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Rent a warehouse, order a 3PL service or apply to a digital logistics provider: what is better?

Posted by Anna Khaletskaya on 15.11.2021
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Rent a warehouse, order a 3PL service or apply to a digital logistics provider: what is better?

There are significant changes in the approach to business in the last two years. Previously, the primary focus was on how many resources a company has. Now it is more important how an organization can adapt to a constantly changing market situation. The approach to logistics has also changed. Formerly, it was easier to forecast the demand because of its relative stability. Today, the supply chain needs to be flexible and adaptive.

Nowadays, more and more companies refuse to use their resources, such as warehouses or car fleets. They understand that by using external resources, they can change strategies faster if necessary. In this article, we explain what logistics solutions help companies to remain flexible.

What has changed in the companies’ supply chains? 

COVID-19 and quarantine restrictions facilitate the revision of the logistics approach. Previously, many companies used the lean logistics approach, which is based on lean production principles. This method implies losses minimization, including reducing excess warehouse stock in additional spaces. But when in 2020 the demand for essential goods rapidly increased and supply-chain disruptions happened, many companies had to reconsider their decisions. It became clear that the insurance stock is essential. About this and other trends that have influenced the change of the logistics approach, we explained in our article.

Trends in demand volatility and supply chain disruptions remain relevant. Among the main logistical challenges for business in the new realities are:

  • Increase eCommerce volumes;
  • Increased consumer expectations for delivery options;
  • Reduction or changes in retail space, and volume;
  • Changing sales channels;
  • Launching of new products;
  • Entering new markets;
  • Product promotion;
  • Seasonality of sales.

Supply chain disruptions are another challenge. Reasons for them may be different: delays in ports, production disruptions, changes of suppliers, weather conditions, economic uncertainties, etc. These factors are often difficult to predict. Additional resources are needed to сope with the supply chain disruptions consequences.

Warehouse rental: what companies it doesn’t fit

The first and simplest step to creating a safety stock is to purchase goods. Then companies face a difficult task: the goods must be stored, placed, and processed. This requires finding a suitable warehouse, hiring staff, investing in equipment, and the storehouse maintenance. A rental itself can be a challenge. It is necessary to select a warehouse of a certain class and type to ensure product preservation. The warehouse location, its proximity to traffic interchanges, and the end customer also matter. The situation is complicated by the fact that the vacancy rate of storage facilities in Ukraine is low, and not all companies will be able to find a suitable offer according to all needed characteristics.

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Long-term warehouse rental and maintenance are significant investments. Before deciding on its appropriateness, it is necessary to consider the pros and the cons. Warehouse rental can be profitable if sales channels are established and stable volumes of goods without seasonal fluctuations are planned. Storing products that require different temperatures or other special storage conditions is more difficult, especially if a business doesn’t have its logistics department and qualified staff.

Renting a warehouse, a company is tied to one location. This is a significant disadvantage that inhibits expansion and mobility. Therefore, renting a warehouse is a suitable option for enterprises whose activities are stable, which can clearly forecast demand and/or have already trained staff and the necessary equipment for their products.

3PL services: why is it difficult to obtain them?

Using resources of logistics providers may be an alternative to warehouse rental and storage facility maintenance. Contractors organize the whole process, so a company doesn’t need to find a warehouse, equip it and hire staff. 

The organization of order processing, packing, and delivery is a complex task that requires resources and distracts from higher priorities. And even if a business has its logistics, it may need additional resources at peak seasons. Renting a warehouse for a short time makes no sense, so it is easier to outsource some of the processes and make sure that the issues will be closed quickly and competently.

Another advantage of 3PL providers is the opportunity to scale up. Activity in new business regions has its risks. Renting a warehouse? a company must be sure that it will pay off. Otherwise, the losses may be significant. To “test” the prospects of expansion, a business should transfer the logistics to a contractor in the city of interest. Thus, a company doesn’t need to rent a warehouse and pays only for services and the number of goods in the provider’s warehouse. If the expansion fails, it will be easier to refuse 3PL services than a rented storehouse.

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But there are some nuances. By cooperating with one 3PL, a business receives a limited number of services and product placement options. Each logistics provider has its specificity and set of available services, and it can take a long time to find an appropriate contractor who will meet all needs. Moreover, you need to study the logistics market, providers’ reputations and compare prices to avoid cooperation with unscrupulous contractors.

How does WareTeka simplify the logistics providers’ search process?

