The Power of Hybrid Warehousing – Saving Companies up to 20% on Logistics Costs. In the last blog we talked about two broad strategies: port and customer centric logistics.

While port-centric and customer-centric warehousing offer unique advantages, explored further in the previous blog, there is a powerful solution that combines the best of both worlds: the hybrid approach. A hybrid warehousing strategy blends the principles of port-centric and customer-centric models. Instead of sticking to a rigid, one-size-fits-all approach, companies adopting hybrid warehousing can customise their warehousing solutions based on their specific customer needs, geographic distribution, and order patterns.

Developing on the hybrid warehousing concept further, we have explored how the the strategic use of On Demand Warehousing services can help provide benefits for customers’ supply chains using both port-centric and customer-centric warehousing solutions to support peak season volumes.

Inefficiencies for Final Mile Delivery

One potential disadvantage of the port centric model, is that the goods tend to be stored a significant distance from the end user, leading to inefficiencies in the final mile distribution of goods. This can also be apparent in certain customer centric models, which typically use warehouses in the logistics golden triangle of the UK. This can also result in certain customers being located a long way from the warehouse. This similarly results in inefficiencies, which whilst smaller than the port centric model, can still be improved upon.

Ultimately the source of the issue within the port-centric and customer-centric model is the same; they both rely on a single warehouse which necessitates sacrificing some level of efficiency when it comes to the final mile delivery.

The ‘Ultra’ Customer Centric Model

Large scale businesses, typically within the FMCG arena, operate in a way to avoid these issues, utilising a large regional distribution centre (RDC) network. This, coupled with the use of a sophisticated warehousing management system (WMS) ensures that the business has complete visibility and control over stock regardless of the storage location. This enables the stock to be moved significantly closer to the end customer, thereby significantly improving their final mile delivery efficiency.
However, strategically using On Demand Warehousing services, the same benefits can be made available to smaller scale businesses. This works as an ‘ultra-customer centric’ warehousing model.

How Does the Ultra Customer Centric Model Work?

  • Core goods will be stored at a main warehouse, which could be based at port or elsewhere.
  • Certain goods that are needed for peaks (seasonal or otherwise) would be stored in a ranges of on demand, partner warehouses across the country within 30 miles of the end users.
  • The partner warehouses would all be managed through a single WMS, providing the same level of visibility and control that large scale businesses receive.

Benefits of the Ultra Customer Centric Model

According to EV Cargo’s modelling, a strategic implementation of On Demand warehousing approach, can lead to remarkable cost savings. For example, some customers can reduce the cost of moving goods from origin countries, to the end user in the UK by over 20%.

The sustainability benefits are also key to consider. By reducing transportation distances for key customers, this approach contributes to lower carbon emissions and a more sustainable supply chain.

This approach also allows companies to provide a better customer experience, providing timely order fulfilment. As businesses grow and change, the approach is adaptable, allowing for changes in customer demand and order patterns.

Who Should Utilise the Ultra Customer Centric Model?

It is important to note that this model may not work for every supply chain, but reviewing the modelling data, businesses with the following traits may be able to utilise the ultra-customer centric model to reduce costs:

  • Single delivery point for the customer
  • Recurring less than full load orders
  • Small number of SKUs
  • Stock manufactured in advance and picked from existing stock holding
  • The delivery point is distant from the manufacturing point or existing warehouse (especially if products are manufactured overseas)
  • Incumbent warehouse is on a closed book cost model, enabling any reduced volume at the main warehouse to immediately result in lower costs.

While all the above works for the day to day supply chain operation, any business with peaks can also benefit. Instead of moving overflow stock into storage located in close proximity to your core warehouse, moving the overflow peak volume to close to your main customer can enhance the efficiency of your final mile deliveries. The on demand operation can then be concluded post peak.

Implementing the Ultra Customer Centric Model

As supply chain complexities grow, companies must adopt innovative solutions to stay ahead of the competition. The ultra customer centric approach delivers unrivalled efficiency and cost savings.
By understanding your customers’ unique requirements and leveraging EV Cargo’s network of partner warehouses, customers can access a warehousing strategy that optimises logistics costs, enhances customer experience and improves the sustainability of their operations.
Contact our expert on demand warehousing team to discuss your specific needs and to find the warehousing strategy that aligns perfectly with your business goals.