Fulfilment outsourcing versus in-house

Should you outsource your fulfilment or deal with it in-house?outsource fulfilment

One of the most frequently asked questions I hear on a daily basis is “will it be cheaper for me to outsource to a 3PL or carry out fulfilment in-house”?   So I thought we would take a look and weigh up the different options available in the current market to distributors in the UK as it is apparent this is a big consideration for some businesses. 

 

Renting warehouse space

The first thing to factor is whether renting an industrial property that could accommodate your operation from storage through to distribution is an option.  Keeping in mind that the majority of leases start at a minimum 12 months and therefore you would need to be completely confident that your business will be able to perform within those first 12 months to achieve the required capital to cover all costs as well as the all-essential profit.

Factoring in a rental charge of, say, £7-£10 psf (dependent on size & location) together with all other overheads such as business rates, service charges, utilities, salaries etc you are already looking at an expense well in excess of £150,000 per annum and that’s without all other costs associated with running your own warehouse and office facility.  You will also need to consider the expense of distribution via either your own transport division or an experienced freight forwarder/courier.

Outsourcing your fulfilment

There are many reasons why you may not want to outsource your fulfilment requirements and some that are worth deliberating are;

  • You would have no control over the reliability of deliveries to your customers.
  • Mistakes may occur more frequently than if your own staff picked.
  • Nobody knows your products as well as you and your staff when it comes to QC and checking for saleability etc.
  • No control over packaging standards.

Alternatively, you could put your trust in a dedicated, reputable and experienced 3PL facility, such as those in the Whichwarehouse network and you could be looking at a saving in the ‘000s. Not only can the third party provider facilitate the storage, pick & pack and distribution of your products to the consumers but most also offer additional services such as a dedicated account manager, real-time stock management systems (WMS), inbound sales operators and even office space on-site that you and your staff can occupy with the use of telephone lines and internet.

There are also many reasons why outsourcing is a good idea – such as those listed below;

  • The impact of seasonal peaks with regard to shipping and returns volume can be minimised.
  • The potential benefit of having access to courier discounts.
  • No overheads or fixed costs to consider.
  • More time for you and your staff to concentrate on your marketing campaigns and procurement activities.

Outsourcing can be extremely beneficial for start-up and newly established businesses and can often provide great assistance and in-sight to guide you down the right path.  Many people appreciate the knowledge and experience that the DC (distribution centre) can offer and are more than happy to accept advice and even constructive criticism if it is felt there is a more economical process of undertaking a specific project.

TO SUM UP.   The main objective when teaming up with a logistics provider for the distribution of your products to the end consumer is essentially to save money.  If you save money, your customers save money and everybody knows that consumers love to get a bargain and when they believe they have found a bargain this encourages repeat purchases which is, of course, great news for your company.  

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Alternatively, for additional information with regards to storage and logistics services offered in the UK why not visit our website Whichwarehouse or contact our team today on 0800 1707 555 or info@whichwarehouse.com

 


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