Creating a product can be exciting, difficult, and expensive. There are many hurdles in the way of getting a product on shelves and in the hands of your customers. First, you must think of a product, conduct market research, start production, approve samples, import goods, and finally send it off to stores. It’s a marathon, not a race! A key component to developing a business or product is properly setting up the logistics. Throughout the process, it is important to stay on budget to ensure your business will be profitable. Once the product is manufactured, it must be strategically shipped to a convenient location and stored before it can be distributed. For many logistics costs are one of the last considerations. Just as developing a logistics plan can be overwhelming for some, the same can be said with third-party logistics pricing. Using a logistics company that offers both freight and warehousing services is great because you can bundle your services and save money.
Here are 4 tips to help you compare 3PL (Third Party Logistics) pricing and ensure you are getting the best pricing:
Conduct Research: Look for various logistics companies in your target service area and even those further away. Different regions have pros and cons to their service. For example; a warehouse near the port may be ideal for importers (reduced trucking fees), but a warehouse that is further from the port and closer to customers and vendors may reduce storage costs. Provide as much Detail as Possible: When reaching out for quotes, ensure you are as detailed as possible. Minimal data will result in a more expensive quote. There are a tremendous amount of factors that affect warehouse pricing such as the number of monthly turns, packages shipped, total SKUs, size of the product, etc. Here is a cheat sheet of what information should be provided: Amount of Pallets/Sqft you need warehouse space for Amount of turns monthly/annually (how often will product ship out and restock) Average Amount of orders weekly/monthly Amount of SKU’s Understand your Logistics Profile: When you know how your product operates; you can be in the driver seat. Understanding what services are needed to drive success for your business can help you bundle various aspects of your supply chain with one provider. If you know you have a high turning product then you can negotiate a lower storage price and so on! Be Open to Provider Solutions: The 3PL provider may be able to develop a solution that was not on your radar but could result in cost savings. A good warehouse and distribution partner wants to develop a relationship with your business, not a quick transaction. Take some time to evaluate the different solutions available to you and make sure you compare quotes appropriately apples to apples. Some may be too good to be true.
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