Is this the best decision for your Business?
There are many reasons why a company chooses to outsource certain business functions. The most common include reducing and controlling operating costs and improving company focus.
Order fulfillment is an area where outsourcing can be beneficial
A company that picks, packs, and ships their own orders must invest a lot of time and resources into this endeavor – Warehouse space, shipping systems, storage racks, forklifts, shipping supplies, and staffing are just a few of the areas that need to be addressed.
Having in-house fulfillment means that a company must generate a certain amount of revenue to support its operation. Even growth can be a challenge as a company can quickly need more warehouse space, and require more staff to keep up with demand.
How do you determine when outsourcing might be beneficial?
Is the task at hand a primary service or offering from your business?
If it isn’t part of the core business, don’t waste valuable time and money on it. Consider outsourcing that service and “stick to what you do well.” Assess the tasks that can help your business grow. If a service or task isn’t integral to helping your company grow, consider outsourcing it. By doing so, you can focus on your business’ core activities, while other vital tasks are handled by experts.
Is there a competitive advantage to doing this in-house?
Is there reason to believe that you can perform the service faster, better, or cheaper than someone else can? If that service isn’t part of your core business, should you spend the necessary time and capital to hire, train, equip and manage your staff to perform that service?
When you entrust these processes to another company, you have the opportunity to focus on the core segments of your business. Thus, the company will experience an increase in efficiency and productivity while lowering resource consumption.
What happens when there is a downturn in the economy?
When the demand for products and services reach the lowest level, how do you handle this if you are fulfilling orders internally? Your operational costs most likely stay the same even during a downturn. Outsourcing is often more flexible and pricing will vary, depending on what your current needs are.
Is it a commodity or service that someone else can do better and more efficiently?
Businesses who outsource experience higher efficiency and quality, service, and a higher level of satisfaction from their customers.
For instance, it may take a company 2 days to ship an order. A fulfillment center can often ship the order on the same day it was placed. In addition to this, fulfillment centers have lower shipping rates.
If you would like to learn more about outsourcing your fulfillment needs, please contact a PSI representative!