When looking to price warehousing distribution services, there are 5 critical areas to keep in mind:
1. Storage...there are typically 2 types of storage pricing...the initial storage is the 1st time entry of the goods into the warehouse...this can be figured through split month if the product comes in on the 1st of the month thru the 15th you should expect to pay a full months rent...if however, the products arrive from the 16h thru the 31st of the month you should figure on paying half a month's rent. Some companies might average the days or use a formula of 75% of the recurring monthly rent.
The second type of storage charges are called recurring, that is whatever number of the unit of measure, cases, pallets, sacks, totes, or whatever you agree on is billed for the quantity stored on the 1st day of each new month following the original entry.
Things to watch out for are: product arrives on the 14th of the month and goes out on the 1st day of the new month...you are paying 2 months rent for 16-17 days storage...timing is everything. If you hold off one more day...you could save a half month of rent...or at least you have something to negotiate...
Handling charges...these charges cover the inbound and outbound handling of the goods. Again, back to the unit of measure you agree on. What are some items that impact the handling price....weight, size, stackability (bulk or rack storage) number of SKU's (stock keeping units) and number and complexity of the times the product wil need to be touched. Whether product is handled by hand, pallet jack, or special forklift with specialized attachment.
Order entry / Admin costs: Typically the cost associated with handling all the Bill-of-lading, to phone calls, faxes, emails, scans, and paper shuffling. End of day reports, parcel and LTL shipments with tracing and tracking numbers all have an impact on the price. Complexity, and information technology can either add to the price or minimize "fat fingering" info into the database. Watch out for the pesky transaction fees, they can add up very quickly. If you require web visibility of your inventory management, typically the costs will sometimes get buried in this line item.
Next are accessorial charges...this can be anything and everything from pallets, stretchwrap, banding, UPS charges, phone charges, labeling, inventory cycle counts, and the change in scope...you forgot to tell me about this charge...all-in-all, this becomes a catch-all. Agree that these charges should only apply if agreed upon in advance.
Last but not least are "Contract terms and conditions"...Net payment terms, 30 day contracts, limits of liability, claim handling, insurance, and extra services. Ask lots of questions...don't assume anything...
Most contract terms and conditions in the public and contract warehousing business are boilerplate agreements...but keep one eye on the fine print.
If this still pretty confusing...give us a call @ 404 -346-1848 or email at warehousebasics@gmail.com
We will help you anyway we can...you are the customer...demand nothing but the best.
