Elves of the Shelves: Is Outsourcing Your Warehousing + Fulfillment Magic Right For You?

It’s no newsflash that the 2020 holiday season is set against a dramatically different backdrop than years past. The pandemic has changed “business as usual” in so many ways, including purchasing behavior and supply chain strategy.

While you can continue to handle your own warehousing and fulfillment needs – after all, Santa does it year after year with his 7.8 billion-and-counting customers – wrapping up this holiday season might have you considering outsourcing this area of your business moving forward in 2021 as you adapt to numerous projected post-pandemic work strategies.

Why You Might Be Considering Outsourcing Your Warehousing + Fulfillment

You might be considering outsourcing your warehousing and fulfillment needs because of one or more of the following reasons:

• The Pandemic: Covid has driven a surge in warehouse outsourcing as many businesses adjust their business strategies to survive the virus’s impacts.
• New Markets: Whether you’re targeting new customer segments or geographic locations, you might be mapping out new markets and accompanying processes.
• Growth Strategies: You’re hoping to gain efficiencies, scalability, revenue, and more.

Let’s explore a number of pros and cons often associated with transitioning this area of your business to a third party.

Pros of Outsourcing Warehousing + Fulfillment

PRO: CONTROLLED COSTS

You only pay a fulfillment vendor for the work actually they perform for your company, like storage, order fulfillment, and kit assembly. Because of this, you can easily project costs and maintain specific margins as needed to ensure that your business is profitable.

PRO: SHIPPING Savings

Warehousing and fulfillment vendors can ship your inventory directly to customers using a more economical freight charge, which is driven by volume. These favorable rates save your business huge expenses over time.

PRO: effortless SCALability

As your volume of inventory changes, you don’t have to worry about finding more room for storage or paying for storage space that you are not utilizing because your storage space easily grows and shrinks as you need it with an outsourced provider.

PRO: Detailed Reporting

An outsourced vendor keeps meticulous details on your inventory, so you always know what your quantities are. Furthermore, they take care of updating inventory spreadsheets, ordering shipping labels and boxes, and other important shipping details that take time, thought, and energy.

PRO: CONCENTRATE ON YOUR CORE BUSINESS

Last but certainly not least, less time focusing on fulfilling orders means more time for you and your team to focus on what you do best: marketing your products and services, improving sales, and increasing revenue.

Cons of Outsourcing Warehousing + Fulfillment

CON: LESS CONTROL

If you decide to outsource, you’re giving up control of the whole fulfillment process. You have to be comfortable with another business being completely responsible for this aspect of your business. It’s crucial to select a vendor who you trust to take care of the tedious details related to the shipping and handling of your products.

CON: Communication Risks

As reliable as your third party logistics team may be, don’t rely on them to be mind readers. It’s critical to consistently communicate your inventory preferences – like how you want an order handled (ie: include label hangtags, package items a certain way, etc.) – and get the proper agreement from the warehouse.

CON: Offsite Inventory

The whole concept of outsourcing your warehousing is a double-edged sword: on one hand, the legwork associated with your inventory is off your hands – yet, on the other hand, you do lose an element of convenience by not having it on site. Don’t forget to factor in this potential travel time when selecting a vendor. You’ll need to travel to the warehouse for initial inspections. It’s also good practice to periodically check on how your vendor is handling your inventory.

CON: COSTS

Yes, for most companies outsourcing fulfillment lowers costs. But if you’re not careful, you could end up increasing your costs if you don’t plan properly. It’s important to seek out a partner you can trust to help structure your operations as an outcome-based result from the start, not just as a cost-reduction exercise.

‘Tis the Season for Solutions

While 2020 will be over faster than we can say, “Bah Humbug” the pandemic’s impacts on how we do business is looking to have long-lasting effects.

Partnering with an experienced warehousing and fulfillment provider can help turn an inefficient supply chain into a competitive advantage, increasing bottom-line value and strategic growth in your organization and set a new foundation necessary for a more proactive resilience in your business for 2021 and beyond.

Santa’s Delzer’s Workshop

We offer year-round intelligent, scalable, and reliable capabilities to help fuel your mission at warp speed – all much closer than the North Pole.