Flexible Warehousing: Definition, Best Practices, Pros and Cons

When you are an eCommerce company or any kind of business that deals with delivering large quantities of products to customers, you are going to need a strong logistics process in place.

Having said that, it is crucial to acknowledge that warehousing is a crucial part of your logistics process, regardless of the industry you operate in.

However, it is even more important to identify the right warehousing strategy when you are running an online business so that you can reap the benefits that come with taking an effective approach towards warehousing. Flexible warehousing is one such strategy that you should consider and we will discuss it now.

What is Flexible Warehousing?

Flexible warehousing is a third-party logistics space that can help businesses adjust their storage requirements in response to changing demands. If you have changing storage requirements, wherein you might decide to increase or decrease your storage capacity and are looking for an on-demand storage approach, you should consider flexible warehousing.

In this kind of warehousing arrangement, the hirer — mostly an eCommerce company — will hire a warehousing provider to handle order distribution and fulfilment operations. Flexible warehousing providers are different from the standard ones as they offer short-term contracts and the ability to scale up your rented space based on demand fluctuations.

Advantages of Flexible Warehousing

Now that you know what flexible warehousing is, let us look at some of the primary advantages associated with this warehousing arrangement.

1. Scalability

Even if your business is growing slowly, if it is impacted by seasonal demand, chances are that your warehousing requirements will fluctuate. Scalability is an undeniable advantage with flexible warehousing, and retailers and manufacturers will be able to scale up or down based on their requirements. Flexible warehousing is the perfect inventory and warehousing management solution for businesses that experience constant shifts in inventory volume.

2. Improved Inventory Management

Inventory management is critical to the profitability of a business, and when done right, it can boost your growth and revenue. It takes time and experience to gain the necessary skills to implement inventory management for a small or new business. 

Flexible warehousing solutions can improve your inventory management by boosting the visibility of your supply chain process. Third-party logistics warehouses can provide businesses with a network of distribution, personnel and logistic resources. 

With the help of automated inventory management tracking systems associated with a flexible warehouse, you will be able to predict customer demand without much manual intervention. The other important sub-processes such as picking, labelling and shipping are taken care of, on your end.

3. Boost in Efficiency

Flexible warehouses have the right expertise and resources to handle logistics operations as well as most online retailers. By outsourcing your warehousing requirements, you will be able to reduce the time and effort going into your operations and improve inventory management. 

Businesses can automate their inventory tracking and management with the help of technology, and allow them to focus their attention on more important tasks. Delegating your storage processes to a flexible warehouse will help you boost your business’ efficiency and result in faster delivery times as well as improve the overall customer satisfaction.

4. Cost Savings

Running an online business involves a lot of unavoidable and recurring expenses. Inventory warehousing is definitely a more economical option, and makes it possible for eCommerce businesses to save costs. Online retailers can reduce their overhead costs, and avoid high fees that come with long-term contracts by paying only for the space they need.

5. Flexibility in Location

Location is an important consideration when it comes to distribution and warehousing. Flexible warehousing solutions can provide businesses with flexibility in location, helping customers keep their inventory closer. You will be able to reduce shipping and transportation costs and your delivery times if your warehouse is closer to your clients.

Shorter delivery times can help customers decide whether to go ahead with a purchase. Considering you will be able to improve your overall performance and profitability, flexible warehousing solutions will help bring in more flexibility in locations.

Disadvantages of Flexible Warehousing

Now that you know about the various advantages you can expect to gain from your decision to enable flexible warehousing, you should also know the drawbacks associated with it. 

Some of the primary drawbacks are —

1. Limited Technology Infrastructure

When you are associated with full-service third-party logistics providers, you often get access to state-of-the-art technological infrastructure. This is because they generate enough revenue to invest in setting up that kind of infrastructure. 

However, flexible warehouses are less likely to make any such investments as they have less incentive to do so. They often make do with outdated technologies which can pose a major problem to companies that are looking to expand their existing distribution process or order fulfilment operations.

