When you start a business it’s likely that you’ll be able to handle your fulfilment requirements in-house. As your business grows, hopefully your order volumes do to, leaving you to face a new set of challenges such as space, resource, cost and time-constraints.
Pick, pack and dispatch, as easy as it may sound, could just be a series of small jobs too far for your business to juggle. If your desk has morphed into a make-shift packing bench, then it’s probably time to re-think the practicality of DIY order processing.
Here are 5 reasons why outsourcing to a fulfilment house will benefit your business:
Tap into lower carrier rates
For your small business sending out modest daily volumes, negotiating and settling on rates with a carrier, and balancing this with establishing your delivery charges, can leave you with a dent in your profit margins. Consider that fulfilment houses will have multiple clients, send out substantial volumes and ultimately benefit from bigger discounts and rates. Now consider that you could tap into these volume discounts, save money and gain further with healthier profits.
Quickly flex your storage capacity
Your business may be able to manage with limited space and resources for a time but you may eventually reach capacity. At this point your business is limited to its current product range, holding back your potential scope for growth. Equally, in times where business is leaner, you will need to cut back your product range, and reduce the warehouse space you require.
Here comes the big decision; finding a new premises and flexing your staff volumes, or outsourcing to a fulfilment house. Few businesses can afford the large fixed costs that come with warehouse rents and permanent staff, without risking their cash flow and margins. Pick, pack and dispatch outsourcing counter-acts the need to commit to significant costs, as providers generally do not set capacity limits. This leaves you free to ramp up or reduce your stock lines and space requirements at any time, with the finer details such as the reallocation of warehouse racking left to your provider.
Protect your bottom line
Once your number crunching is done, weighing up the space to be rented, insurance, staff, racking, packaging and so on, you may find that the alternative, to outsource, is now looking very favourable. Bear in mind that fulfilment providers can spread and aggregate their fixed costs amongst their total client base, significantly beating in-house expenditure.
Another factor to take on board are the pay-as-you-go charges that many fulfilment houses have adopted. With per item or per order charges, you could find that outsourcing delivers the best solution with the costs directly correlating to your sales volumes, and no fixed overheads.
Receive the gift of time
Allow for time constraints during your decision making process. Can you really afford the time to keep on top of rates, rent, heating, facilities, pallet trucks, ordering packaging materials, managing extra staff and a whole lot more? Of course when you have all of these essentials in place, your daily orders still need to be fulfilled, adding another layer of duties to your list.
The ideal position for a business owner is to take an eagle eye view, but if you’re embroiled in these functional tasks you could add unnecessary pressures where 24 hours are already too stretched in your average day. To ensure your orders are dispatched accurately and promptly, and your customer satisfaction remains high, then fulfilment outsourcing could also buy you the gifts of time and repeat customers.
Make your processes slicker
Add one final factor onto your pros list – the availability of technology to support your business. Some fulfilment houses go one step further than just pick, pack and dispatch. Now, the addition of streamlining the order process with technology sitting behind it has opened up a whole new world to businesses.
Whether you’re a start-up, SME or an enterprise level business, you could benefit from being able to track your fulfilment activities in real-time. Think about your stock levels for example, with software supporting your order processing you’ll always have an up-to-the-minute picture of your stock holding. This means that you no longer have to manually manipulate spreadsheets, removing the potential for human error and the possibility of over or under ordering. From your customer’s perspective, imagine ordering a product that you then discover is not in stock or available for delivery for X days or weeks. It would leave a very negative impression. So a fulfilment house may add more value than you might initially think.
Is outsourcing right for your business?
If your time, money or resources are stretched, and you could benefit from automating some of your most manual tasks, then fulfilment outsourcing might make all the difference to driving your business forwards. Of course, no two businesses are the same, so your company objectives and financials will be your biggest areas of influence in your decision making process.
by Gemma Tomlinson on 23/08/2013