What are the key components in a distribution facility that create a competitive advantage for a 3PL company? Encon Commercial offers the following guidelines; 1) Scrutinize the warehouse layout and yard configuration, 2) analyze the logistical through-put at the DC, and 3) negotiate a financial commitment that offers flexibility (John Scatoloni 2006). Since manufactures have already moved their manufacturing overseas, predominately China, and this shift in transpacific manufacturing has created a supply chain corridor between China’s East Coast and California. 3PL warehousing is increasingly the most visible component in the supply chain process, one that will showcase and sell the entire service platform.
First, we locate a DC that offers the following features; a freestanding newer construction warehouse with higher clearance that offers a secured yard for containers, and a rectangle/box layout that maximizes the number of loading docks and bays. As a result of a better layout, 3PLs are using smaller handling crews, creating more turns per day which translates into lower fixed costs and more profit.
Second, clients are not only judging handling through-put but also the facility safety, cleanliness and image. Invest in a security system that keeps management’s eyes on all four corners of the premises, and a warehouse manager’s office that maintains sight of the dock-line and the point of entry at yard. Security is a priority in the client’s decision process and one that can easily be achieved at a minimal cost. In addition, do not overlook a clean image warehouse, one that includes sealed warehouse floors, freshly painted interior walls, natural lighting and attractive landscaping. These items may seem incidental at the time, but are improvements that increase value and convey care in handling from the client’s perspective.
Third, a lease is a negotiated commitment with the landlord that will create or limit your flexibility for growth. After you have located a functional facility, keep the operational objective at the forefront of lease negotiations. Negotiate a tenant improvement package that allows for the most current, in-demand features, including a dock package with pit-levelers, additional yard space and edge of dock lighting for 24-hour operations, and an office component designed for maximizing administrative needs such as will-call facilities, a warehouse manager’s office and an employee break room.
Negotiating correctly can turn an A facility into an A+ operation, by customizing the facility at the landlord’s initial expense and then offset operation costs with free rent. Furthermore, look for a landlord that is willing to take on these improvements, which are inherently beneficial to both the tenant and the landlord in the long-run. Finally, chose a landlord that is open to you moving to larger space within the industrial park during the term of the lease for the possibility of expansion. Although this option may not terminate a lease, an option to upgrade will allow leverage to increase size should clients offer more accounts.