The Pros and Cons of Outsourcing the Order Fulfillment and Distribution
The world is now a gigantic virtual shopping mall, and ecommerce enterprises constantly face the challenge of meeting orders from all over the globe. To meet the demands of an international market, online businesses have turned to outsourcing order fulfillment and distribution. As an industry executive, you need to take a good look at the pros and cons of this strategy before taking it on.
The Pros of Outsourcing
Outsourcing is an unavoidable step for companies who try to move products from onshore and offshore suppliers to customers scattered all over the world. Undoubtedly, outsourcing order fulfillment and distribution has several significant advantages.
- You save on capital investment on order fulfillment and distribution. Outsourcing minimizes the need to invest on technology, training, personnel, and equipment dedicated to fulfillment and delivery. It frees you from pouring enormous capital into storage, insurance, transportation, and labor. Your business is kept relatively leaner, and your capacity to meet orders is practically limitless.
- You can focus on product development and company growth. Freed from the burden of running an entire department for order fulfillment and delivery, you can concentrate on product development, marketing and expansion. Your distribution and order fulfillment partner will see to this end of the business, and you will not need to worry about warehousing, delivery deadlines and coordinating the many details that go into getting goods from point A to point B.
- You avoid a potential weak area in your operations. Distributing products from a fluid, multi-source inventory implies having to manage transportation. In turn, this means managing a “pick up” and delivery route, maintaining transportation and training personnel. These complex undertakings could spell a weak area in the company – one that will impact on the company’s capacity to do well in core areas.
- You get experts to do the work for you. Your partner will (or should be) an expert with the infrastructure, the established processes, the equipment, and the people to take care of this end of your business. What’s more, you won’t have to train employees for it or go through the trial and error that accompanies any learning curve.
The Cons of Outsourcing
If you have reached a point where order fulfillment and distribution have become gargantuan tasks, outsourcing may be inevitable for you. However, there are potential disadvantages to this strategy that you will need to counterbalance.
- You have less control but are still responsible for order fulfillment and distribution. Your customers will still complain to you about delayed shipments, lost or damaged products and errors in delivery – even if these are outside of your immediate control. To avoid having problems in this area, choose your outsource partner carefully and thoroughly discuss systems and safety nets.
- Your company can lose some “visibility”. A company that takes care of its own order fulfillment and distribution gets an enormous amount of exposure every step of the way. Think about the big trucks making deliveries all over the continent – they are mobile advertisements for the company. You will need to think of ways to regain visibility – maybe through packaging, follow up calls, and other tactics.
If you are ready to take your company to the next level, you may consider taking a step towards outsource order fulfillment and delivery. Just keep in mind the potential disadvantages that come with this step and you can indeed start conquering your worldwide market.
We provide you with tips, tools and educational resources designed to help you in your career.
Photo: Axis Warehouse