Operations & Fulfillment: 7 Signs You Should Consider Outsourcing Your Fulfillment
3. Outbound freight costs are growing, and you need to gain control. Outbound freight costs comprise a growing percentage of overall fulfillment costs. In many cases, they represent more than half of the total cost. Although gas prices have come down lately, you can’t expect shipping costs to follow anytime soon.
The good news is that volume can be leveraged to get lower outbound freight rates from carriers, and third-party fulfillment companies aggregate their total volumes when negotiating rates. In many cases, they’re willing to share some of the savings as part of their overall costs of service. This can serve as a competitive advantage for outsourcing companies.
Don’t be afraid to ask what a potential fulfillment partner can do to reduce your freight costs. But keep your expectations realistic based on the volume you bring to the total packages shipped.
4. Seasonal peaks are a significant aspect of your business cycle. When you have large seasonal peaks in your order volume, you obviously must maintain quality service during those times — particularly from a facility, systems and labor standpoint. When you have unused resources you’re paying for throughout the year, you’re stuck with covering the cost of hiring for those peaks.
Third-party fulfillment companies often have a mix of clients that helps smooth out peaks. This way, they can charge rates that don’t build in the overhead you’d pay to maintain your own cyclical operation. And if your peaks run outside of the fourth-quarter holiday season, you’ll be attractive to many outsource service providers that have higher volumes during that time of the year.
5. You want to pay less, yet still have a high level of “best practice” expertise. A well-run call-center and fulfillment operation can mean the difference between the success or failure of a multichannel business. Beyond that, the application of best practices separates a merely adequate operation from one that’s continually finding ways to be more cost-efficient, and even help deliver sales growth.