05 Jun The Benefits of Outsourcing Product Fulfillment
The Benefits of Outsourcing Product Fulfillment
The idea of trusting another business to handle your product fulfillment may seem nerve-racking. Whether you’re a new enterprise with smaller order volumes or a veteran business with sunk costs in warehousing facilities, running inventory management, order assembly and fulfillment in-house is likely not the most cost-effective option. Outsourcing fulfillment has helped hundreds of thousands of businesses across the country grow and become more efficient. Outsourcing fulfillment offers six key competitive advantages.
- Reduced Overhead: Investing in warehouse facilities, personnel, IT management systems, and equipment can be expensive. Outsourcing fulfillment eliminates these costs.
- Economies of Scale: Fulfillment companies provide the same services for multiple companies. Thus, we are able to do fulfillment for any one company in a more efficient manner than they could do it themselves. With greater efficiencies come greater savings.
- Safety & Associated Costs: Utilizing a separate fulfillment provider eliminates certain safety concerns and liabilities. Let us pay for safety training, certifications, and regulatory compliance measures; it will be cheaper for you!
- Reduced Shipping Costs: Most fulfillment centers have the benefit of shipping discounts due to the quantity of packages that are sent out daily. In addition to these cost savings, fulfillment providers also eliminate the headache of coordinating distribution and finding the lowest cost shipping options. It is our job to be experts in product distribution. We know you have better things to worry about.
- Product Assembly & Kitting: Fulfillment centers offer product assembly services, which give you flexibility in the manufacturing process. Many companies find that it is more cost effective to ship individually-manufactured components to their fulfillment house, and then assemble the product there. This often trims excess shipping costs by reducing the distance any given item has to travel before it ends up on the shelf or in a mailbox.
- Fixed Labor Costs v. Fluctuating Market Demand: Market demand for most products tends to fluctuate. This makes hiring your own warehousing and fulfillment staff difficult to manage; sometimes you need more labor, sometimes you have too much. Fulfillment service providers eliminate this variability and introduce a pay-per-order model within which costs are easier to predict and control.
By leveraging the six competitive advantages above, companies who outsource fulfillment find they have more cost savings to pass on to their customers and more time to focus on their core business.