When a global brand like Puma changes the way it operates its distribution network, supply chain leaders should pay attention.
Puma recently announced an agreement with Maersk to manage three of its U.S. distribution centers in California, Arizona and Indiana. Together, the facilities encompass approximately 2.3 million square feet of distribution space.
The headline may be about Puma and Maersk.
But the larger story is about something many companies are considering right now:
Does operating a warehouse internally still make sense simply because that is how it has always been done?
For distribution leaders dealing with labor variability, rising operating costs, changing volumes and increasing pressure to improve service levels, that question deserves serious consideration.
Owning the Infrastructure Doesn’t Mean You Have to Operate Everything Yourself
There has traditionally been a tendency to think about warehouse outsourcing as an all-or-nothing decision.
Either a company operates its distribution center internally, or it turns the entire operation over to a third-party logistics provider.
That distinction is becoming less relevant.
Companies can retain control of their facilities, inventory, systems, customer relationships and supply chain strategy while bringing in an experienced operating partner to execute specific portions—or potentially all—of the physical operation.
That might include:
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Receiving and putaway
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Warehouse staffing
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Order picking
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Replenishment
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Facility management
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Full distribution center operations
The objective isn’t necessarily to outsource the warehouse.
The objective is to determine who is best equipped to perform each part of the operation.
The Bigger Question: Are You Getting Enough From the Infrastructure You Already Have?
One of the most important ideas behind the Puma announcement has little to do with footwear.
It’s asset utilization.
Companies across North America have already invested enormous amounts of capital into warehouses, distribution centers, automation, warehouse management systems and material handling equipment.
The next competitive advantage may not come from building another facility.
It may come from getting more productivity out of the facilities that already exist.
A warehouse can have excellent automation, modern technology and plenty of capacity while still struggling with one of the most difficult variables in distribution:
the workforce required to make everything work.
Technology can improve warehouse productivity.
Automation can reduce touches.
Software can improve visibility.
But trucks still have to be unloaded. Product still has to be received. Orders still have to be picked. Inventory still has to move through the building.
Execution remains critical.
Labor Is Often the Most Variable Part of the Warehouse
For many distribution operations, warehouse labor is simultaneously one of the largest operating expenses and one of the hardest resources to forecast.
Volumes fluctuate.
Inbound schedules change.
Seasonality creates peaks.
Customer orders move unpredictably.
Employee turnover affects productivity.
Absenteeism can disrupt an otherwise well-planned shift.
Yet companies frequently build warehouse labor models around relatively fixed staffing structures.
That creates a difficult tradeoff.
Staff for peak demand and the operation carries excess labor during slower periods.
Staff for average demand and the warehouse may struggle during volume spikes.
This is one reason managed warehouse operations are getting more attention.
Instead of viewing labor strictly as a headcount requirement, operators can begin viewing it as an operational capacity requirement.
The question becomes:
How much productive capacity does the operation require—and what is the most efficient way to provide it?
Outsourcing Doesn’t Have to Mean Giving Up Control
One of the biggest misconceptions surrounding outsourced warehouse operations is that bringing in a partner means relinquishing control of the facility.
It doesn’t have to.
A properly structured relationship should create greater operational accountability, not less.
The customer can continue establishing:
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Service-level expectations
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Safety requirements
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Quality standards
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Inventory controls
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Operating procedures
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Technology requirements
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Customer commitments
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Performance expectations
The operating partner becomes responsible for executing against those expectations.
That distinction matters.
The goal isn’t simply to provide people.
The goal is to provide measurable operational performance.
Managed Labor and Temporary Staffing Are Not the Same Thing
This distinction is particularly important.
Traditional staffing generally provides workers.
Managed labor provides an operating structure.
In a managed model, the partner can assume responsibility for recruiting, scheduling, training, supervision, productivity management and performance measurement for the function it operates.
Instead of the customer managing dozens—or hundreds—of individual labor decisions, the conversation becomes centered around outcomes.
That might mean:
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Cases handled per labor hour
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Orders picked per hour
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Dock-to-stock performance
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Trailer turnaround time
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Cost per unit handled
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Service-level attainment
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Safety performance
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Labor utilization
Those are operational conversations, not staffing conversations.
And that difference is significant.
You Don’t Have to Outsource the Entire Distribution Center
The Puma announcement illustrates one end of the spectrum: a major company turning significant distribution operations over to a logistics partner.
But companies don’t have to make that leap all at once.
For many organizations, the right starting point is a specific operation experiencing recurring pressure.
Inbound Unloading
Receiving docks frequently experience significant volume fluctuations.
A managed unloading model can help convert variable inbound activity into a more predictable operating structure while allowing internal warehouse teams to focus on inventory movement and fulfillment.
Picking
High-volume or labor-intensive picking operations can be another logical area for managed labor, particularly where productivity can be clearly measured.
Warehouse Labor
Some facilities need greater flexibility without outsourcing management of the entire distribution center.
A managed workforce can provide dedicated labor while introducing stronger recruiting, training, supervision and performance accountability.
Full Distribution Operations
For companies looking to focus internal resources elsewhere, an operating partner can assume responsibility for broader portions of the distribution operation—including labor management, supervision and continuous improvement.
The correct model depends on the operation.
There is no universal answer.
When Should a Company Consider Outsourcing Warehouse Operations?
Several conditions can signal that an operation is worth evaluating.
A company may benefit from an outsourced or managed operating model when:
Labor availability is limiting growth.
The facility has adequate space, inventory and customer demand but cannot consistently maintain the workforce needed to support operations.
Warehouse labor costs are unpredictable.
Overtime, turnover, recruiting expenses and productivity variation are making operating costs difficult to control.
Management spends too much time solving staffing problems.
Warehouse leadership should be managing the operation—not constantly recruiting, scheduling and replacing employees.
Volume changes significantly throughout the year.
Seasonality or inconsistent inbound and outbound demand makes fixed staffing inefficient.
Productivity varies substantially between shifts or teams.
A managed operating model can introduce standardized expectations and stronger performance measurement.
The facility has capacity that isn’t being fully utilized.
Before investing in additional infrastructure, companies should determine whether improved operations could generate more throughput from existing assets.
The Warehouse Outsourcing Decision Is Really an Operating Model Decision
The lesson from Puma isn’t that every company should outsource its distribution centers.
It is that companies should be willing to challenge assumptions about how those distribution centers are operated.
For decades, many businesses built their warehouse operating models around a simple assumption:
We own the operation, so we should employ and manage everyone working inside it.
That assumption is changing.
The better question is:
What operating model gives us the greatest combination of control, flexibility, productivity and cost visibility?
Sometimes the answer will still be an entirely internal operation.
Sometimes it may involve outsourcing a single function.
And sometimes it may mean bringing in an experienced partner to manage a much larger portion of the distribution center.
The important thing is making the decision intentionally.
Better Warehouse Performance May Start With the Operation You Already Have
Companies don’t always need another warehouse.
They don’t always need more automation.
And they don’t always need more people.
Sometimes they need a different way of operating the resources they already have.
At FHI, we help companies evaluate and operate critical functions throughout the distribution environment—from managed unloading and warehouse labor to picking and broader distribution center operations.
For organizations dealing with labor variability, productivity challenges or rapidly changing distribution requirements, the first step isn’t necessarily outsourcing.
It’s understanding where the operation is creating friction—and determining whether there is a better way to run it.
Wondering whether your current warehouse operating model is still the right one? Talk with FHI about your operation.
We’re here to help. There’s no pitch – just a conversation.