Frequently Asked Questions
What is the Supply Chain?
When consumers buy products, often times they are unaware of how much planning goes into having their product of choice at the store. The Supply Chain is the journey a product takes from the procurement of raw materials from one or several suppliers, to delivering the raw materials from those suppliers to one or more manufacturing facilities, to shipping the finished product to distributors and retailers and end-users.
Where does a Public Warehouse fit into the Supply Chain?
When a customer moves their product through a public warehouse, the product is somewhere on its way through the supply chain. It is typically being stored waiting for the retail consumer to order the product and then shipped to that customer through the supply chain or the stored product can be part of the supply chain of raw materials that make up the components of the finished product at a later date. So whenever a commodity needs to be stored over the course of its supply chain journey, the owner of the product has the option of acquiring their own warehouse to store the commodity or hire out the storage and distribution of their product to a public warehousing company.
What is Logistics?
Logistics is simply the coordination of the movement of inventory through the supply chain. That coordination can be provided by either the owner/manufacturer of the product, by a third-party logistics provider (3PL), or by a combination of the manufacturer and one or more 3PLs. Technically, a 3PL provider does not need to have industrial assets to provide 3PL services to their customers but generally 3PLs do operate warehouses, trucks, and other logistics equipment.
Do Public Warehouses provide logistics services?
Most public warehouses provide “added services” for customers as part of their warehousing agreements. These added services typically include scheduling inbound and outbound shipments, inventorying product, processing bills of ladings, providing trucking services, inspecting shipments for overages/shortages/distressed product, packaging products, and consolidation services. Since these added services help the customer coordinate the flow of their product along the supply chain, they can be viewed as logistics services. The amount and depth of the logistics services provided depends on desire of the customer and the sophistication of the public warehouse.
What are the advantages of using a public warehouse over renting your own space?
The main reason customers choose to use a public warehouse in their supply chain is to reduce non-variable distribution costs and maintain flexibility of their inventory levels. Distribution costs incurred at a public warehouse can be viewed as variable costs. The customer has the flexibility to increase their space footprint during inventory spikes and decrease their footprint when inventory levels are down thereby reducing storage costs. Substantial savings in labor costs can also be realized since the customer only pays for labor when their product moves. On the other hand, if a customer chooses to rent their own facility for their distribution needs, rent charges and labor charges remain relatively constant regardless of how much inventory is on hand or how fast or slow the inventory is flowing. There are no cost savings if inventory levels are reduced or if product flow comes to a halt. Furthermore, landlords generally require a minimum lease term and there are other incidental charges that add up such as utilities, maintenance, security costs, snow plowing and lawn mowing. In short, customers who rent their own space lose flexibility in cost and gain fixed costs that have no bearing on product flow.
Is there a minimum term to a public warehouse agreement?
When customers enter into warehouse agreements with a public warehouse, they have the flexibility to agree on terms that fit there specific needs. Many warehouse agreements are month-to-month agreements allowing the customer to terminate the warehousing arrangement on a month's notice. Additionally, standard warehousing agreements charge the customer in relation to the number of pallets on hand. Therefore, customers can reduce their warehouse cost to zero by simply shipping out the inventory on hand. Larger customers with larger footprint needs may want to enter into longer term warehousing agreements to guarantee lower rates and secure longer term commitments.
What is a Thruput rate?
The term thru-put refers to the amount of money it would cost to move a pallet “through” a warehouse without the product staying on floor for more a then a few days. Thru-put rates are used in cross-docking situations when a warehouse is requested to transfer product from one mode of transportation (ie, rail) to another trailer/container, etc. This type of rate structure offers a discount to the customer due to the short time the product is expected to be on the floor of the warehouse.
What does the term Dry Storage mean?
The storage of products that does not require a climate controlled environment.
What is a slip sheet and why are they used?
Slip sheets are 40X48” plastic sheets that are placed under product on a rail car or trailer by the shipper instead of a pallet thereby reducing damage in route, maximizing space in a rail car or trailer, and reducing pallet costs. Using slip-sheet attachments, product is unloaded and then set on pallets for outbound shipment. Utilizing a pallet exchange program, customers reduce pallet costs by using the same pallets over and over as they are "exchanged" with the end user.
