Let’s be honest, your core business is marketing and selling products, not shipping them. And because you have a business to run, we’ve highlighted just the five top reasons why outsourcing fulfillment can help maximize profits and keep your focus where it belongs – growing your business.
1. Focus on growing your business, not running it.
One major advantage to outsourcing fulfillment is spending time where it matters most – growing your business. There are many costs to performing tasks in house, including opportunity costs. What could you achieve with your time if it was not spent on managing the logistical process? This could be the difference between running a flat business versus a growing one.
2. Upgrade your level of experience.
When you outsource any function, you bring on a team of experts delivering service at a higher level of skill and accuracy. This is why you hire a CPA to do your taxes and an attorney to handle legal matters. Your company’s logistics is no different. A fulfillment provider knows how to manage inventory and process your ever-important orders quickly and accurately, keeping your customers happy. This performance is achieved by employing experienced distribution professionals, engineered processes and best standards, and utilization of highly sophisticated distribution technology and equipment.
3. Turn fixed costs into variable costs.
Chances are your landlord doesn’t give credit for space you’re not using each month. And your warehouse managers don’t take unpaid leave when it’s slow season. Nope, you currently have fixed costs. Now what if you could turn those into variable costs? With an outsourced fulfillment solution, you will pay for what you use. The same is true with employees needed to run your warehouse.
4. The Power to Scale
Most businesses have some seasonality or cyclicality for sales. Ask yourself “Do I have enough space and labor to handle the peaks?”
A large influx of product to meet your seasonal demand may overwhelm your facility. Even if it all fits in, is it organized? Do you have room to perform normal warehouse operations such as assembly and kitting, reworking and shipping?
Do you have enough labor to meet the peak demands? Oh sure, your kids, friends and neighbors and brothers-in-law have all said they would help. And the temp agency promises to deliver all the untrained warm bodies you could possibly need. None of these options is efficient and none hold a candle to the ability of a fulfillment provider.
Another side of the above coin is “How fast can you react to peak demands, and at what cost?” Sometimes your labor solution just cannot be there the day or week that you need them. You can cover this by carrying more employees than you really need. And the cost of training short-term employees also absorbs valuable time and resources.
Another point on labor. Your original business concept didn’t envision becoming an expert and managing a labor force. You do it because it’s got to get done. A fulfillment provider, on the other hand, is an expert at managing labor. That is one of the key ingredients to success in outsourcing fulfillment.
Outsourcing fulfillment, and spending less of your time on the back end functions, you free up more time for your key business needs. Hey, we are back to Reason #1!
5. Discounted freight rates.
Since fulfillment providers serve many different clients, they are able to aggregate the freight activity and negotiate with the carriers to achieve lower rates than you can achieve on your own.
Lower freight costs means stronger marketing tools. It is less expensive to offer free freight. You can offer a wider selection of options to meet your customers’ needs. Lower rates may create a margin opportunity.
6. Bonus Reason. Peace of Mind.
With the support of professional partners assisting you with your fulfillment and back end functions, you can focus on growing your business, while providing outstanding service levels to your customers, at a competitive cost structure, while saving money for your growing business.
If backend functions are distracting you from marketing your product, then now may be the time to trust a team of experts to handle the logistics for you. If you choose your vendors wisely, the savings in freight costs alone will fund your entire outsourcing program. That alone could really put your mind at ease. Happy hunting!
