One of the most intricate, and costly, aspects of running a product-based business is the product fulfillment process. This process includes everything from the warehousing of inventory to maintaining control over that inventory, packing, kit assembly, delivery and more. Often, one of the most effective ways to improve a company’s productivity and to enhance its bottom line is to outsource all of these services to a company that is experienced in product fulfillment and distribution services.
If you have been wondering whether you should have an external company handle the process for you, you likely have many questions, and also more than a few concerns. The good news, however, is that there are a number of benefits that you can enjoy by outsourcing this labor intensive and potentially expensive operation to a company that is experienced in performing these tasks. Outsourcing typically allows you to streamline your costs and frees you and your staff up to focus on more critical aspects of your business that can help you advance your business more effectively.
Here are just a few of the benefits that you can reap by outsourcing your fulfillment and distribution:
- Costs – When you handle the process yourself, you have to take into consideration a great deal of costs that will be impacted by the decision. For example, if you have to hire additional employees, you’ll have added salaries or hourly wages, as well as any benefits and taxes you have to pay on their behalf, to your costs. You’ll also have to likely invest in purchasing or renting facilities to house your inventory. Then you’ll also have to consider things like packaging, delivery, and so on, that need to be factored into your in-house costs. In contrast, when you have another company handle all of these services for you, you typically just pay a fixed cost that covers all aspects of the process. Not only can you save as much as 50% by outsourcing, but you will know in advance exactly what you can expect your costs to be so you can properly price product and budget for all costs.
- Economies of scale – If a company that is used to handling fulfillment services handles those services for you, you benefit from their economies of scale. Instead of you having to pay top-dollar for warehouse space, packing supplies, trucking or shipping, and anything else that impacts getting your product from factory to consumer, an outsourcer can provide you with a lower cost for each portion of the logistics stream since they are operating on a much larger scale than you would encounter if you were doing it on your own.
- Flexibility – If you’re ready to ramp up your business, you might not be able to handle the extra volume if your company also needs to handle all aspects of the on its own. Rather, you may need to acquire extra space, more employees and additional supplies to handlogistics processle the extra volume of orders. But what happens if you subsequently want to reduce that volume or downsize? You’re left with an expensive proposition. Outsourcing this process allows you to be more flexible, whether you need to increase or decrease the volume of your product stream at any time. This is especially helpful for companies that operate with seasonal fluctuations in ordering volume.
These are just some of the benefits that you can attain if you outsource your product fulfillment and distribution process, although there are others as well. Each business has individual needs and the key is to find a company that can effectively and efficiently meet those needs.