There are numerous advantages to using fulfillment services that many business owners may not even know. As far-fetched as it might sound, hiring a third party to handle the fulfillment end of the business will most likely save a substantial amount of money in the end. After weighing out the costs of hiring fully burdened employees and buying equipment it is no surprise that many executives choose to outsource their fulfillment department to a service company that has the skills and the technology to carry out an elaborate operation successfully.
What are Fulfillment Services?
Some of the largest online businesses in the world depend on a professional fulfillment service to help them fulfill all of the orders that come in. It turns out that the task of fulfilling orders is not an easy one, especially if there are lots of customers.
Since all businesses are unique, the full operation of fulfillment will differ from business to business. Some of the features that businesses offer that can benefit from a fulfillment service provider are:
- eCommerce fulfillment
- Subscription services
- Promotional material
- Durable goods and consumables
- Product samples
- Distribution and packaging
A typical fulfillment service will be comprised of a team of people that are trained and equipped to handle business as it comes in. For example, if an online shoe store has a vast selection of shoes, accessories, hats, and other clothing that customers order in large amounts throughout the day a fully functional fulfillment team can track the orders and keep them moving along smoothly as quickly as they come in.
Most of the online stores that sell their own merchandise will have to use a warehouse in order to properly facilitate business. Smaller companies can use a home garage, or another smaller building to make things work, but places that handle a lot of merchandise need a large place to work out of.
A fulfillment service will become alerted when an order comes in, then they will locate the items that have been ordered. Depending on the type of business and what the items consist of the people that are in charge of the orders will pick and pack small items, or ship items individually to customers that order them.
Warehousing and Inventory
Sometimes keeping up with orders can be a little challenging if the business is not fully equipped to carry out the process. The number of items available will change from moment to moment, and somebody has to stay on top of those numbers. Of course, not every business is going to be perfect at all times, but it is a good idea to stay on top of these things and be as perfect as possible. All it takes is slip up and customers will venture out to other suppliers.
It is not cheap to pay for a warehouse and all the whole crew that makes the warehouse work. In addition to stocking and storing merchandise, keeping up with what is sold and what is available is crucial. You don’t want to not have what customers want, and you don’t want to order items that you already have an abundance of.
- Items bought
- Items sold
- Items available
- Items returned
- Items damaged
Keeping track of all of these things can be overwhelming if the company does not have the right equipment to do so. Whether it be software or whatever method of tracking, all of the numbers need to be kept up to date unless big problems can occur.
Picking and Packing
Answering orders then hunting down the items can be a bit tedious, especially if there are thousands of orders happening at once. One of the biggest problems companies face when it comes to picking and packing items is that it takes an entire department to do it. Some companies may be able to create their own in-house department that deals with all of the needs of the fulfillment process, but these costs can add up and ultimately lose money for the company.
One of the biggest reasons why companies would rather hire a third party to handle all of the picking and packing needs is that the costs of having an in-house department are extremely high. The employees that do the work are one thing, but the software and fulfillment cost in addition to laborers is mindblowing.
A third-party fulfillment service will be able to provide:
- The warehouse
- A team of laborers
- Sofware application for tracking
- 24/7 service
Essentially a whole department that is dedicated to fulfilling orders as they come in would be what a fulfillment service would provide.
Equipment and Tools
Each type of business will require its own tools and equipment. However, in order to maintain a complete fulfillment operation, it will take a lot of both. For example, a company that is constantly shipping and receiving goods with pallets will need a forklift or a pallet jack…or both. In addition to forklifts and pallet jacks, there will be shipping supplies, wrappers, cutters, pens, and whatever specialty tools are required for certain companies.
Beyond the physical tools that the company will need there is also the aspect of electronic equipment that is necessary in order for businesses to stay on top of their orders.
Some companies may only need a few things, while other companies need numerous amounts of tools and equipment in order to keep up with the flow of the work.
A fulfillment service will give you a list of all of the things that they will provide along with their services before you start working with them. It will be easy to weigh out the costs of hiring a third party as opposed to buying all of the equipment that it would take to successfully operate a business with its own fulfillment department.
Training and Costs
One of the downfalls of hiring a fulfillment company is that the people that are hired through a third party will have to learn your ways. This situation can work for you and against you at the same time, however, one of the advantages of training a new company is that you get to teach them from scratch the way you do things and not give them a chance to pick up any bad habits.
The company that you sign up with, if they are high quality, will be more concerned about the welfare of your business than you might expect. They will have their own management team that will assist in the training processes as well as the quality control aspect. The workers that they hire will be great at what they do, or they will hire other workers to take their places.
In the end, however, many companies find that they save quite a bit more money by hiring a third party than by creating an entire department and maintaining it on a daily basis.
Conclusion
All of the money that a business owner invests towards their company counts. The reason why a business will gain greater returns by using a fulfillment service is that they won’t have to hire their own department or buy all of the equipment necessary to carry out daily work. Outsourcing for a flat rate as opposed to hiring a full crew of employees has the potential to save a lot of money. More money in your pocket means you are doing it right.