In the era of same-day delivery and regular online shopping, warehousing and fulfillment are growing in importance. It’s not only necessary for logistics companies to have adequate space, but they must also be as efficient as possible.
Optimizing warehousing and fulfillment is essential in successfully managing the supply chain. It allows for a smooth flow of orders, a manageable cash flow, reduced costs, and an effective transportation strategy.
However, this is easier said than done. Margins are notoriously tight in fulfillment. Start-ups and small businesses are at a disadvantage when it comes to logistics and supply chain management. It is beneficial to outsource warehousing and fulfillment to a third-party logistics (3PL) provider in many cases. Here are a number of reasons to consider outsourcing.
Reduced Capital Expenditure
While business owners may desire to own a warehouse and run an in-house fulfillment service, it requires significant investment. As well as property costs, there are additional fees to consider, such as warehouse equipment, vehicles, security, and temperature regulation equipment.
By outsourcing, a company avoids high levels of capital expenditure, leading to cost savings.
Scaling Opportunities
Many businesses are affected by seasonal fluctuations. Certain times of the year can be notably busier than others. By outsourcing, you can handle storage and fulfillment at all times without having to worry about an over or under capacity warehouse.
Using a 3PL allows businesses to scale their distribution to meet the changing demands. This is an efficient method of inventory management, enabling businesses to concentrate on improving their core competency, customer service, and other vital functions.
Shipment Consolidation
A 3PL typically provides consolidation services in its fulfillment center. By combining several shipping orders at distribution centers, 3PL’s can offer reduced shipping rates to businesses. It may also allow for order fulfillment that isn’t possible otherwise.
Reduced Operating Costs
Third-party warehousing and distribution services generally operate using the same pricing structure. There is a set cost for warehousing, then fees are charged for individual orders. By only paying for the service when you use it, you essentially pay no operating costs when business is slow.
Utilize Experience and Expertise
Warehousing and fulfillment is a specialized industry. No matter how great your efforts are, it is extremely difficult to match an established logistics company’s experience and expertise.
Your customer base is likely to place a significant emphasis on shipping costs. A lack of expertise makes it difficult to provide a service that matches competitors. Choosing to outsource fulfillment and storage can give you a competitive edge as you gain access to skilled and qualified professionals.
Avail of the Latest Technology
Warehouse management systems (WMS) and transportation management systems (TMS) are valuable assets that contribute massively to logistics companies. Logistics technology and high-level IT services can help optimize distribution in terms of productivity and efficiency.
One of the biggest benefits of outsourcing warehousing and fulfillment is availing of such technology. Many logistics companies invest hundreds of thousands into technology, so gaining access to it gives your business a competitive advantage.
Time Savings
There is no getting away from the time requirements associated with warehousing and fulfillment. Every aspect of the process needs careful management and precise attention to detail. Outsourcing this to an expert company can save you an enormous amount of time.
Use this additional time for growing your business. Instead of struggling to meet fulfillment demands and delegating warehousing tasks, you can concentrate on more effective operations.
Location Advantage
As established logistics companies, 3PLs tend to have warehouses and fulfillment centers located in optimal areas. This gives them quick and easy access to the most important routes, highways, airports, ports, and cities. Utilizing fulfillment centers in the right locations can significantly reduce your distribution costs.
Invest in the future
Owning and operating warehouses and fulfillment centers may be more profitable in the long run. However, it doesn’t mean it is necessary at every stage. It’s essential to grow your business consistently, rather than to bite off more than you can chew. Invest in the future but take advantage of the outsourcing opportunities available right now.
If you need additional information or assistance on fulfillment or shipping, one of our experts is on hand to help. Contact Asiana USA today at (833) 444-1333.
