What are the Strategic Advantages of Outsourcing Order Fulfillment?
Everywhere you look around the East coast, vast fulfillment centers are under construction. America's largest retailers are looking to satisfy revitalized demand, meaning new facilities and expanded operations.
Outsourcing order fulfillment is also proving a popular option for smaller retailers, who often lack the ability to scale without third-party expertise.
Not Everything is Amazon
Last month we mentioned Amazon's latest facility right here in New Jersey.
This month, USA Today reports on another center with a footprint of more than 1 million square feet.
This one will be located in neighboring Pennsylvania to serve the equally huge Wal-Mart. It will handle a mind-boggling 5 million SKUs, which is 40 times as many as you'll find in your average Wal-Mart Super Center!
The media has a tendency to focus on the biggest household names in U.S. retail, of course, but there are plenty of other significant retailers managing intricate fulfillment operations around the country.
Once we move into the realm of handling many thousands of different SKUs, though still far from the Wal-Marts of the world, complexity reaches a level that often requires outside assistance to handle. Even those business owners who strive to keep order fulfillment in-house acknowledge the specific skills required, from building custom software that tracks inventory movement, to rigorous paperwork checks to identify anomalies.
The Advantages of Outsourcing Order Fulfillment
So although it may be realistic for some operations to continue to manage their own fulfillment, for many others any kind of scale brings with it the need to outsource it to a third party.
The control that comes with understanding your own fulfillment process inside out is undoubtedly appealing. But the many advantages of outsourcing order fulfillment may prove a better fit for organizations seeking quicker, leaner expansion.
These are some of the strategic advantages and compelling reasons for outsourcing order fulfillment:
- The burden of operational expense lies with the third-party provider, not your business.
- Maintain a focus on providing and improving your core product or service, instead of being distracted by time-consuming tasks that lie outside of your core competencies.
- Expert advice on tap immediately, without the learning curve that comes with going solo.
- Established supply chain solutions in place when sudden growth hits, with the option to expand or contract your operation as demand dictates.
- Ability to set required service level agreements and hold your provider to these levels, including the responsibility for reporting performance.
- Custom order picking and tracking solutions that can be quickly adjusted without additional investment in software and those who manage it.
There are clearly challenges involved with growing from an in-house operation to one that integrates a third party fulfillment solution.
The advantages of outsourcing order fulfillment are many, however, and going through the process is often an important step in scaling a high-growth eCommerce or retail operation.
If that sounds like your business, you can easily contact us with any questions you have about improving your operation and how to change fulfillment provider.