By Michael J. Cook
Every small business venture begins with the hope of the founder that today’s small business will grow into tomorrow’s bigger business.
Often, that success happens sooner than the small business owner is prepared to deal with all the issues that inevitably arise – especially the issue of when it is time to outsource.
Outsource what, you say?
Even a sole proprietor probably outsources quite a few things from the start – legal and accounting services, printing and mailing, deliveries, etc.
And if you are a manufacturer or if you distribute a product, even more outsourcing needs arise. The questions seem formidable and almost endless:
· Where will I store my inventory?
· How much space do I need (now, and six months or a year from now)?
· When is it time to rent warehouse space (or even buy/build it)?
· Who will take, and process orders for shipping?
· How will I get my product transported to my storage space, and shipped out to customers?
· Do I have to hire additional employees to accomplish all this?
· Will I have to buy equipment to handle large quantities of my product?
· What about security for my storage space?
· What about insurance for my inventory in storage?
· How will I pay for all this? Will I have to raise prices?
And the list goes on.
More and more small businesses, both start-up and well established, are discovering the numerous benefits of using a “3PL” (3rd Party Logistics) provider. Such a company, like Clark Logistic Services, can provide the answer to all the above questions and free up the small business owner’s time and resources to focus on marketing, manufacturing, research and sales, and remove all the worries about buildings and labor costs.
In our industry, we call it “One-Stop Shopping” for the small business owner – total supply chain management, warehousing, transportation, equipment, labor, the latest technology, with Web visibility for inventory accuracy and management, security, value-added services, seasonal overflow requirements – all with one telephone call.
Another way to look at it is to picture 3PL services as a cafeteria. You take only what you want from all the offerings, and you might take different items each time you go through the line. You pay only for what you take.
Perhaps it’s best explained through the example of one of our clients, Steve Leinenbach, president and CEO of a new, St. Louis-based company called Safety By Design.
The company manufactures and sells security products for residential and small commercial applications; specifically, a keyless deadbolt lock. People can lock the deadbolt without a key when leaving their home.
Safety By Design developed, and now owns the patent on the product, sold as the Turner Keyless Lock. It is manufactured in China to Safety By Design’s specifications, and under its direct supervision.
Steve markets this product to homeowners, hardware stores, lumber yards, locksmiths, and even direct-to-consumer via television shopping channels. He uses Clark Logistics for virtually all his company’s logistical needs – importing, customs clearance, freight forwarding, warehousing, shipping, order fulfillment – everything from hundreds of containers to a single item shipped directly to a homeowner.
“A new company has to take care of cash flow,” says Steve. “We outsource a good part of our total operations – information technology services, human resources services, marketing and public relations, and all our logistics from warehousing to order fulfillment.
“When you’re new, and a smaller company, you can look just like your larger competitors, thanks to the Internet. But you have to perform like them, too, and to do that you need lots of support from someone you can trust to do a good job – someone who understands that you’re new and have to try harder; someone who knows how to dot all the “I’s and cross all the “T’s”.
He says, “At this stage of our company’s development and growth, a 3PL makes good sense. I wouldn’t even consider bringing on employees of my own or trying to buy or build warehouse space. A 3PL is ideal for startups and newer companies.”
Flexibility is a key component of effective 3PL service. In a case like Steve’s, he may not know from one month to the next how much warehouse space he will need. With a 3PL like Clark Logistics, he can rent storage space month-to-month in whatever volume he needs. If he only needed to store four or six containers and could stack his product four or six containers high, he needs to rent only enough floor space to hold one container. We price our service on a flat fee for each container brought in, each container brought out, and the amount of floor storage each container takes.
The beauty of the whole system is that while a client is storing product with a 3PL, he receives all the services that go with that warehouse space – security, insurance, labor, equipment, and custom processing and order fulfillment. And, as we mentioned, the customer pays only for the services he uses, and he can change the level of service he needs from month to month.
If a business is seasonal, 3PL warehouse space is the perfect answer for fluctuations in inventory. Even some very large corporations operate this way – renting warehouse space to handle the overflow during seasonal peaks when their own space is insufficient to store the greater inventory. When inventories are down, the larger corporation can simply terminate the month-to-month contract with a 3PL.
Using a 3PL is a flexible, cost-efficient, customer-friendly solution to many of the tough questions a small business owner faces. Why worry about all those issues when, with one phone call, your worries are erased?
By Michael J. Cook, Vice President
Clark Logistic Services (CLS)
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