Warehousing Strategies Shift as Manufacturers Pause Assembly Lines

Whether you plan to slow production or to keep your assembly line churning, reviewing your warehousing strategy can save you money.

Not long ago, the falling value of the dollar seemed like a blessing in disguise for American companies that export products. European and Asian customers, bolstered by their relatively strong currencies, suddenly found bargains stamped with the words "Made in the U.S.A." However, as an international credit crunch equalized global currencies, orders started slowing down. Today, as companies around the world think about surviving a recession, it might be time to reconsider your warehousing strategy.

Start by examining where freight warehousing fits into your own supply chain. If you intend to slow down production until demand for your product returns, you may be able to negotiate a preferential rate on longer term storage. Likewise, if you use third party warehousing facilities to stockpile raw materials, think about these two money-saving strategies:

• Keep ordering supplies now while prices are low, stockpiling them in relatively inexpensive warehouses.
• Slow down the intake of raw materials, while reducing the square footage or the number of pallet spaces you lease from your warehousing provider.

Both of these strategies exploit the biggest benefit of outsourcing warehousing: the ability to scale quickly. Maintaining open communication with your account manager can help you take advantage of flexible facilities and dynamic pricing. By coordinating your decisions with those of other clients, an account manager at a responsive warehousing company can minimize your costs.

Take Advantage of New and Expanded Warehouse Locations
Next, investigate the markets where you expect to sell the most product as the global economy kicks back into gear. You can take advantage of discounted shipping and warehousing costs now, to be ready for new orders over the next year. Likewise, if you decide to slow down production, global warehouse services can help you centralize product to facilities that can help save the most money.

For instance, locating product in warehouses that can quickly serve a large portion of your customer base can result in significantly lower shipping costs. Shipping larger blocks of product to a warehouse can reduce waste and decreases freight expenses. Fulfilling product from strategically located warehouses can shorten the time it takes for your product to reach your customer. You can choose to bank the extra profit from less expensive order fulfillment, or you can pass the savings along to customers as an incentive.

Build Rapport with Warehousing Account Executives
Finally, talk to your warehousing account manager about their plans to weather the current economic conditions. Many warehousing companies have leveraged lower real estate prices to expand their footprints or to locate facilities close to major highways, train lines, and ports. Coordinating your own shipments through these new facilities can often reduce your rental fees and shipping costs.

Sudden economic shifts often force company leaders to make rash decisions. Partnering more closely with warehousing distribution experts can help you understand the impact of your decisions. More importantly, keeping the lines of communication open with all of your vendors can generate the kind of cost savings that can keep your company in business.

Sources

Shipping Digest

International Herald Tribune