In today’s ever-changing world of business, many companies are facing challenges when it comes to transporting, storing, and distributing goods. Many businesses have found that it is no longer sustainable financially to run and maintain their own warehouses.
Whether you run a small business or a large corporation, there are many reasons to switch to outsourcing your warehousing and fulfillment services. If you are considering this change, but you are not sure about how beneficial it will be, read below to find out some of the key benefits of outsourcing your business’s warehousing and fulfillment services.
The upkeep and costs involved in establishing and running a warehouse can be exponential and unsustainable for certain businesses. If your business currently runs a warehouse and is looking to downsize or is just starting out and does not want to invest all of its funds into building a warehouse from the ground up, then outsourcing is your solution. By outsourcing your warehouse and fulfillment services, you can save a lot of money on overhead costs.
From hiring and maintaining warehouse employees to paying for insurance to cover things like workers’ compensation, property damage, and liability coverage, to purchasing and updating modern equipment, running a warehouse is a huge expense. Because of this, many companies have chosen to opt out of doing this themselves and have opted into outsourcing this responsibility to already-established warehousing services.
Choosing to redirect investments into other existing business buildings and employees means that you can focus more on office operations than worrying about the overhead costs of one or many warehouses depending on the size of your business.
Scalability is a very important factor to consider when deciding to invest in your own warehouse or outsource this service. Many businesses see fluctuation in demand for certain products, especially companies that provide seasonal products like winter sports equipment or summer clothing.
Renting out an outsourced space in a warehouse means that you can change the amount of space that you rent out as seasons change. This is something you cannot do if you own your own warehouse and have to pay the same overhead costs every month no matter what.
Having your own giant warehouse can also be very restrictive if you plan to move your business internationally. The burden of paying for and operating a warehouse in one place means that you will have to ship all of your products out from that one location, leading to more and more expensive shipping costs as you expand further and further away.
It also means that if you put all of your eggs into one basket, (or one big warehouse), you will not have the budget to instead outsource your products to multiple smaller warehouses around the world. Choosing to instead create a global network of outsourced facilities and distribution centers is a better option in the long run if you choose to go international with your business.
Use of bonded warehousing
If you have never heard of the term “bonded warehousing” before, it essentially means that international businesses outsource a specific type of warehouse where goods can be stored for a certain amount of time without being taxed. The most common businesses to use this system are importers and exporters who need a place to store their products before they send them off to their final destinations.
Think of a bonded warehouse as a kind of purgatory for goods before they go to wherever it is in the world they are headed. For a further explanation of bonded warehousing principles, you can learn more at the AMSC website where you can find out exactly how companies are able to take advantage of this kind of warehousing system.
This is another good reason why companies that ship internationally prefer to outsource their warehousing services because it will save them money in the long run.
Access to the best technology
Working with warehouses that offer outsourcing services means that you can find facilities that are stocked full of the most modern technological services from sorting machines to inventory management to shipment tracking. If you are running your own warehouse, you may not have the resources to update your technology, which could lead to your business falling behind in the industry.
One of the most important parts of running a successful business is delivering your products to customers on time. You have a better chance of doing this if you outsource your warehousing and fulfillment services to reliable warehouses. Because outsourcing warehouse partners only focus on warehouse operations, they can invest everything they have into the newest technology.
This means they always have the most up-to-date machinery and digital systems. This is a level of proficiency that you just can’t get with your own warehouse because, on top of warehouse operations, your business has to also focus on all other operations from product development to marketing to sales. Choosing to outsource in order to have the best technology available to you is the best choice you can make for company advancement.
Working with experts
On top of having the best technology, outsourced warehouses focus completely on the operations, so they have expert employees working on the floor making sure that everything is running smoothly. With specializations in logistics and supply chain management, managers of these warehouses are a great asset to have because they can predict when you need to move certain products and when to hold off on others.
This is a partnership that will benefit both parties by ensuring that your products will be organized and delivered correctly and on time and the warehouse manager will continue to have your business. Working with warehouse management experts in an outsourced warehousing service means that you will encounter fewer errors and have more efficiency in product movement.
Mitigated operational risk
Owning and operating your own warehouse means that you are in charge of several employees who are handling dangerous equipment as well as responsible for any damage to property or products within the warehouse. If you choose to outsource your warehouse and fulfillment services, then those risks do not apply to you because you are only hiring the warehouse to move your product.
Warehouses run by outsourced partners are responsible for their own employees and have their own insurance and protocols in the event of an emergency. This means that not only will outsourcing warehouse operations result in less stress on your end, it will save you a lot of money in the long run.
Quicker delivery times
Because these outsourced warehouses are run by order fulfillment experts, you will begin to see your deliveries being processed and delivered faster than ever before. Once again, these warehouses are so efficient because it is their sole focus, so they work day in and day out doing the same thing, meaning that they are experts at executing these actions quickly and correctly.
If you are a business that is competing with the delivery giants in our modern world today, these fast delivery times will make a huge difference in customer satisfaction as modern customers expect fast delivery.
Understanding of laws and regulations
On top of everything else that goes into running a business, many companies do not have time to become well-versed in warehouse regulations and standards, especially if they run a company that constantly has different products filtering through their warehouse. This is another benefit of outsourcing your warehouse and fulfillment services because most well-established warehouses are always up-to-date with regulatory requirements and laws.
When your products enter their warehouse, it becomes their responsibility to know what to do if compliance issues arise or certain products run into international shipping issues. This takes one more thing off of your plate so that you can focus more on other aspects of your business.
Improved customer satisfaction
When two organizations work together to churn out the most desirable result, customers notice and they appreciate it. Sometimes businesses think they can do it all by running both office and warehouse operations and they often become overwhelmed and forget to consider the customer.
Sometimes it is important to recognize that you have to release some responsibility to others in order to produce the best product for the customer. Working with an outsourced warehouse partner that can complete the delivery and fulfillment needs of your business better than you can means that your customers will be happy and will return to your products again and again.
Outsourcing is a word that has grown in popularity in our increasingly global world and although sometimes it has a negative connotation, it is actually one of the best things you can do for your business. Realizing that you do not need to be in control of every operation to have a successful business will help you to be more open to the idea of passing off certain responsibilities to another reputable organization.
From cost efficiency to mitigating risk to increased customer satisfaction, there are so many benefits to outsourcing your warehouse and fulfillment services. Keep this list on hand if you decide that outsourcing is the most logical next step in the growth of your business.