but take up considerable time. You can use the time saved to focus on your core business or other critical tasks, such as marketing, sales, or product development.
In Conclusion
The advantages and benefits notwithstanding, all third-party warehouse operators are not equal.
Choose a warehouse partner who has the capabilities to deliver the benefits and the experience to get it right. Also, ensure the providers' facilities are near your area of operations to avoid extra transportation costs.
Cargoz can help you find the ideal third-party warehouse provider to boost your business's competitiveness.
Contact our team to learn more.