4 min read

5 Benefits to Outsourcing Your Fulfillment

Mar 4, 2019 11:28:02 AM

Running a business can feel like far more than a full-time job. Not only do you have to provide your customers with appealing and useful products, but you also must purchase, market, and deliver them, all while providing excellent customer service, performing daily operations, and working to grow your business.

That’s why it is important to streamline every process you can and why over 90% of Fortune 500 companies in the United States are using a third-party logistics provider in one way or another. By utilizing a 3PL to handle your fulfillment, you are adding a strategic logistics partner to your team so you can focus on what you do best, while your 3PL handles your distribution and fulfillment.

Here are five ways outsourcing your fulfillment can help your business grow.

1. You can focus on your core business.

Managing your fulfillment can take a lot of time and energy that you could be spending elsewhere—marketing your products, focusing on sales, expanding your offering, or training your team. Outsourcing enables you to leverage specialized expertise in supply chain to enable you to focus elsewhere. 

3PLs are hyper focused on the specific operational functions that lead to a polished supply chain. They eat, sleep and breathe key metrics like: order cycle time, dock-to-stock, on-time deliveries, stock outs, etc. So by outsourcing your fulfillment, not only will you save time and energy, but it can also give you the peace of mind knowing that your products will arrive at their final destinations safely, accurately, and on-time. You can then spend your time focused on growing your company.

2. You will save on shipping and avoid pesky fines.

If you have an e-commerce side of your business, you know that shipping costs can be a huge expense. Because shipping rates are typically driven by volume, working with a large partner like a 3PL gives you access to better rates on freight charges. Plus, most 3PL providers allow sellers to benefit from the collective volume of their customers—saving you even more money.

If you are regularly shipping items into big-box retailers, you know you have to meet their strict requirements such as must-arrive-by-date (MABD) or on-time-in-full (OTIF)—and failure to do so results in compliance fines. You have to have the right amount of inventory sent on the right day at the right time. And if you don’t make it in time, there could be large fines to pay. For example, Walmart's On-time, In full (OTIF) program forces vendors to have their products arrive within a one-day window and if they miss that window (either being too early or too late) vendors will incur a 3% fine based on the value of the product.

A logistics provider works with big-box retailers all the time.They know the rules and they also have ways to help save you money on fines. Freight Consolidation Services allow less-than-truckload orders to be shipped together that are going to the same big-box retailer. Working with a 3PL can save you time, frustrations, and money when shipping products to big-box retailers.  

3. You don’t have to perform manual inventory audits.

Because your inventory is located at an order fulfillment warehouse, you will no longer have to perform manual audits of your products yourself. Your 3PL takes care of this for you. They will also integrate their reports with your inventory management tools so you always know what your inventory quantities are. A good 3PL partner will provide you with visibility into your entire supply chain so you never have to worry about losing track of any products.

4. You have the flexibility to scale your business.

When your business grows or you have a new product launch, you need more space. When you outsource fulfillment to a provider with open space, you have the option to "scale up" or "scale down" as needed. As the volume of inventory changes, you don’t have to worry about finding more room for storage or paying for storage space that you are not utilizing. With a 3PL, you pay for the storage you need, when you need it.

You also take advantage of your 3PL's network. Are a significant portion of your customers located on the west coast while your distribution center is located on the east coast? You can utilize your 3PL's network to open a second distribution center so your customers can receive their orders faster. 

Outsourcing your fulfillment also enables you to take advantage of your 3PL’s technology. A good logistics provider is constantly finding new and innovative ways to increase productivity and efficiency. Customers expect their orders to arrive at their door in two days or less—and if you meet those expectations, your business is more likely to grow. But in order to meet these expectations, your warehouse needs to be operating at maximum efficiencies. 3PL’s investing in technology such as robotics and automation allow your products to get into the hands of your customers faster.

5. You don’t have to worry about customer service and returns.

Customer service issues and processing returns can take up a lot your time. A fulfillment center can provide support for your customers and process returns for you. By having a 3PL manage your return logistics, you can protect your relationship with your customers—and your brand—without dealing with all the headaches that come with it. 

Your returns process is just one of the value-added services a 3PL can perform in order to strengthen your customer experience. According to Armstrong & Associates, brands are seeing new, category specific value-added services and they view them as increasingly essential to help attract and retain customers.

Markdowns, display building, labeling, packaging, repair and refurbish, white-glove service and final-mile delivery are just a few value-added services your 3PL can provide to help you stand out from your competitors. 

"We hired our 3PL to do distribution services for outbound, but they do a lot of other things to support our business like special labeling, packaging, as well as special projects that come up from time to time." - VP of Supply Chain, Global Personal Care Company

If you are looking to scale your business, better manage your inventory and labor force, or simply looking to free up some of your valuable time, a 3PL can be a great partner for your company. Lean on the expertise they provide in distribution and fulfillment, so you can focus on building a powerful brand.

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Written by GEODIS