The usual human perspective about warehousing is basically to store goods. But it is much more than a storage space. Warehousing involves a series of processes, beginning with receiving goods (inward process), storing goods in a suitable manner, and managing inventories. All of these steps can directly affect a company’s reputation if done poorly. Such as shipment delays, misplaced products, or damaged goods can create unhappy clients and financial loss. That’s why companies spend a lot of money on a well-set up warehousing system to run their business smoothly and to keep customers’ trust.
As the operations of different businesses vary, so do their warehousing needs. Some specialize in keeping perishables, while others do bulky shipments or store high-value items. Flexible warehousing is one of the most adaptable, enabling companies to right-size their storage space and offer storage space according to demand. This is particularly handy for businesses with seasonal products or varying inventory levels. Therefore, a company can reduce costs and get quick feedback for the market needs. Let’s explore more about flexible warehouses.
What Is Flexible Warehousing?
Flexible warehousing is a type of warehousing strategy that provides storage solutions based on the business’s demand. The business will not be trapped in long-term leases or contracts. It can be short-term storage or long-term storage, whatever the business needs. This is the perfect warehousing model for businesses who have high demands during a particular peak season or holidays.
Let’s understand this with an example:
Assuming you have a gifting business, you got minor orders the whole year, and your peak season is Diwali and Christmas.
In this case, you can outsource the flexible warehouses for the festival season that fulfil your orders on your behalf. For the rest of the year, the business can fulfill its orders on its own. In this scenario, businesses can save storage costs and deliver their product faster in peak demand.
Difference Between traditional Warehousing And Flexible Warehousing
Today, most of the supply chain and logistics industry faces challenges like high operational costs and increasing demand for last-mile delivery.
Building logistics warehousing and storing products require a lot of investment, which most businesses cannot afford. Hence, most businesses outsource their warehousing operations to a third party logistics company.
However, storing goods and products in a traditional warehouse requires long-term agreements, i.e., for months or years. The businesses have to pay money even for the unused space. The business may expand in the future and require more space or services to store products. Unfortunately, traditional warehousing has limited scalability.
The technology used to carry out all the warehouse processes is even manual. So, order fulfillment is usually delayed in traditional warehousing.
However, if we talk about flexible warehousing, then a business has to pay only for the space and warehouse services they use. Flexible warehousing is highly scalable, which means it can accommodate products or services when your business expands.
Flexible warehouses have even been adopted to advance technologies like AI and real-time tracking, which makes ecommerce fulfillment faster. These warehouses do not even require long-term lease agreements from the businesses.
How Flexible Warehouse Works – Flexible Warehousing Working Process?
Flexible warehousing allows businesses to scale storage space based on their product demand in the market. Here is a detailed overview of the flexible warehouse model.
- The business partners with a flexible warehouse provider.
- Goods or products are received in the warehouse, checked, and then stored in their respective places inside the warehouse.
- Most flexible warehouses use advanced technology like real-time inventory & storage tracking to optimize storage.
- Whenever a customer places an order, the warehouse staff picks up the ordered product, packages and labels it, and then hands it to the shipper.
- Most of the flexible warehouses partner with courier companies and offer transport services for faster delivery.
How do Businesses Benefit from Flexible Warehouse Solutions?
1. Saves Cost
It is simple math. If we go with the traditional warehouse, a business needs to sign a long-term contract, meaning you must pay at least a particular time frame. Still, flexible warehousing follows the pay-per-use model without any long-term contract. This can save a huge amount of the business. Let’s analyse this with another scenario:
A business requires space to store its bulk products. Building a warehouse requires a company to purchase land. It even has to construct the building, manage staff, pay utility bills and buy heavy equipment like forklifts.
However, investing a big amount of money in making a warehouse is not possible for every small and medium business. Flexible warehousing allows products to be stored for a limited period. The business does not have to spend money on infrastructure, staff or maintenance. Hence, it saves the cost of a business.
2. Scalability
Your business can scale up or down based on market demand. When your products are in high demand, you require more warehouse storage space. A Flexible warehouse allows you to scale the storage space and services based on business product demand. They have enough infrastructure to cater these types of situations.
3. Fast Order Fulfillment
Today, customers want their ordered products delivered as soon as possible. Flexible warehouses are usually located closer to target markets or larger cities. Hence, they can deliver products faster and enhance customer satisfaction.
4. Advanced Technology
Most flexible warehouses have adopted advanced technologies like artificial intelligence and the Internet of Things to track products. These technologies will increase the efficiency of the warehouse operations.
For example, warehouse automation reduces labor costs by enhancing the efficiency of picking and packing. IoT sensors allow tracking of the products in real-time and ensure better monitoring of the temperature and humidity of the products.
5. Fast Return Processing
Flexible warehouses are located closer to the target markets. Hence, this makes return processing easier. They have a specific area in the warehouse that manages only returned products.
Key Applications Of Flexible Warehousing
1. Seasonal Inventory Management
The demand for goods or products in retailers and e-commerce brands can fluctuate according to the market situation. Flexible warehousing can be the best option in such cases to store products for a limited period.
2. E-commerce Fulfillment
Delivering ordered products to customers, especially on peak days or holidays, is quite challenging for an e-commerce business. It has to handle bulk orders and deliver them in proper condition and at the right time to customers.
Flexible warehousing can be the best fulfillment solution at such a time. It handles bulk orders and easily fulfills orders during peak seasons or holidays.
3. Just In Time Supply Chains
Flexible warehousing plays a significant role in just-in-time supply chain management. Businesses can store inventories in flexible warehouses only when required, thus reducing overstocking or out-of-stock issues.
4. Multi Location Distribution
Flexible warehousing companies have a wide range of storage networks. Businesses can store inventories in multiple locations and speed up the delivery process.
5. Cold Storage And Perishable Goods
Flexible warehouses even have temperature-controlled areas where perishable goods can be stored for a longer time without compromising the product quality.
6. Market Expansion And Testing
Expanding into new markets presents various challenges for a business, such as high logistics costs, uncertain demand or infrastructure investments. Flexible warehousing allows businesses to enter new markets with ease. The best part is that businesses do not have to make long-term commitments to the flexible warehousing provider.
7. Reverse Logistics And Return Management
Reverse logistics is a process of managing customer returns. Flexible warehousing handles return requests quickly and improves customer satisfaction.
8. Disaster Recovery And Business Continuity
Disasters like natural calamities or cyberattacks can adversely impact business operations. Flexible warehousing stores inventories in multiple locations. So, if one warehouse is affected by a natural calamity or disaster, the other locations remain operational.
Conclusion
Flexible warehousing is evolving modern supply chain management. It offers scalable and cost-effective storage solutions to businesses without long-term agreements like traditional warehouses. These types of warehousing solutions are particularly beneficial for startups or businesses expanding their reach in new markets.
AAJ Supply Chain Management
