// industry insights
The rise of flexible warehousing – Part I
Last Edits on: 29th April 2020
What’s flexible warehousing?
Simply put: flexible warehousing is the model of making use of the warehouse facilities of a 3PL (third party logistics) provider at flexible terms. Whether you are a multi-national, mid-sized or a startup organization – flexible warehousing can help you unlock new business opportunities and excel your growth and profits by optimising your supply chain and logistics. But there’s much more to this definition of flexible warehousing.
Why is it time for flexible warehousing?
The way consumers and businesses shop and purchase is rapidly changing, however, the supporting logistics have been slow at catching up. Pre-internet supply chains were designed to deliver products to domestic store shelves according to predictable purchasing plans – rather than to customers’ doorsteps across borders within a few days or even hours.
With the emergence of e-commerce, omnichannel retail and disruptors such as Amazon setting new delivery standards, the traditional way of distributing products became outdated, rigid and inefficient. In fact, according to a recent study by PA consulting, less than 10% of organizations have an advanced vision of a smart supply chain, despite significant customer experience and cost savings potential. Thus, flexible and accessible solutions to manage supply chain operations in a smart way must evolve.
Flexible warehousing by everstox is a scalable and tech-driven platform solution, providing independent retailers and brands of any size with the unique opportunity to contract and expand their warehousing networks as needed and without large scale investments or complex IT integrations.
Operations across the warehouse network are connected to a proprietary cloud technology enabling full visibility of and intelligence on all storage, inventory and fulfillment processes.
Ultimately, flexible warehousing makes it possible to competitively deliver on all the different ways customers do their shopping today and in the future, be it online, cross-border, via retail stores, pop-up shops, or any other method yet to arise.
What do we mean by traditional warehousing solutions?
For everyone who is not an expert in logistics or wants to understand the differences between flexible and traditional warehousing better, we will examine the traditional options retailers and brands had for managing their warehouses in more detail below.
Traditional warehousing solutions:
- You can build a real estate facility that you own, equip, and operate
- You can lease a real estate facility that you equip and operate
- You can lease space and services from a 3PL(Third-party logistics provider) based on long-term contracts and complex IT integrations
Your warehousing needs are unique to your business and some combination of the above options may work for you, however, there also are some major drawbacks:
Expensive: Traditional solutions require significant upfront capital investments and costly project setup fees
Slow: Changes to your owned network won’t be implemented very quickly and leasing space from traditional 3PLs is associated with long sourcing and implementation times
Limited: With traditional 3PLs, your company’s growth is highly dependent on and limited by their network locations and capabilities
How is flexible warehousing different?
Flexible warehousing provides you with a distribution network as dynamic as your business. It allows you to scale the size, locations and capabilities of your warehousing and fulfillment network and adjust for the varying and sometimes unpredictable demand over time.
everstox partners with leading warehousing providers across Europe integrating their services into one platform solution. Everstox also adds a smart layer of data and analytics, so the solution doesn’t only give you access to all these warehouses, but provides you with unique visibility and control.
Flexible warehousing enables you to test out new strategies and take into consideration increasing customer expectations, because the infrastructure will be built around your business rather than the other way around. Since costs will be calculated on a variable cost model, fixed, long-term contracts or high premium short-term contracts will be eliminated.
Traditional vs flexible warehousing
- Diverse legacy systems across 3PLs
- Complex IT integrations
- Manual processing of scattered data
- Unified technology across the network
- Easy to use pre-integrations
- Real-time dashboard and analytics
- Time and effort to source and qualify 3PLs
- Months-long manual implementation
- Process repetition when expanding markets or providers
- Selection from pre-qualified providers
- Standardized onboarding to get started in weeks
- Easy warehouse addition thanks to unified technology and terms
- Long-term contracts and startup costs
- Unused space and services as sunk cost
- Varying terms from provider to provider
- Flexible pay-as-you-go model
- Only pay for space and services used
- Unified term structure across providers
- Growth limited by locations and capabilities of 3PLs
- Lack of expertise in supporting new channels
- Biased advice of 3PLs governed by own capabilities
- Expansive network covers every size and market
- Broad capabilities incl. storage, Retail and eCommerce
- Access to an independent expert team
Now that you know that flexible warehousing substantially differs from traditional solutions, you should also know how it solves some of the biggest logistics challenges retailers, eCommerce and B2B enterprises face. Learn more about what flexible warehousing can do in the second part of our ‘The rise of flexible warehousing’ series.
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