When consumers buy products, often times they are unaware of how much planning goes into having their product of choice at the store. The Supply Chain is the journey a product takes from the procurement of raw materials from one or several suppliers, to delivering the raw materials from those suppliers to one or more manufacturing facilities, to shipping the finished product to distributors and retailers and end-users.
Where does a Public Warehouse fit into the Supply Chain?
When a customer moves their product through a public warehouse, the product is somewhere on its way through the supply chain. It is typically being stored waiting for the retail consumer to order the product and then shipped to that customer through the supply chain or the stored product can be part of the supply chain of raw materials that make up the components of the finished product at a later date. So whenever a commodity needs to be stored over the course of its supply chain journey, the owner of the product has the option of acquiring their own warehouse to store the commodity or hire out the storage and distribution of their product to a public warehousing company.
What is Logistics?
Logistics is simply the coordination of the movement of inventory through the supply chain. That coordination can be provided by either the owner/manufacturer of the product, by a third-party logistics provider (3PL), or by a combination of the manufacturer and one or more 3PLs. Technically, a 3PL provider does not need to have industrial assets to provide 3PL services to their customers but generally 3PLs do operate warehouses, trucks, and other logistics equipment.
Do Public Warehouses provide logistics services?
Most public warehouses provide “added services” for customers as part of their warehousing agreements. These added services typically include scheduling inbound and outbound shipments, inventorying product, processing bills of ladings, providing trucking services, inspecting shipments for overages/shortages/distressed product, packaging products, and consolidation services. Since these added services help the customer coordinate the flow of their product along the supply chain, they can be viewed as logistics services. The amount and depth of the logistics services provided depends on desire of the customer and the sophistication of the public warehouse.
What are the advantages of using a public warehouse over renting your own space?
The main reason customers choose to use a public warehouse in their supply chain is to reduce non-variable distribution costs and maintain flexibility of their inventory levels. Distribution costs incurred at a public warehouse can be viewed as variable costs. The customer has the flexibility to increase their space footprint during inventory spikes and decrease their footprint when inventory levels are down thereby reducing storage costs. Substantial savings in labor costs can also be realized since the customer only pays for labor when their product moves. On the other hand, if a customer chooses to rent their own facility for their distribution needs, rent charges and labor charges remain relatively constant regardless of how much inventory is on hand or how fast or slow the inventory is flowing. There are no cost savings if inventory levels are reduced or if product flow comes to a halt. Furthermore, landlords generally require a minimum lease term and there are other incidental charges that add up such as utilities, maintenance, security costs, snow plowing and lawn mowing. In short, customers who rent their own space lose flexibility in cost and gain fixed costs that have no bearing on product flow.
Is there a minimum term to a public warehouse agreement?
When customers enter into warehouse agreements with a public warehouse, they have the flexibility to agree on terms that fit there specific needs. Many warehouse agreements are month-to-month agreements allowing the customer to terminate the warehousing arrangement on a month's notice. Additionally, standard warehousing agreements charge the customer in relation to the number of pallets on hand. Therefore, customers can reduce their warehouse cost to zero by simply shipping out the inventory on hand. Larger customers with larger footprint needs may want to enter into longer term warehousing agreements to guarantee lower rates and secure longer term commitments.
What is a Thruput rate?
The term thru-put refers to the amount of money it would cost to move a pallet “through” a warehouse without the product staying on floor for more a then a few days. Thru-put rates are used in cross-docking situations when a warehouse is requested to transfer product from one mode of transportation (ie, rail) to another trailer/container, etc. This type of rate structure offers a discount to the customer due to the short time the product is expected to be on the floor of the warehouse.
What does the term Dry Storage mean?
The storage of products that does not require a climate controlled environment.
What is a slip sheet and why are they used?
Slip sheets are 40X48” plastic sheets that are placed under product on a rail car or trailer by the shipper instead of a pallet thereby reducing damage in route, maximizing space in a rail car or trailer, and reducing pallet costs. Using slip-sheet attachments, product is unloaded and then set on pallets for outbound shipment. Utilizing a pallet exchange program, customers reduce pallet costs by using the same pallets over and over as they are "exchanged" with the end user.