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How Can A Product Fulfillment Company Help My Business?

Posted On January 5, 2015 by Laura

There are various reasons businesses choose to utilize a third party logistics provider, referred to as a fulfillment service company or fulfillment center. These companies are experts in providing the right packaging, warehousing and logistics to effectively manage and fill orders in various industries. Mainly, they enable businesses to focus on manufacturing their core product lines and to grow efficiently.

Fulfillment centers pack and ship merchandise to complete the sales transaction then ship the product direct to the customer. They can provide customer and technical support after the sale and store the merchandise you select while the sales are still in progress.

Your merchandise is sent direct to the fulfillment center in advance where it is warehoused until the order has been filled. They then track and manage inventory needs to determine when reorders and supplemental stock becomes necessary. Shipping and tracking information is provided once the sales transaction and shipping cycle is finalized. The fulfillment center hires and trains the personnel needed to manage inventory growth and handle day-to-day operations.

The main advantages to outsourcing your fulfillment is to avoid the capital investment in technology, facilities, hiring and staffing personnel, and save the time associated with creating and managing an in house infrastructure. This enables you to spend more time on strategic planning, marketing, research and development and building a strong customer base.

A fulfillment house becomes a serious consideration to help your business when:

  1. Your business volume becomes too challenging to keep up with packaging and shipping orders.
  2. Your business volume becomes too challenging to keep up with packaging and shipping orders.
  3. You want to take your business to the next level and compete with larger brands.
  4. You don’t have enough space to offer a broader product line.
  5. You start spending more time on fulfilling orders or don’t have the necessary software to manage multiple vendors.

Utilizing a fulfillment company will allow you to increase sales, expand territories and turn a larger profit without taking on the extra expense. They can provide turnkey solutions including real-time reports for monitoring your orders, inventory and shipment saving you the investment in expensive software development and programmers.

The true cost of doing your own fulfillment would include storage buildings, racking, moving equipment, utilities, payroll, training, packing supplies, software, security, insurance, taxes, maintenance, equipment and so on. With outsourcing you have no capital expenditures to worry about. The overhead costs incurred by a fulfillment center are evenly distributed across multiple clients and projects minimizing your overall expense. Additionally, you only pay for specific services needed for each specific situation such as storage, kitting assembly, picking and packing, shipping, etc. helping you to more easily predict your fulfillment expenses and improve cost control no matter if your projects are ongoing or intermittent.

Your fulfillment center will provide secure online access to view your order activity providing accountability so that your inventory is identified and counted accurately. These centers are streamlined for efficient distribution. They can pull, prepare and ship orders at light speed at high volumes allowing them to negotiate the best rates with carriers. Often times they can also provide a centralized location to distribute from, reducing both transit time and delivery expense to all parts of the country.

Fulfillment houses have the flexibility to quickly increase or decrease your distribution to meet fluctuating demands. Instead of you having to manage a shortage or surplus of staff and space during peak or slow times, they take on this responsibility and are able to adjust rapidly to each client need. This is particularly helpful to businesses that have seasonal trends in demand.

There are multiple reasons a fulfillment center can be a logical solution to meet your order fulfillment needs. A cost vs. benefit analysis is a good place to start to see if it makes sense for your business. Consider what stage you are currently in and where you want to be in the next five years. A fulfillment company may just be the solution to help you get there without taking on additional internal costs.