As mentioned in our previous post, there are many reasons that a 3PL Public Warehouse can be a value added resource for your business including Business Expansion, Entering New Markets, Operational Focus, and Contract Filling or Packaging. Let’s focus on Business Expansion.
Growth for a business in terms of new customers and orders can be both exhilarating and challenging at the same time. The thrill and excitement of landing a new deal can be quickly forgotten as it becomes time to execute on the products or services that you and your company provide. Sometimes, the customer order is small to medium in size and is easy to deliver. Other times, the order is overwhelming in time and scope.
Recently, I was involved with a company who received their single largest order in the history of their business. The order was for $650,000 in product and represented 20% of their revenue for the year! Delivering on a $650,000 order can be a huge challenge. As we all know, many companies have payment terms of 90 to 120 days upon final delivery of your products, while raw material suppliers may require payment in 30 days. That’s a cash flow squeeze of 60-90 days! In any small to medium sized business, cash flow is king. The company had to take a bank loan just to cover the raw material purchases.
A 3PL Public Warehouse is a cost effective way to assist in expanding your business without impeding cash flow. Expanding a building, building a new building, or moving into a larger building can be costly, and it will take time away from what is really important…Continuing to expand your business!
- Your revenue is rising, but not to the point where it makes financial sense to expand your footprint.
- Your revenue is rising, but you are not sure if it is going to continue over time.
- You receive a single large order, but don’t have the physical space or enough employees to effectively fill the order
A 3PL Public Warehouse can fill these needs without crushing your cash flow. In most cases, you only pay for the services you use in a 3PL Public Warehouse, and only for the time frame that you use them. The company I mentioned earlier completely outsourced the kitting of the 8,500 piece order. This allowed them to continue to focus on their regular business within their own manufacturing operation.
3PL Public Warehouses can allow you the flexibility to expand your business without taking unnecessary risks with cash flow. Why risk your hard earned dollars when you don’t have to?