Top 5 Benefits For Small Businesses Of Outsourcing Fulfillment

It is extremely difficult for a small business to perform like and have the credibility of a big business. However, one area where a small business can immediately level the playing field is supply chain management. By outsourcing fulfillment to the right company, your small business can look, act and reap all the benefits of a large-scale operation. These are five of the biggest benefits of fulfillment outsourcing:

1.  Substantial Cost Reduction

By using a fulfillment firm, you immediately take advantage of its economies of scale. A successful, medium-to-large fulfillment company should get the best possible prices and terms for all aspects of the fulfillment operation, including

• Freight — Low rates for parcel, LTL and full truckload shipments.

• Storage — Low cost per square foot and locations with proximity to major truck routes and/or popular destinations (further reducing freight cost).

• Packaging — If your outsourcing needs involve repackaging or kitting, the fulfillment company may have the ability to purchase materials such as corrugated and shrink film at considerable discounts. More importantly, the fulfillment company will have packaging lines in place so that you don’t have to acquire and manage them.

A small business cannot obtain favorable pricing and terms for any of these cost centers, putting them at a competitive disadvantage when managing fulfillment in-house.

2.   Greater Customer Satisfaction

Customers are often won or lost during the fulfillment process. Because market leaders like Amazon have set such a high bar for fulfillment, customer expectations are higher than ever. If your package arrives late, arrives damaged, or arrives looking like it went through a war, or contains the wrong items, the odds of a reorder, word-of-mouth referral or favorable online review drop to about nil.

A fulfillment company has refined processes in place to ensure efficient and accurate deliveries on your behalf. Its systems and procedures for order entry, order picking, packaging, labeling, staging and loading include check points to make sure your order is not only processed quickly, but accurately as well.

Efficient fulfillment systems require investment in personnel and IT infrastructure beyond the reach of most small businesses. Rather than cut corners and scramble to fill orders, a small business can gain the efficiency of a Fortune 500 firm overnight — with no additional personnel or infrastructure needed.

3.     Space Savings

Maintaining inventories of merchandise and packaging materials, along with operating packaging lines, requires a considerable amount of space — and space, as every business knows, is money.

Eliminating the need for a warehouse maximizes a small business’s flexibility: it is much easier to move an office than an office/warehouse as your business grows. In addition to reducing cost based on pure square footage, eliminating the warehouse provides additional savings on backroom-related costs such as insurance, safety, training and maintenance.

4.  Scalability

When a small business grows rapidly, it’s success can be its undoing if it is managing fulfillment in-house. If order volume goes from, say, 10 units to 1,000 units overnight, it will overwhelm internal systems, causing orders to arrive late and patchwork fulfillment costs to reach staggering levels. A prolonged period of inefficient fulfillment can be enough to sully a firm’s reputation permanently, if not drive it completely out of business.

Scalability is a huge advantage of outsourcing. A professional fulfillment firm has the resources and experience to scale as your business grows, at whatever pace it grows. Also, it’s worth mentioning that a fulfillment can also downscale efficiently, should your business experience a dip or sustained decline in shipping volume.

5.  Focus

It’s become obvious by now that fulfillment is a complex process, a business unto itself. By relying on an outsource provider, your business can maintain focus on that rather than on trying to become an expert in two businesses. Concentrating on sales, marketing and innovation makes small businesses grow — nothing, including order fulfillment, should interfere with that.