Don’t take on managing a warehouse if you don’t have to! There’s a better way.

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Enjoy today’s guest post about how to take the pressure off a small business with warehouse space and inventory to manage.


Entrepreneurs face myriad challenges in launching their new businesses. On virtually a daily basis they must step outside their comfort zone to address issues they never contemplated, nor have the skills or sometimes budget to resolve.

Take for example an e-commerce, consumer-products company. After months, or perhaps a year or more of development, prototyping, testing, reconfiguring, working and negotiating with factories and marketing efforts, you finally have a product ready for market. All you have to do is store the inventory, take orders, pick, pack and ship the products to your customers. Sounds easy, right?


All you need to do is find and lease a warehouse, put down the first and last month’s rent and security deposit, buy some racks to store the inventory, material handling equipment to move the inventory around, find and install a computer system, integrate your shopping cart platform to the computer system, hire and train employees, develop processes and procedures, negotiate a contract with a freight carrier, and voilà, you’re ready to ship your first order—at the low cost of tens of thousands if not hundreds of thousands of dollars which you probably don’t have.

There is a simple solution; hiring a third party logistics company (3PL). 3PL companies can:

  • Safely and securely store your products
  • Seamlessly integrate with your shopping cart platform
  • Pick, pack and ship orders to your customers

There’s no initial capital outlay. There’s no learning curve in figuring out how to manage a warehouse. And, if well chosen, you’ll have a partner to ensure that the final leg of your supply chain is in place ensuring the right product is shipped to the right customer, on-time, and undamaged.

In the following case study, we examine a new business that initially managed their own warehouse, the challenges faced and how they efficiently transitioned to a 3PL.

Outsourcing Warehousing Operations – Saving Money and Improving Customer Service

A specialty cycling company was contemplating outsourcing its warehousing and fulfillment operations. After managing the warehouse for a couple of years, the owner wanted to spend more of his and his management’s time on developing new and innovative products to help grow market share.  He found that operating a warehouse was outside his company’s core competency; he couldn’t afford to hire experienced warehouse management and personnel, nor purchase an adequate business system. His on-time fulfillment and order accuracy suffered. The cycling company had the additional challenge of operating a seasonal business that required more warehouse space than they leased during the busy seasons and left them with expensive excess space during slower seasons.

After interviewing several 3PLs and preparing a detailed cost analysis, the owner was surprised to learn that the fully-loaded cost of running his warehouse—after taking into account salaries and wages, workers compensation, rent, insurance, material handling equipment, and general warehouse costs—was far greater than he realized. He also recognized that those costs were about to go even higher when factoring in recently passed minimum wage legislation and increasing health insurance costs.

With this data in hand, the owner was ecstatic to learn that by outsourcing his fulfillment operations to a 3PL he was able to:

  • Significantly improve customer service metrics
  • Reduce warehousing and fulfillment costs by 43%
  • Mitigate future minimum wage and health care cost increases

Transition to Go Live

Once the decision was made to transition the operations to a 3PL, an implementation coordinator from the 3PL prepared a detailed and comprehensive transition plan in coordination with the cycling company operations team. Weekly meetings were held and a target cutover date established.

The detailed transition plan included obtaining the client’s SOPs, routing guides, item master uploads, electronic data interchange requirements, packaging and labeling requirements, and myriad other details. After integrating with the client’s shopping cart platform, the next order of business was implementing a more efficient slotting strategy in the warehouse.

Using data obtained and analyzed during the transition planning process, specific SKUs were assigned to the most appropriate storage medium by family of products. Next, products were assigned to pick locations based on their velocity to maximize labour efficiently, and implemented a “Golden Zone” for high velocity movers to ensure the most efficient pick locations.  After a 60 day planning and implementation cycle, the warehouse transition was complete and the warehouse was up and running; ensuring a smooth transition and minimal downtime in fulfilling new orders from customers.

A series of key performance metrics were reported: inventory accuracy, order cycle times, on-time delivery and other key performance indicators as determined in conjunction with the customer. And the customer had 24/7 visibility to their inventory, receipts, shipments and tracking information through the 3PL real-time web portal.

Ultimately, the customer experienced in excess of 40% cost savings over running their own warehouse, received up-to-date metrics to better understand key customer satisfaction indicators and their team was able to focus on developing new and innovative products.

Utilizing a 3PL to manage your warehouse operations not only saves capital and expenses, but helps ensure the final leg of the supply chain is effectively and efficiently managed so that management has time to focus on its core competencies and grow the business.


About XB Logistics

Peter Resnick is the Chief Executive Officer of XB Logistics, a leading third party logistics company which works with companies to design customized, value-added warehousing and distribution solutions. Whether it’s direct to consumer, big box distribution centers or retailers with complex individual store distribution needs, XB Logistics works with you to efficiently manage, process, and distribute your products for significantly less than you pay today. Learn more at

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Small business blog posts we liked this week

From efficient habits to business lawsuits to the truth about PR, here are some of the recent small business blog posts we enjoyed. What about you?

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Understanding your prime time for small business productivity

What’s your prime time?

No, I don’t mean your favourite TV show – I mean the time of day when you’re most productive and effective in your small business.

We all have a prime time. For some of us, it’s early morning. We can’t wait to get up and get started. By the time late afternoon rolls around, our brains have had enough and we don’t function nearly as well. Other people seem to kick in after lunch and make great strides by suppertime. And we all know at least one night owl – someone who thrives after dark and is alert and hard at it when the rest of us have turned out the lights.

It’s important to recognize when you’re the most productive and use that knowledge to your advantage as an entrepreneur. Are you bright-eyed and bushy-tailed at 5 am? Then get up and tackle the most pressing item on your to-do list then (one that doesn’t involve a phone call, of course). If you’re a slow riser, work at secondary tasks in the morning and save the big jobs for mid-afternoon. The same goes for scheduling appointments and making important decisions. Unless it’s life or death, whenever possible, postpone signing important deals or talking to decision-makers until your prime time. You’ll feel fully alert and more in charge.

This isn’t always possible, especially when other people are involved. If a client can’t meet you any later than 7 am – when you’re usually brewing your first coffee – so be it. Meet, do more listening than talking and say you need to consider the important points they’ve raised. Promise to be get in touch later that day.

When you do call your client back, use this simple trick to maximize your effectiveness: stand up when you talk to people by phone. Let’s say you’re responding to a request for a quote and have just dialed the customer (during your prime time, of course). Stand up – don’t sit at your desk. Your blood flows better, your breathing isn’t obstructed, your voice will project and you’ll feel much more in control. Try it and see.

When is your prime time? Do you notice when you’re more productive and efficient in your small business? What about your team members? Let us know!


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