Takeover in place (TOIP): How a third-party provider can transform your warehouse

It is a truism that successful businesses will outgrow their facilities; just think of Apple, which famously started in the garage of Steve Jobs’ parents in California. Yet while growth is at the heart of business success, the reality of one day having to overhaul key processes – say, an entire warehousing operation – can prove a massive challenge.

For decades, the answer to insufficient warehousing capabilities was to start over: Find a greenfield site, pour capital into a new building, relocate. But in today’s uncertain business environment, that is a luxury many cannot afford.

The dilemma for firms looking to rejig their warehousing is clear: How can we modernise our legacy operations without the capital expense of a new build, and dealing with challenges like land scarcity and the operational risk of downtime?

The answer is found in the takeover in place (TOIP) model wherein a third-party logistics (3PL) provider takes over – thus the name – the management of a company’s existing warehouse. 

While this brings numerous benefits, the principal one is that firms can unlock the innovative agility of a tier-one supply chain network while keeping their physical footprint unchanged. That means no need to scope out new locations, relocate inventory, rebuild systems or shutter workflows. 

Instead, TOIP maintains continuity of service and avoids costly fulfilment interruptions – preserving customer service levels and paving the way for higher performance.

While business leaders know the pain of warehousing inefficiencies, many worry that steps taken to fix them will cause bigger problems. A TOIP approach helps to overcome the biggest fear: A productivity drop during handover. 

Resolving that starts well before a contract is signed, says Chantal Dumoulin, Head of Human Resources at FM Logistic, with the client’s employees trained ahead of the key event: day one of the handover when the 3PL takes over all warehousing operations.

From process automation to employee training to client management, 3PL providers like FM Logistic place cooperation at the centre of TOIP operations, often anticipating takeovers in advance to ensure business continues as usual after the switch. “This approach allows for the retention of the existing teams’ skills while combining them with FM Logistic’s expertise,” Dumoulin says.

This focus on the client’s warehouse staff – with integration and training in the first weeks – is vital because the change of employer to the 3PL is being imposed on them, Dumoulin points out, which can be a cause for concern for the retained teams. 

“So, our approach is to present FM Logistic as a company collectively – our DNA, culture, history, organisation, strategy – and then hold individual interviews with employees,” she says. “It’s important to reassure everyone, answer their professional and personal questions and build a connection.”

Additionally, says Dumoulin, a TOIP can help to motivate, upskill and retain staff. Given that a 3PL provider’s core business is logistics, warehouse staff will eventually transition from a support role to become the main driver of revenue. This brings opportunities, including development and training pathways, to become logistics specialists in a state-of-the-art 3PL firm – boosting their skills and advancing their careers.

This links to a second core aspect – technology – with the approach taken dependent on the client’s needs. 

One option is to use the client’s Warehouse Management System (WMS) during the transition while functional workshops, data, networks and ecosystem mapping are carried out. Another is to anticipate requirements ahead of time with training workshops done on the 3PL provider’s WMS in the months prior to the day of the takeover.

Ultimately, the client’s legacy offering will be replaced with a Tier-1 WMS. At FM Logistic, that is achieved via our Control Tower offering, delivering real-time data visibility and efficiency without stopping operations. 

This technology element constitutes another benefit of TOIP: it brings immediate access to innovative solutions. While in-house teams rarely have the budget to research, test and implement secure supply chain technologies, a global 3PL provider offers an ecosystem of ready-to-deploy tech.

That can prove transformative: By analysing, for example, years of order history, artificial intelligence (AI) can optimise inventory handling by, for instance, moving high-velocity items closer to shipping docks to cut in-warehouse travel time. Predictive AI models can also analyse seasonality and promotional data to forecast staffing needs, preventing over- or under-staffing.

Additionally, new tech can transform older facilities, which often lack the level floors or ceiling heights needed for automated storage and retrieval systems. In those cases, FM Logistic’s experts on innovation and robotics might well recommend flexible automation: Rather than bolting heavy infrastructure to the floor, a modern retrofit can use autonomous mobile robots with LiDAR to map the facility and navigate obstacles. 

And should the warehouse layout later change, the system remaps the robots. This proactive approach means brownfield facilities can attain cutting-edge features comparable to smart warehouses without refashioning their shell.

By converting a firm’s fixed logistics costs into variable costs via the TOIP model, companies can weather market dips without spending on unused space. TOIP also brings instant scalability by plugging the warehouse into a global network that can easily absorb spikes.

And while a lower cost-per-unit shipped is a positive outcome, Dumoulin says the primary measure of success is integrating and retaining the client’s original warehouse team.

“Team retention and stability are the first visible successes,” she says. “Safety, quality and performance indicators – including order accuracy of up to 99.9 percent and a lower carbon footprint thanks to optimised energy use – all flow from that.”

Ultimately, TOIP ensures firms can expend their efforts on what they do best after handing over their logistics operations to a trusted professional.