In the previous sections, we described the warehouse rental and logistics providers’ service features. Depending on the business needs, a company can choose one or another option. Finding an optimal logistics solution can be difficult. WareTeka specialists know about it. Therefore our approach is different.

We offer businesses the solution to their issues. WareTeka cooperates with more than 30 logistics providers throughout Ukraine. Each 3PL has its specificity. We take this into account when we receive a request from a particular company with a specific need and select the best options from different service providers. We don’t impose a particular provider or service. Our goal is to close the business issue that it indicated in his request. Therefore, we provide our clients with several offers that are suitable for them. Considering tariffs, a range of services, and providers’ capacities, the business makes the final decision.

In today’s realities, both business strategies and the logistics approach are changing. To remain afloat, it is not enough to have a warehouse or to cooperate with one logistics provider. It is necessary to organize supply chains most efficiently and to react to the smallest changes. WareTeka will take this into account when selecting an offer for a specific business.

How warehouse rental, 3PL providers, and WareTeka solutions differ: a comparative table

Previously, companies had to choose between their logistics with a warehouse rental or cooperation with a 3PL provider. WareTeka offers a different approach. The company receives the offer and can use external resources without rejecting its logistics or its contractors’ services. Combining several methods enables getting advantages of different approaches.

Warehouse rental advantage is access to your warehouse and control of your production 24/7. The possibility to get a qualified service without investment in a warehouse and staff is the main plus of 3PL. However, these approaches also have disadvantages. Renting a warehouse, a company needs to seek approval for changes in its layout of the landlord. A particular 3PL provider typically has a certain range of services that are limited by its specificity.

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Cooperation with WareTeka assumes a choice of options for working with different 3PLs, with different capabilities and warehouses throughout Ukraine. Business doesn’t need to adapt to the landlords’ terms or the range of available services from a provider. This gives a business what it needs: a current offer in a particular period.

Warehouse rental, 3PL services, and WareTeka solutions have their features. Depending on the business needs, one logistics solution may be more suitable than another. In the table, we presented an overview and comparison of the characteristics of different logistics approaches.

Warehouse rental3PL servicesPlatform WareTeka
Monthly feeSignificant investment in equipment, staff, and monthly rental feePayment for operations and warehousing depends on the number of goodsPayment for operations and warehousing depends on the number of goods
Startup costsHighMediumMedium
TermsFixedLong-term contractsNo term agreements
LocationFixedFixedWarehouse network throughout Ukraine
Warehouse capacityPredetermined area in square metersPredetermined area in square metersOpportunity to choose our partners’ warehouse throughout Ukraine
EquipmentPurchase on its ownIncluded in costIncluded in cost
ScalabilitySlow and expensive expansionThere is an opportunity to expand that is limited by the provider’s resourcesFast and low-cost expansion
Time to implement logistics12 months+2-3 months+2 weeks+

What services can you order on the WareTeka platform?

Our platform offers a wide range of warehouse logistics services. These are fulfillment, outsourced storage and warehousing, cross-docking, flow-through, co-packing, bonded warehouse services, complex logistics, and value-added services. On our site, you can see the list of operations that are included in each of the services, their advantages, and peculiarities. You can also view pages with logistics services in the cities of Ukraine. They contain information on the number of providers and vacant pallet positions in our partners’ warehouses in a particular city.

In addition, we recently launched the LTL transportation service. There is a calculator that can estimate the price of the transportation of your goods to a particular city on the service page.

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If you do not know what service suits your business needs, leave a request on our platform. There you have to specify the contact details, which warehouse and services you require, the type of goods, and the date of arrival in a warehouse. WareTeka experts select a unique offer to solve current issues according to your request.

Conclusions: why you should try a solution from WareTeka experts

At a time when it is difficult to predict consumer demand and supply-chain disruptions are inevitable, a business must adapt. With the right approach to logistics, even in such conditions companies have a chance not only to remain afloat but also to develop. To do this, it is not necessary to completely change its logistics. A supplement with new solutions is enough.

WareTeka offers such business solutions. To select the best cooperation options, we study the business needs, their specificity and match with logistics providers that can close the company’s logistics issues. After studying the specifics of a particular company, we offer several options from different 3PL providers. Thus, our client always makes the final decision.

Even though the WareTeka solutions’ implementation in the company’s logistics is much faster than the creation of its logistics, it is worth trying this model before it is urgently needed. This will help to avoid disruptions, loss of time and money in the future. Therefore, we recommend trying to cooperate with our platform now.

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