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Pros and Cons of Going for Third-Party Warehouse Management for FMCG Retailers

FMCG retailers like any other retailer are going through a huge pressure of offering improved services at reduced prices to survive the competition thrown by the e-commerce giants. When it comes to small to medium-sized FMCG companies, this pressure gets even more intensified as they compete with companies that have both the infrastructure and resources for catering to the demands. However, the emergence of third-party warehouse companies has changed the game giving FMCG SMBs the platform to grow and flourish. Though opting for third-party warehouse management has its benefits, it has a few drawbacks as well. In this article, we will discuss both. So, let’s break it all.

Pros of Opting for Third Party Warehouse Management for FMCG Retailers

1. Economies of Scale

In a highly-price sensitive industry like FMCG, the consumers mostly prefer brands that provide them with the best value for money. Considering it, third-party warehouse management can be extremely beneficial to those FMCG companies that aim for customer acquisition. They can scale up quickly and venture into global markets from the local area. The continuous stream of supply makes them adequately agile to meet demand.

2. Execute Cross-Docking to Drive Cost Savings

Cross-docking has several benefits like low storage costs, lesser damage of products due to lesser material handling, etc. It not only lowers the costs associated with storage, transportation, and labor but also decreases the inventory and delivery lead times. Even though it requires a time commitment, it is highly preferred, for it gives a high payoff. However, not every FMCG company has proper systems and resources to implement cross-docking and so they turn towards third-party warehouse management.

3. Save Time and Effort

Can you imagine the time and effort it takes for doing it all yourself? Making calls, performing calculations, searching for quotes, etc. in your already busy day would be quite hectic and harassing! Right? This is the reason why most FMCG companies rely on third-party warehouse management companies for their warehousing needs.

Some businesses still believe they can do it all by themselves. But once they have reaped the benefits of third-party warehouse management, they know how good it feels to work more intensely towards your business bottom line than wasting time on something that is not their specialty. Third-party warehouse management allows FMCG companies to dedicate their precious time to their core business.

Cons of Opting for Third Party Warehouse Management for FMCG Retailers

Opting for third-party warehouse management certainly has its benefits, there are a few drawbacks associated with it as well that you must consider. The most common cons of opting for third-party warehouse management is getting a trustworthy FMCG Logistics Company is not easy. It involves a lot of research. You need to create a list of FMCG logistics companies first and then filter out the one you can collaborate with based on your needs. After all, you will give control of your inventory to a third party. Trust is crucial.

The Final Thought

The reasons could be many. You want to expand your customer base, create a positive consumer experience, or venture into new markets. Whether you are a big or a small company, external expertise and support can help you run your supply chain more effectively and gain a competitive advantage. That’s where FMCG logistics companies come into the picture. These companies play an extremely strategic role and offer a high-level infrastructure at the reasonable process building which on your own had cost you a fortune

If you have got one of the best FMCG logistics companies, nothing is better than that. It certainly gives an edge over your competitors. However, it is really difficult to find one. Reading reviews and testimonials is one of the ways you can validate the promises made by the FMCG logistics companies. You can also verify it in the industry. Word of mouth seldom says false. While reading the reviews and the testimonials read carefully what issues are being addressed by the company. Do these issues or needs match yours? If yes, you can further research those FMCG logistics companies and separate out the one you think is the most suitable.