For a company, outsourcing a warehouse is a strategic decision that can bring significant benefits such as cost savings, flexibility and improved efficiency of operations. Successful outsourcing requires careful preparation so that the process runs seamlessly and the partner understands the needs of the company. In this article, we will go through 7+1 important steps to help your company outsource its inventory control smoothly and successfully.
1. Start with assessment and documentation
The first step in warehouse outsourcing is a thorough assessment of your own operations. This means that the company needs to analyze its current warehouse processes and identify potential challenges. It is important to ask how the company's warehouse operations are currently managed and where there is room for improvement. This internal assessment will help you understand what goals you want to set for outsourcing. The goals should be clear, measurable and aligned with the company’s overall business targets. If your company has been carrying out the warehousing so far, your employees are likely to have plenty of tacit knowledge of warehouse processes. Documenting this information is critical to ensure the continuity of operations during and after the outsourcing. A well-conducted internal assessment also serves as the basis for drawing up the request for proposal and as supplementary information for partner candidates.
2. Carefully draw up a request for proposal
Finding the right partner starts with carefully drawing up a request for proposal that accurately describes the company’s needs regarding warehousing. The structure of the request for proposal should be created in such a way that the proposals are easy to compare. This is especially important with regard to pricing so that the company can choose the best service provider. A good request for proposal also includes a description of the company’s business model and the role of the warehouse in it.
3. Identify potential partners
Once the request for proposal has been prepared, it is time to identify potential partners. The aim of this phase is to find the service providers that are best able to meet the needs of the company. Particular attention should be paid to how well the partners manage the planning, projecting and resourcing of the handover phase. It is important that the partner is able to carry out moving stock and other practical measures without disrupting the company’s business operations. In addition, it's good to assess how the partner handles risks and how flexible their service is in changing situations. Taking responsibility for people and the environment is also an important assessment criterion, as the partner’s operations will also be a major part of your company's sustainability. It's a good idea to check whether a potential logistics partner is transparent and whether it would support your company in the development of sustainable business.
4. Choose the most suitable partner
Once you have received offers from different partner candidates, it is time to go through them carefully. Select a few promising partners and get to know their operations in more depth. This may include, for example, an assessment of the company’s financial situation, which is a prerequisite for the continuity of operations, through financial statements and credit ratings. Also make sure that the partner has the technical competence and capabilities to support your business in, for example, material handling and warehousing of dangerous goods.
5. Make a clear service level agreement
Once the most suitable partner has been chosen, it is time to draw up a Service Level Agreement (SLA). This Agreement precisely defines the responsibilities and obligations of the parties. It is essential that the agreement states, among other things, the service description, the goals, the delivery schedules, processing speed, practices for processing damaged products, the accuracy of inventory values, the flexibility of capacity and the customer service and communications practices. It is important to define clear indicators for monitoring the quality of the service in the Agreement. Possible sanctions for breaches of Agreement must also be specified. It is also advisable to agree in advance on how potential disputes will be settled and what happens if the Agreement is terminated early.
6. Transfer responsibility for inventory control
The transferring of responsibility to an outsourced partner is a critical phase that requires careful planning. The aim is to ensure the seamless continuity of the warehouse's operations during the transfer of responsibility. It is important that the cooperation between the company and the partner is close and open so that potential problems can be solved quickly. There are several different ways of rearranging personnel – often, the logistics personnel will be transferred to the new partner as part of the outsourcing. This offers employees the opportunity to learn new things as well as grow and develop in their own logistics profession.
7. Continue active cooperation
When outsourcing inventory control, the continuous cooperation, which is usually described in the service level agreement, begins when the handover phase ends. This cooperation will focus on the development of operations in accordance with the mutually agreed goals. The goals can include, for example, streamlining the flow of goods and information, increasing automation or making the use of warehouse space more efficient.
+1. Prepare for the termination of the partnership
Although warehouse outsourcing is usually a long-term solution, it is also important to plan the termination of the partnership and the related matters in advance as precisely as possible. Warehouse outsourcing is usually a long-term project, which means that it's a good idea to plan the termination on a general level. In temporary outsourcing, it is essential to agree on the details at the beginning so that the partnership can end in a controlled manner and the company’s operations can continue uninterrupted. Outsourcing a warehouse is a strategic decision that requires careful planning and implementation. Good preparation and clear goals help to ensure that outsourcing a warehouse will bring long-term benefits to your company.
Download our guide to warehouse outsourcing
Read more in our Guide to warehouse outsourcing and ensure that the outsourcing process runs seamlessly!