What is Fractional Warehousing?
Key Takeaways
- What is Flexible Warehousing Infrastructure using fractional warehousing
- Why brands and retailers need fractional warehouse space
- How fractional warehousing is different from fixed infrastructure
- Who should use fractional warehousing
- Why is Flexe Essential in Today's Business Landscape
Organizations today feel the squeeze from geopolitical shifts, skyrocketing costs, and ever-changing customer needs. Many businesses struggle to keep operations efficient with traditional, inflexible warehousing tied to long-term leases. Are traditional models holding companies back? Flexible Warehousing Infrastructure, utilizing fractional warehouse space, presents a compelling solution for several critical use cases within the supply chain.
But, what makes it so effective, and how are organizations actually using it?
What is Flexible Warehousing Infrastructure using fractional warehousing
Designed with speed in mind, Flexible Warehousing Infrastructure enables organizations to move quickly to achieve strategic goals or meet market demands. Traditional warehousing models, often characterized by long-term leases and fixed costs, are more rigid. Flexible Warehousing Infrastructure, utilizing fractionalized warehouse space (flexible, shared space) and transactional pricing (paying only for the space and services used), uses scalable technology, operational expertise and data intelligence to scale warehousing networks up or down with demand —from excess inventory to seasonal peaks and dealing with big and bulky inventory. Add or remove warehouses as needed, through an asset-light approach, without being tied down by fixed-term agreements or location constraints.
For example:
- If you unexpectedly have more inventory than space available from forward buys or safety stock, flexible warehousing utilizing fractionalized warehouse space gives you access to extra capacity so you have a place to store your goods.
- If your business has seasonal aspects or there is variability in demand cycles, Flexe can scale up or down with demand and provide real cost savings compared to year round committed space that is only needed part of the year.
- If you have heavy/bulky SKUs that are hard to automate, expensive to ship, and impact the efficiency of owned networks, flexible warehousing can place goods closer to demand centers without disrupting owned operations or CapEx investment.
Get The Insights: Navigating Supply Chain Challenges
Why Brands and Retailers Need Fractional Warehouse Space
To succeed in today’s dynamic business landscape, agility and adaptability are more important than ever. Flexible Warehousing Infrastructure, utilizing fractional warehousing, empowers businesses to efficiently manage excess inventory, spikes in demand, and strategically optimize the distribution of non-conveyable SKUs. Build more resilient and efficient supply chains and actively adapt to changing market demands by leveraging the power of Flexe.
- Scalability and Agility: Easily scale up or down your warehousing capacity with fractionalized space in response to fluctuations in demand.
- Operational flexibility: Adapt to changing market conditions, customer preferences, and business strategies without being constrained by fixed assets.
- Speed: Rapidly deploy new warehouses or fulfillment centers to meet emerging needs or capitalize on time-sensitive opportunities.
- Cost-Effectiveness: Avoid large capital expenditures and reduce operating costs by paying only for the space and services you actually use.
- Risk Mitigation: Mitigate risks associated with supply chain disruptions, natural disasters, and other unforeseen events.
How is Fractional Warehousing Different from Fixed Infrastructure
In the simplest terms, fractional warehousing operates similarly to fractional ownership, where multiple businesses lease portions of a single warehouse and pay only for the space they use. This model optimizes warehouse space utilization, offers flexibility, reduces costs, and provides access to warehousing services without long-term commitments. Both fixed and flexible warehousing have characteristics that stack up differently and that can be complementary. Depending on project criteria, one approach may provide a more optimal solution than the other.
Warehousing needs will depend on the business, and some combination of these may in fact be a great solution. But there are some major drawbacks to fixed infrastructure as well:
- Expensive: Fixed solutions come with steep upfront capital investments and costly project setup fees.
- Slow: Changes to an owned network won’t happen in an instant, and leasing space from traditional providers comes with long sourcing and implementation times.
- Limited: With typical warehouse partners, growth is limited by their network locations and capabilities. This often leaves organizations responsible for sourcing more than one provider in different geographies.
Who Should Use Fractional Warehousing
The choice of flexible warehousing with fractionalized space and transactional pricing is driven by the need for cost-effectiveness, operational flexibility, scalability, speed, and reduced risk in today’s dynamic and often unpredictable business environment. It allows organizations to optimize their warehousing infrastructure to match their evolving needs without the burden of long-term commitments and high upfront costs associated with fixed infrastructure. Flexible warehouse space is a valuable solution for a wide range of businesses, including retailers, manufacturers, eCommerce, consumer package goods (CPG), and food & beverage companies.
It is particularly well-suited for organizations that:
- Experience seasonal fluctuations in demand
- Open and shut new facilities close to owned DCs to build seasonal inventory reserves without over-provisioning space year-round with North America’s largest flexible warehouse network.
- Require space for excess inventory
- Quickly react to opportunities, disruptions, and macroeconomic events. Choose a location, duration, and go. Reduce costs associated with long-term contracts with fractionalized space when you need it.
- Need to optimize the distribution of bulky inventory
- Actively drive efficiency in owned networks by strategically placing non-conveyable SKUs closer to demand, optimizing transportation costs, and eliminating unnecessary CapEx with flexible warehousing.
Why Flexe is Essential in Today’s Business Landscape
Flexible Warehousing Infrastructure using fractionalized warehouse space offers a scalable, flexible solution. Four components distinguish Flexible Warehousing Infrastructure from traditional solutions. The Flexe Technology Platform, the Flexe Logistics Network, the Flexe Operations Team, and Flexe Data Intelligence. These components work together to provide a comprehensive flexible warehousing solution.
- A network of 800+ operators with 3,000+ warehouses throughout the U.S. and Canada.
- An easy-to-use warehouse management system (WMS) with one point of integration to all suppliers in the Flexe Logistics Network.
- Expert logistics guidance from your dedicated representative, who is backed by a larger team.
- Proprietary network insights and warehouse market intelligence to make data-based decisions.
While various warehousing solutions exist, Flexe has the largest flexible warehousing network in North America, allowing access to fractionalized warehouse space and transactional pricing (only pay for what you use). Ideally suited for seasonal spikes, excess inventory, and strategically optimizing the placement of bulky inventory.
Compare Fixed vs. Flexible Storage Costs.
