Comparing Warehouse Providers
A warehousing or Fulfilment solution can be a complicated process from a suppliers perspective and even more so for the customer.
Exalt has have therefore prepared this free guide to assist with the comparison process, highlight hidden charges and allow a business to accurately compare multiple providers to identify the lowest overall cost and highest possible service level.
Each Warehouse provider has a different method of charging and refers to their own activities or charges with different terminology. When comparing rate schedules side by side, it is important to consider the overall cost, rather than focussing on particular charges which may be higher or lower. We therefore STRONGLY advise building a simple cost model to calculate the total annual charge for each provider. Exalt now supplies a sample model with each rate schedule.
Whilst the overall activity determines the annual cost, the key costs are usually container unload, storage, order processing, picking and packaging charges, which will result in around 80% of total cost. Be sure to build setup costs, weekly admin fees, pallet hire and most importantly annual freight charges, which are normally more expensive from anywhere other than Sydney, into the rate model.
Furthermore ensure you enquire about hidden or un-disclosed costs and charges. Some providers will not forward rates for a number of EXTRA CHARGES or SUNDRIES, but to compare correctly and to calculate a true annual cost comparison, make sure you ask for them specifically. Common undisclosed extra charges include rubbish removal, stretch wrapping per pallet into or out of the warehouse, return processing charges, customer pick up fees and weekly or monthly minimum charges. Make sure you understand every rate which may apply to your requested service.
Storage costs are calculated based on the amount of space occupied per week. This space is usually calculated around number of pallets or shelving, but can sometimes be per carton or per square metre. A lower capability provider may offer a cheaper storage rate, however it is important to check if the provider can hold multiple SKU’s (product codes) per pallet, if not, you have to face a full pallet storage charge being applied to the very last carton of your product. This will result in a much higher overall cost and demonstrates the system capability of your supplier.
Also ensure that you enquire about pallet hire charges which apply on top of storage, and the cost for any shelving occupied to assist the pick process.
Most customers will require packaging to be supplied for the despatch of some, if not all orders. Packaging charges can vary wildly between providers, whilst other suppliers recommend a customer supplies their own materials.
The cost of new cartons can vary between one and five dollars each, other packaging can be up to or more than one dollar, plus bubble wrap or void fill in addition. A good provider should be able to supply a range of packaging cost effectively.
Recycled cartons are a low cost, and environmentally friendly alternative ensuring good freight utilisation, and the quality in most cases is as good as new. Supplying your own materials is an option, however your purchase cost will not be as good as the provider purchasing in bulk, the range will be limited, resulted in increased freight costs, plus capital is tied up and storage may also apply.
As important as the overall warehousing cost is the total freight or distribution cost of orders. An annual freight bill is likely to run at a similar overall cost to the warehousing charges, therefore it is very important to consider this as part of any warehousing selection.
A good Fulfilment provider should be able to offer a range of freight options, at competitive rates beyond what the customer could achieve individually. Using more than one freight provider will deliver the best overall service at the lowest cost.
The location of the freight or storage should also be strongly considered. Based on average population density across Australia, Sydney will deliver the lowest freight costs around 15 percent cheaper than Melbourne or Brisbane, and much less than Adelaide or Perth. This saving will outweigh the cheaper cost of storage in those states, and results in a Sydney provider normally always being the cheapest option.
Save a copy of this page for future reference by downloading the Comparing Rates and Providers document. The guide aims to customers understand how rates and service providers can be compared and what are the important questions you have to ask.More..
When conducting a comparison between providers, it is important to gather important information from potential suppliers around price, service and capability. Knowing the correct questions to ask requires significant prior experience. This questionnaire will not only show you what to ask, but also explain why knowing these details is essential. It will help you to identify hidden costs and get an idea of the service providers capability.More..
Visit the pricing method section of the site to see how competitve Exalt rates are and a number of options designed to suit your business.More..
Answer a few simple questions about your business activity and receive customised rates to your email address. More..
January 14th, 2011
WAREHOUSE OPEN DAY 2011
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July 09th, 2010
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Telephone: (02) 9659 1550
Exalt Group head office is located in Sydney but provides all services Nationwide.