There are so many important aspects of running a successful business, and the challenge for business owners and managers is to find the most appropriate way to complete these functions either internally or through a partnership with a third party firm. Some of these processes are mission critical – things that you simply have to perform in house.
Usually, companies maintain control over activities that fall within the core capabilities of the organization, or that have such a major significance that business managers wouldn’t want to risk the chance of outsourcing with another firm. On the other hand, there are a number of activities that are a “good fit” or candidate for outsourcing with a third party firm. One of the most commonly outsourced functions within a product based business is the inventory storage and distribution.
Inventory management is a great candidate for outsourcing because it isn’t usually a task that only internal employees can process. Furthermore, inventory management companies typically can provide these services at either reduced cost or enhanced service levels due to the fact that they specialize in performing these functions day in and day out. But above and beyond these core benefits, third party warehousefulfillment servicescompanies offer the following benefits.
No Storage Worries
Companies that decide to manage inventory internally will have to either lease or purchase warehouse space. If you rent a warehouse, chances are there will be times that you use less than the entire space, and still other times when you might need more. These fluctuations make it difficult to manage warehouse leases – not to mention that leasing or purchasing warehouse space is full of inherent risk. Conversely, if you outsource, all of these responsibilities are handled by your warehousing company. Plus, these companies will make sure your inventory is in a climate controlled area that will keep your inventory looking new and fresh.
Time Intensive Shipping Activities are a Thing of the Past
Many businesses try to handle shipping themselves and run into a lot of problems along the way. To run the shipping yourself you need to hire enough people so the process goes smoothly, constantly update inventory systems, order shipping labels and boxes…the list goes on and on. Fulfillment companies not only store your inventory, but they also will ship your inventory to customers, as well. This means that your inventory would be handled by people who are trained to ship items with care and speed. Even the mere process of managing a staff of employees is cumbersome and can take away from critical hours during the day that may be better spent on the core activities of your company. Simply put, keeping track of inventory, returns, invoices and orders can get a bit maddening if you do it all yourself. Fulfillment centers can do all of this for you. You can still keep on top of everything since fulfillment centers will allow you to log into their system to check on every aspect of the storage, shipping and processing using a special dashboard or reporting system – so it really offers the best of both worlds.
Get Plugged into the Best Technology
Do you stay on top of the latest inventory and shipping software trends? If you’re like most business owners, probably not! Thankfully for you, fulfillment centers do. That means that you won’t need to worry about when your software should be upgraded or who will do it. It will all be done for you. Warehousing companies can integrate with various systems so that order information and inventory information is shared among all of the relevant people within your organization. And because they’re had experience with managing other companies’ inventory, warehouse professionals will oftentimes be able to see problems within your current systems, make recommendations as needed, and even provide best practices for other similar situations that they’ve encountered in the past.
Inventory Management Can Save Money
At the end of the day, having someone else do all of the above for you can save your company money – especially when you account for the time value of money earned by negotiating terms with your provider and when you factor for the opportunity cost of key management personnel gaining valuable time to be spent on other value producing activities. Furthermore, warehouse providers get more significant freight rate discounts because they aggregate shipping among many different clients.