Piece by piece payments shine a detailed spotlight on costs. The costs for warehousing and distribution services are especially critical for the process. Companies in charge of bringing the product in to this country need to know the cost to do so down to the last penny. That’s what they tell the end user. Customers should have a budgeting tool; a way for them to know their costs from the time the product leaves the port until it arrives at its destination.
If a 3PL is going to provide warehousing and distribution services, either by paying someone else to do so, or providing it internally, they need to know exactly what they are getting/providing and how much it will cost. Everyone needs to understand the margin involved and there is nothing wrong with discussing it.
To ensure all parties will end up on the same page, they need to lay out their budgeting requirements before they make any other arrangements. I like to use the analogy of the patient and the dentist. The patient is in the dental chair and, just as the dentist is starting to drill, the patient grabs his hair and says, “We’re not going to hurt each other, are we?”
That dentist is going to be upfront and say, “This might hurt a little, that may hurt a little, but we’re all going to work for the same goal.” If the patient does feel some pain after being assured there will be none, the dentist will also get hurt!
However, if the patient, (customer) knows that there will be some pain (costs) along the way, he can prepare. By establishing trust and eliminating the pain by putting everything on the table upfront, then the customer will be happy and reap the desired results.
Planning a workable budget is a good starting point to analyze your situation and establish a budget that agrees with both parties.
By getting all the information and prices upfront, you are avoiding “Budget Hiccups.” In the old days, that was not such a big deal. Today, it could get someone fired or cause the loss of a customer.
If a 3PL quotes rates that are cheaper than other companies and a business gives them their business, and then at the end of the month they are losing money, what happens? They pass their losses on to that business. BUT, and this is a BIG but, they have the product in their building, while customers are relying on them to provide the service. Now, back in the dentist’s chair.
The amount of freight coming into the country is growing. It is almost cheaper to buy steel overseas, pay someone to box it, pay someone to put it on a boat and ship it from China to California, then deliver it next door to the steel mill, than it is to buy it at the steel mill.
Think of all the containers of product being brought into this country that need to be handled/stored before going on to their destination. Many people do not want the headaches of managing and running a warehouse and will pay for such. If a business pays, or even provides, it is important to know what they are getting for their money or what the costs may be. Without a complete understanding there’s bound to be trouble.
For a smooth relationship and pleasant business experience, businesses should find a company that offers a budgeting tool that will work within the parameters of their needs.
FW Warehousing is headquartered in St. Louis, Missouri with Midwest warehouse distribution centers in Kansas City, Indianapolis and St. Louis totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, FW later broadened its services to include contract warehousing, dry storage, hazardous material and chemical storage, temperature-controlled storage, product distribution and B2B and B2C fulfillment.
FW Warehousing has more than 50 years of experience in third-party 3PL logistics and has been ranked in the top 100 Third Party Logistic Companies in the country by Inbound Logistics magazine.