<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=393225&amp;fmt=gif">
Port_of_LA_Pier 300_400 Container Terminals

West Coast and California Logistics Blog

The importance of 3PL inventory management in 2022

Thu, Jul 14, 2022 @ 07:30 AM / by Todd Naramore

The supply chain environment has seen incredible change over the past few years, from panic buying to supply shortages to historic inflation surges. These changes have all had a profound impact on how suppliers, distributors, and retailers manage inventory. These days, however, inventory is back in a big way – whether intentionally or not. In this article, we’ll look at the state of inventory management and how a 3PL can help your operations.


Inventory levels are rising

3PL inventory managementCompanies are now holding more inventory in their warehouses – or those of their 3PL warehousing partners. The primary reasons for rising inventory levels are both intentional and unintentional.

On the intentional side, companies have been spooked (and who can blame them) by supply chain uncertainties dating back to the start of the pandemic. Many companies are holding more product to guard against future uncertainty and disruption.

Unintentionally, consumer spending has slowed in 2022 after a red-hot rebound in 2021 – in large part due to inflation and a slowing economy. As sales forecasts aren’t being met, many companies find themselves holding much more inventory than anticipated.

This is the view from 10,000 feet as we sit here in the summer of 2022. The problem, however, is that there’s a whole lot more inventory on its way.

Peak season shipments have already begun as many companies started importing product earlier to combat shipping uncertainties in Asia (e.g., lockdowns at Chinese ports) and longer trans-Pacific shipment times. According to Logistics Management, transit times for China-to-US shipments currently average around 100 days (more than double the recent average of 45 days).

As a sign of this increased activity, the Port of Long Beach just reported its second-busiest month on record in May.


Where does it all go?

The issue many logisticians now face – and have for a while – is where to put all of this inventory. Many companies don’t have sufficient warehouse space to store their current volumes, let alone product arriving for peak season.

Why not just lease new warehouse space, you ask?

The answer is that there’s very little space available. Especially in a distribution hub like Southern California, home to the major Ports of L.A. and Long Beach.

The June 2022 National Industrial Report from CommercialEdge reports the following sobering statistics.

  • The national average in-place rent for industrial space is $6.53 per square put – up nearly 5% year over year.
  • New leases in Los Angeles average $14.53 per square foot – up over 7% year over year.
  • The average industrial rent in the Inland Empire (IE) is now $6.81 per square foot – up almost 7% year over year. New rents in the IE now average $10.61 per square foot.
  • The national industrial space vacancy rate is currently 4.7% – a full percentage point lower than a year ago.
  • The vacancy rate for industrial space in the IE is a staggering 0.6%. It is 2.1% in Los Angeles.

In short, warehousing space is hard to find and expensive if you’re lucky enough to find it.


Turn to a 3PL for warehousing and inventory management

Instead of spending significant time and money trying to obtain your own warehouse in this tight market, you can partner with a 3PL that already has the space, staffing and equipment in place within your chosen market. Following are handy tips for finding a 3PL that can best support your operations during these challenging times.

1. Look for a 3PL partner that is aggressively growing. Despite the challenging real estate market, some 3PL providers are actively looking to grow their footprint. Weber Logistics, for instance, has doubled its warehousing footprint in the Inland Empire within the past year – adding large warehouse facilities in San Bernardino and Moreno Valley to its network to support the growing inventory and distribution needs of its customers.

2. Seek a 3PL partner that can manage B2B and B2C from a single inventory pool. Your 3PL’s WMS system should manage inventory for multi-channel distribution in real time. With such a system, you no longer need contend with multiple, sometimes duplicate, instances of inventory which can throw your weeks of supply and cycle counting off track. This then allows you to lower your warehouse footprint (and costs) as you no longer need to account for inventory surprises in your stock volumes.

3. Look for a 3PL partner that is nimble enough to develop custom solutions. When you partner with a mega 3PL, you’ll need to cut through a lot of red tape to do anything outside the norm. In contrast, mid-sized providers have the infrastructure to support you, plus they are flexible enough to develop custom solutions for your business. When a 3PL’s senior executives are directly connected with your team, customized solutions can be implemented quickly.

For example, a large paint customer of Weber’s was having trouble obtaining key ingredients for paint production due to material shortages. Orders were thus piling up that they were unable to fill. Once the necessary raw materials arrived, Weber was able to convert their dedicated warehouse to a temporary cross docking facility. Weber brought in trailers of the raw materials; produced the paint products within the warehouse (a value-added service); and sent those products right back out on an outbound trailer.

4. Look for a 3PL partner that performs integrated services. Many 3PLs provide multiple services such as warehousing, transportation and drayage services, but not many offer an integrated solution. Weber’s services are integrated to give you one point of contact (and one point of visibility, point of billing, etc.) for multiple functions within your supply chain.

Such an integrated approach also enables your 3PL to pull any strings necessary to support the movement of your products. Need the warehouse to open after hours to receive an incoming container? Need to bump up an outbound shipment from the warehouse to accommodate a retailer stock out? Your integrated 3PL can do those things seamlessly as it controls all elements of the distribution process.


Consider 3PL Inventory Management

Weber Logistics is a 3PL provider that offers integrated logistics services (warehousing, transportation, port services/drayage) from the West Coast. Our capabilities include 15 high-volume distribution centers located throughout California. To learn how you can leverage our warehouse infrastructure to address your inventory management challenges, contact Weber today.

New call-to-action

Topics: West Coast Distribution, Public Warehousing, Shared Warehousing, west coast warehouses, Warehouse Rates, 3PL Outsourcing, Warehouse

Written by Todd Naramore

Subscribe to Instant Updates

Recent Posts

Posts by Topic

see all