Studies have shown that warehouse distribution management fulfillment services, sometimes referred to as third-party service, have certain advantages to the grocer market. In a recent study, grocers using distribution fulfillment services indicated that the important business factors when choosing to utilize a warehousing company were: service requirements and subsequent response times, management quality, and businesses that have integrity and solid ethics. Low costs and value-added services were also mentioned and cited for reasons that distinguish warehousing companies.
The benefits of using distribution fulfillment services as ranked by manufacturers, wholesalers, and retailers are as follows:
1. The ability to respond to specific warehousing logistics needs. Having more responsiveness for the individual marketplace can be attained through flexibility on the part of the warehousing services providers.
2. Quality of management: Being very familiar with the often changing logistics marketplace is a requirement for any distribution fulfillment services due to the nature of needing to be very specialized related to anything warehousing.
3. Having a great track record including ethical decision making is another important factor when determining which distribution fulfillment services to partner with.
4. The ability to provide certain value-added warehouse services such as kitting and even light assembly creates the logistical advantage of having products come in already prepared for the marketplace.
5. Using distribution fulfillment services can also decrease the costs associated with warehouse logistics. Reduction in costs related to warehousing space and requirement of capital expenditures when procuring real property can be significant.
6. Understanding the transportation channels in a given market area is a specialty of a regional warehousing and logistics company. Reducing the transportation costs for utilizing these regionally based warehouse providers can also be reduced through negotiation based on overall volume processed.
7. Streamlining the process for product flow to encourage efficiency and a smooth flow can be done using the market specific knowledge and specialization of logistics and warehousing.
8. Adding functional and dynamic value to the local businesses can be done through warehousing and logistics service by cultivating strong relationships.
9. The associated risk involved in the warehousing and shipping of goods should be a cost assumed by the warehouse company.
10. Lastly, the distribution fulfillment service invests in state-of-the-art warehousing technologies. The reduction in cost for the client is significant when leveraging this technology for procurement or costs associated with obtaining this technology independently.
Further responses to preferences of the size and scope of the distribution fulfillment service chosen reveal that while national warehousing providers are preferred when a client wants to consolidate services, the warehousing consultants and logistical service providers most often prefer the regional distribution fulfillment service. The research that has been mentioned so far includes these findings. To be closer to the mission of their clients, regional warehousing companies with a local reach can provide flexibility and added responsiveness to local considerations.