2. Higher Rate of Errors

Another issue with flexible warehousing solutions is its lack of dedicated staff on top of having the right technology in their arsenal. Owing to these factors, a flexible warehousing provider is more likely to make errors albeit minor ones than a 3PL provider. While minor mistakes may not bother smaller businesses a lot, it can be a huge concern for other businesses and even impact their business success.

3. Lack of Specific Experience

Flexible warehouse workers can typically work only with a few industries or types of brands, that too for shorter durations. The short-term nature of these associations makes it difficult for warehousing providers to gain enough experience and expertise related to that specific industry. Most flexible warehouses also do not have any niche capabilities such as kitting or custom packaging, so if you have any such requirements, you should stay clear of them.

4. Weak Customer Experience

Flexible warehouses can serve numerous customers from each location, however, it is definitely challenging and often results in communication gaps. If you require constant communication, then your decision to enable flexible warehousing may not be the best idea. They may also not have high-quality customer service, which can go further in weakening the overall customer experience you want to deliver.

Flexible Warehousing: Best Practices

Now that you are familiar with the pros and cons associated with flexible warehousing, here are some of the best practices you should consider implementing.

1. Utilise Modular Storage Systems

If you are not using a third-party flexible warehouse, and want to implement the technique in-house, you need to do it right. You can consider implementing modular shelving and storage systems which will let you reconfigure your warehouse layout. This enables you to implement efficient space utilisation and quick adaptation to different kinds of inventory shapes and sizes. Modular systems will also help you facilitate scalability, and help warehouses accommodate growth.

2. Implement Dynamic Slotting Strategies

Dynamic slotting is yet another strategy that can help you improve your warehouse efficiency. The strategy involves regularly reassessing the item placement within a warehouse and depends on factors such as demand patterns, product characteristics, and frequency of orders. Warehouses can optimise and minimise travel time, improve picking efficiency and reduce congestion by optimising the location of the goods.

3. Invest in Automation Technologies

You should also consider investing in automation technologies like robotic picking systems, conveyor belts and automated guided vehicles (AGVs) that can boost your warehouse flexibility by streamlining repetitive tasks. Subsequently, you can also increase your throughput, and reduce labour costs while automating routine operations. 

4. Implement Cross-Docking Practices

The process of cross-docking involves transferring your goods from inbound vehicles to outbound vehicles thus minimising storage time, especially when you are dealing with micro-fulfilment operations. Cross-docking also reduces inventory holding costs and accelerates your order fulfilment process while minimising your handling and storage requirements. With the help of cross-docking practices, warehouses can also improve their operational efficiency and shorten lead times, while responding quickly to changing demand patterns.

5. Adopt Multi-Channel Fulfilment Capabilities

You will be able to meet the diverse needs of your customers and adapt to constantly evolving market trends. Warehouses should also be equipped to handle different kinds of orders from different channels — eCommerce stores, brick-and-mortar stores, and wholesale distributors. You will need highly effective inventory management systems and efficient order processing workflows when you want to implement multi-channel fulfilment capabilities.

6. Establish Collaborative Partnerships

Collaborating with different kinds of stakeholders such as suppliers and logistic providers can help warehouses get access to different kinds of resources, expertise and capacity whenever necessary. Moreover, setting up such collaborative partnerships can also enable warehouses to take advantage of shared networks and resources. These additional perks can help you meet the changing demand and fight against supply chain risks.

6. Implement Flexible Workforce Strategies

Changing demands and seasonal fluctuations often force companies to consider implementing workforce management. While doing this implementation within a time crunch can feel like too much pressure, it is good to have flexible workforce management policies that will help your company prepare for such a situation. Some of these strategies could include activities like cross-training employees, implementing flexible scheduling, and utilising temporary labour.

Implement Flexible Warehousing For Your Logistic Operations

In the end, your flexible warehousing approach could save your company a lot of time, costs and efforts if implemented correctly. Flexible warehousing can help you combat challenges that come with changing demands and seasonal fluctuations more easily.  To understand the cost benefits that you can avail with the help of flexible warehousing, you can use our online postage calculator to get a better idea of the shipping costs associated with your operations.