Warehouse Pricing & Benchmarking Services
Armstrong & Associates (A&A) has been engaged by manufacturers and 3PLs alike for its warehouse benchmarking and process improvement services.
A&A will assess your current warehouse pricing to increase profitability if you are a warehousing 3PL or determine if the pricing with your current warehousing provider is in line with the market if you are a manufacturer, distributor, or retailer.
Warehouse Pricing & Benchmarking — Example Statement of Work
Armstrong & Associates will create a tailor-made 3PL warehouse pricing and benchmarking report in an MS Excel Workbook specifically designed for your operation. This report will be customized to encompass the unique operating profiles of each warehousing operation. It will provide a comprehensive breakdown of benchmarked warehouse costs, operating best practices, and market pricing for each facility. These benchmarks can then be compared to your existing operating costs to identify any pricing disparities.
Warehouse Pricing, Benchmarking Workbook Deliverables:
Scope of Work
- Executive Summary
A&A is poised to deliver an in-depth Executive Summary within our comprehensive workbook. This summary will outline our pricing strategy for a 3PL distribution center by examining market trends, A&A benchmarks, precise evaluations of engineered space and labor, a comprehensive analysis of operating and start-up costs, and a gap analysis. This extensive analysis will be conducted across all contract warehousing facilities. Our pricing model will be tailored to each facility, encompassing both non-automated and lightly automated solutions.
- Baseline distribution center costs
- Cost per square foot
- Warehouse base pay
- Total Outsource Cost-to-Serve
- Annual storage costs
- Variable handling costs
- Fixed handling costs
- Automation fixed handling costs
- Expected operating margin using A&A research data
- Total 3PL expected revenue
- Transactional Fees Engineered and A&A Research
- Inbound handling fees
- Outbound handling fees
- Return handling fees
- Value-add fees
- Storage fees
- Distribution cost per unit shipped
- Distribution cost as a percent of sales
- Operating Profile
- Inbound
- Outbound
- Value-add
- Automation
- Storage media
- Staffing
- Managers
- Supervisors
- General labor
- Material handlers
- Indirect warehouse associates
- Indirect clerical associates
- Operating Profile
The operating profile is a critical component of our engineered pricing model for 3PL services. A&A will work closely with the client to create the operating profile, leveraging our extensive experience and expertise in warehouse optimization.
- Product Profile
- Product value
- Weight and dimensions of the goods
- Total SKUs stored
- ABC analysis
- Inventory turns
- Inbound Profile
- Carrier mode
- SKUs per inbound
- Each, case, and pallets per inbound
- Frequency of inbounds
- Unique handling characteristics
- Outbound Profile
- Direct-to-consumer, retail, and wholesale profile
- Lines per order
- Units per order
- Weight and dimensions per order
- Carrier, routing
- Unique handling requirements
- Value-add Profile
- Labeling, re-labeling
- Bundling
- Bubble-wrap
- Re-packaging
- Summarize Profile
- Operating characteristics
- SLA’s and KPI’s
- Product life cycle, ABC analysis, and seasonality
- Direct-to-consumer, retail, and wholesale profile
- Operating Profit & Loss
The Operating P&L is an essential tool for evaluating the financial impact of outsourcing 3PL services. A&A will create a comprehensive operating P&L that incorporates industry best practices and leverages our extensive benchmark data.
- Direct Storage Expenses
- Facility
- Storage equipment, capex
- Utilities
- Interior maintenance and repairs
- Safety and security
- Pest control
- Other facility expenses
- Direct Handling Expenses
- Warehouse labor
- Material handling equipment
- Handling automation
- Pick and pack equipment
- Operating supplies
- Other
- Operating Administrative Expenses
- Management
- Office equipment
- Office maintenance
- Office supplies
- WMS, data processing
- Legal and professional fees
- Taxes and licenses
- Travel
- Personal property tax
- Insurance and claims
- Other
- General Administrative Expenses (3PL best practice allocation)
- Engineer Transactional Fees
- Cost per hour
- Engineered operating standards
- Storage media
- Benchmark operating margin
- Minimum monthly fees
- Pricing, Terms and Conditions, Service Gap Analysis
The purpose of this gap analysis is to evaluate your current offerings to third-party logistics industry best practices.
- Cost analysis with benchmarks
- Scalability, pricing for growth
- Service and quality, KPIs/SLAs
- dock-to-stock
- on-time ship
- order accuracy
- perfect order index
- inventory accuracy
- inventory shrinkage
- productivity.
- Risk management
- Service and quality, KPIs/SLAs
Along with pricing benchmarking, A&A can review your warehouse operating processes and develop an improvement plan. Our team uses its proprietary knowledge of warehousing operations and industry benchmarks to determine how your warehousing operations compare to “best-in-breed” companies. The basic process is to identify benchmarking priorities, detail key processes to be assessed, perform a current state operational assessment, compare the current state against industry benchmarks, identify performance gaps, and develop an improvement plan to close operational gaps and fuel future growth.
Our general operations benchmarking and improvement plan development process starts with the following areas of assessment/process groups:
- Warehouse Management System (WMS)
o Basic System Processes
o Capabilities
o Dashboards, Reporting, and Metrics
o Interfaces - Receiving and Inspection
o Dock Management
o Transactions
o Product Labeling
o ASN and Supplier Communication
o Process
o Inspection
o Cross Docking
o Metrics
o Scanning - Material Handling and Putaway
o Material Handling
o Housekeeping and Safety
o Cross Docking
o Putaway
o Metrics
o Product Identification - Slotting
o Strategy
o Business Rules and Maintenance for Current and Projected Volumes
o Location and Product Velocity
o Product Configuration and Packaging
o System / WMS support
o Metrics: WH Capacity used, Honeycomb, Cubic Capacity - Storage and Inventory Control
o Location Management and Review (Optimize to Reduce Travel time)
o Product Data and Special Requirements
o WMS / Inventory Control
o Transaction Processing
o Cycle Counting (ABC?)
o Inventory Strategy - Pick / Pack Optimization
o Strategy and Methods (Order profile, Consolidation, Wave, Zone, etc.)
o Tactics and Equipment
o Pick Documents (Paper, RF, Label, etc.)
o Transactions (Level of Automation)
o Performance Metrics - Shipping and Transportation Management
o Process
o Shipping Transactions (RF, barcode readers, WMS / TMS)
o Managing Customer Requirements
o Shipment / Load Consolidation
o Carrier Selection Optimization Criteria (WMS / TMS)
o Performance Management
o Shipping Documentation (BOL, Manifesting)
After a thorough assessment of the warehousing operations, A&A will hold a debrief meeting with your management team to discuss the initial findings and impressions. Then, a more formal assessment and improvement plan will be developed for the team’s review. This plan will include a balanced scorecard for key value-added warehousing and distribution areas and process improvement recommendations to drive future growth.
For more information:
- Submit your contact information below.
- An A&A consultant will reach out to you to schedule a time for an in-depth discussion of your current operations.
- Based on your requirements, A&A will use its proprietary warehousing benchmarks to identify and recommend a successful pricing strategy and operational improvements.