Warehouse on contract and its benefits
Defining contract warehousing
Warehouse on contract is one where goods are shipped, received and stored on a contract basis. For such services, a client is required to fix a particular period of time for which the warehouse is required. Usually the time period stated is fixed in terms of years. Whereas the structure can be fixed based on the services offered and transactions. It can either be a cost plus model or a fixed cost model or even a combination.
Lower cost of operation and fixed service period
For a company to have its own warehouse, it requires a huge capital to invest in the same. It includes renovation of a building, purchasing the equipment that is required and arranging for staff to man the facility. Now that contract warehousing is available, everything is already in place and also segregated to arrange goods in zones. Whether storage needs to be temperature controlled, dry or general, anything is possible.
In this case the logistics company takes care of the employees the expenses and equipment which helps reduce cost further. With a service period that is locked in, as a business you will know that you have access for a particular period of time. You are aware of the expenses and can set it aside since the contract will specify the charges for whatever period you have signed on.
Additional services related to distribution and packaging had often provided by contract warehouses. Whenever a business is planning to expand or is suddenly faced with increase in demand these services can be made use of. It’s always beneficial to develop a good trustworthy relationship with your warehousing partner as it is important to the success of your business. Make the right choice and limit your expenses too.