For most companies, keeping vast amounts of stock in their own buildings will be out of the question. The added burden of keeping enough space for everything may be too overwhelming, financially speaking, particularly if goods are cyclical in nature. Public warehouse facilities are there for just such a purpose and they help to keep stock when the company cannot handle all that they are holding for perhaps a manufacturing process. Even a 3PL (third party liability) does the same thing and they can even store things of a perishable nature too.
Imagine that a company is in the field of selling everything to do with Christmas. The months leading up to December are very sensitive since this is when the majority of profit is likely to be made for the whole year. A slip up here could affect the company detrimentally and may even put it out of business.
Therefore, and probably for a full year in advance, the company will be buying in all kinds of stock which will probably be sold from around September onwards. The trick here is not to over order or under order since either way, he will probably make a loss. Once retailers know that this company can always be relied upon to have the right stock in at the right time of year, they will always come back for more for sure.
The company may also be in the business of selling something like Christmas or Thanksgiving hampers which people tend to send to each other. Stores stock them too so the supplier must be able to keep them in temperature controlled facilities particularly if they have perishable goods inside. Turkeys and hams are great favorites at this time of year so it is very important to keep them cool or frozen. Once the retailers make their orders, the facility can often deliver across the country to chains of outlets too and this takes the strain off the originating company for sure.
One other service that these facilities provide is consignment break down into smaller lots. These goods may well be coming in from abroad in containers which hold enormous amounts of stock. Once they reach the facility, they can be downsized into smaller lots to make them more manageable. Here too, they may well be repackaged into different boxes which the company can design at will.
Most of these facilities have sister companies which produce cartons to specifications that the company wants. This is free advertising for the company and the boxes are often left on counter tops, in the case of candies etc, for the public to view.
It is obvious then that these third party companies play an important part in the supply chain and this makes it much easier for goods to be priced competitively. Without them, we would all be paying much more for goods which would only be available on certain occasions throughout the year instead of whenever we need them. Since we are used to getting what we want when we want them, this is indeed a good thing.
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