As companies develop and grow, the infrastructure that supports them needs to develop and grow with them. With increasing in staff numbers, larger offices, more stock, and making every effort to focus on your business’s core competencies, outsourcing your warehouse operation can be a shrewd business decision.
So what are the signs that it’s time to start looking for a suitable partner?
1.You’re struggling with fluctuating demand cycles
If the number of orders processed fluctuates throughout the year, it probably doesn’t make sense for you to commit to running and staffing your own warehouse. A Contract Packing company will be able to adapt to your needs and level out the peaks and troughs. While it is good news is that your company is growing, it is not good news if you cannot keep up with the new order volume. This can result in a decreased service levels for customers.
2. Your teams are either too busy or overwhelmed
If you’re putting too much time into packaging, managing, and sending out shipments and not focusing on your immediate business needs, then it may be time to move your order fulfilment to a trusted partner. There is a good chance an outside expert will identify operating efficiencies that help make significant cost savings.
3. You’re running out of warehouse space
Moving to larger premises is of course expensive. If you’re near a point where your warehouse is at maximum capacity, consider outsourcing fulfilment and storage instead of leasing more space. This will help lift the burden of fulfilling orders while preserving your capital.
4. Your warehouse labour costs are increasing
As one of the most expensive aspects of running a warehouse, labour costs can sneak up quickly as you gear up to meet growing and customers’ demands. Staff need ongoing training, they need to be paid and supervised. When you outsource order fulfilment to a third party, these worries and expenses are no longer on the radar.
5. Your inventory isn’t correct
Low inventory accuracy, poor visibility, and operational inefficiencies can cause companies to increase their safety stock as a buffer against these issues. Carrying excess safety stock or obsolete inventory is not only a financial burden, but can lead to your warehouses being overcapacity. This can increase product damage and safety issues while hindering productivity.
6. Reducing risk and associated costs
Running a warehouse means shouldering a great deal of expense. Issues like claims, compensation, maintenance, environmental risks from mishandled products and product damage are all liabilities that can be avoided by outsourcing your warehouse work and management.
When deciding between an in-house or outsourced order fulfilment strategy, remember that what works for one organisation may not work so well for another. But by weighing up the pros and cons, considering your company’s biggest challenges in this area and carefully selecting a Contract Packing company or a 3PL, you’ll be able to make the best decision for your company. Third-party logistics providers can cater for companies that require a high level of flexibility, which means you can confidently outsource the fulfilment function.
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