Dedicated Warehousing Solutions: What Are They and How do They Work?

Logistics managers must be on the lookout for some areas of the supply chain as they become more vital to the operations. Dedicated warehousing and dedicated warehousing solutions will help mitigate the effects of exponential growth in the market. As more consumers order online, more shipments go out. Short or long distance, improving the warehouse and its practices will lead to a more efficient and lucrative year. 

Percy Hung with Forbes states, “e-commerce will account for 20.4% of global retail sales by the end of 2022, up from only 10% five years ago. In other words, the e-commerce space is becoming more crowded.” Such growth will precipitate a shift in demand, resulting in even lower warehouse vacancy rates. As a result, today’s shippers need to know a few things about dedicated warehousing and how it works to avoid stock-outs and delays in order transportation. 

Dedicated Warehousing vs. Shared Warehouse

A dedicated warehouse is a facility occupied by a single tenant and does not require a shared warehouse space. Renting or buying the location outright is optional, but the allocation of services remains for a single business or tenant. Labor, operations, new technology, and equipment are allocated for the owner or tenant’s use. Dedicated warehousing solutions grant a single business free reign of a warehouse and can keep business operations centralized. 

A shared warehouse allows multiple businesses to utilize the warehouse, distribution facilities, and other resources. Tenants share all labor, equipment, expenses, and additional overhead costs. This approach allows for implementing lean methodology as a company updates its practices and reduces costs. Shared warehouse space can save money over time by renting a partial space, but that also comes with consequences, such as the shared equipment. Using either of these warehousing solutions will achieve many of the same results. It just depends on the needs of each business. 

How Dedicated Warehousing Works 

Some advantages of dedicated warehousing include the allowance for additional pricing transparency and the ability to impact and audit key performance metrics directly. This setup allows management to understand unit costs better. The operation revolves around the product flow and customer demand of a business. The model paves the way for businesses to access specialized services not often accessible to multi-client or public warehousing agreements. Dedicated warehousing solutions improve the front line and work with these services to revamp warehouse operations. 

These specialized services include: 

  • Bulk packing services
  • E-commerce order fulfillment
  • Cross-docking services
  • Inspection services
  • Pick/pack and order fulfillment
  • Order consolidation
  • Specialized shipping services
  • Returns processing
  • Assembly and light manufacturing
  • Reverse logistics

What to Consider When Looking at Dedicated Warehouse Solutions

Weighing dedicated warehousing solutions often comes down to the advantages versus the disadvantages. On the one hand, outsourcing can fast-track many operations; on the other, it may substantially increase costs. Remember to consider the following:  

  • Opting for dedicated warehousing allows proprietors to understand unit costs more effectively, directly impacting critical performances. 
  • The entire operation must function around product flow and the other requirements of the businesses. 
  • Increased dedicated space also forges a way for light manufacturing and specialized shipping services because of the centralized location. 
  • Fixed monthly rates can save money over time when considering extensive inventories.

There is a direct counterpoint: even with these benefits, dedicated warehousing can lead to higher overhead costs and other maintenance-related costs when orders decrease during the off-season and under more stable market conditions. The trick is to ensure leased dedicated warehousing can scale alongside your business throughout any period. That’s the core benefit of working with a 3PL that can flex to meet your needs, not the other way around. 

Take Control With Dedicated Warehousing Solutions and Industry Partnerships With Port Jersey Logistics 

Any business looking forward to another successful year will need the right partner within the industry to provide accurate solutions. E-commerce continues to rise and break records by the quarter. This trend is the future, a whopping 6% each year. The pandemic illuminated a new age within the industry, and trusting a partner to ensure better warehousing solutions and practices to remain competitive means contacting Port Jersey Logistics today!