66% of businesses have outsourced at least one of their departments. Order fulfillment is an example of an outsourceable department.
You may have heard of this before clicking on this article. If so, you’re probably wondering if you should outsource this department.
Are you currently using in-house order management? If so, you’re probably running into problems. If you use outsourced order management, you won’t have these problems.
Read on to learn about the disadvantages of in-house order fulfillment. You’ll also learn how outsourced shipping services eliminate them.
What Is Order Fulfillment?
After a customer orders a product, it needs to get to them. A lot of steps happen between order placement and delivery. Business managers often refer to these steps as order fulfillment.
Before a potential customer places an order, they have to learn about and search for a product. For example, a person could see an advertisement. This convinces them to visit a site or ask a business about its offerings.
Here the customer learns about the price of a product. If they agree to the price, they will move on to creating their order.
Once they create their order, the customer will need to make certain choices. These selections can be different sizes, colors, etc.
Booking, Confirmation, and Invoice
The customer finishes their order and sends it in. The business will send the customer a confirmation and an invoice.
Order Planning and Changes
Now the shipping logistics section begins. Business workers and their technology must determine the locations of different products.
Sometimes products are missing and/or will take too long to acquire. In these cases, workers might ask customers for an order change. They may offer a refund or replacement with a similar item, for example.
Order Processing and Shipment
At this stage, workers prepare the product for shipment. If the product came from another company, the workers will receive it. If the product is in the company’s warehouse, the workers will find it.
Shipping and Tracking
Workers will pack up the shipment and send it to the customer. Usually, customers and the business can digitally track the product as it moves.
Delivery and Return
If all goes well, the product will make it to the customer. The customer will pay for the item if they haven’t already. If the customer doesn’t like the item, they will return it and get a refund or replacement.
Disadvantages of In-House Order Fulfillment
“In-house order fulfillment” or “in-house shipping management” happens when a company does all of its shipping operations by itself.
They hire workers that pick, receive, pack, and ship products. They also own or rent a warehouse that stores all of their products. In many cases, businesses might even hire drivers that deliver products to customers’ doors.
Handling shipping operations this way can work. However, in-house order fulfillment can come with a lot of disadvantages businesses may not like.
In-house workers can get expensive. Keep in mind that businesses don’t just pay workers in wages. They also have to give them benefits.
If a company hires drivers, order pickers, and order packers, costs can quickly build up.
To ship items, businesses will need shipping supplies. This includes tape, boxes, envelopes, etc. The cost of all these items will add up over time.
Businesses may get discounts if they bulk buy shipping supplies. But not all businesses are big ones. Smaller businesses may have trouble justifying bulk purchases.
Many businesses can only have so many workers. It may be more beneficial to have certain workers doing something other than packing and shipping. For example, marketing may be better to focus on.
Cost of Storage
Running a warehouse costs money. This is true even if a business owns a warehouse. The business owner still has to pay for energy and other utilities.
In addition, a warehouse can only be so big. A business with only one warehouse can only store so many products. In this state, a business may be unable to expand.
Advantages of Outsourced Shipping Operations
If a business hires outsourced shipping services, another company handles all or some of its shipping operations. For example, the other company may store the products. The other company’s workers may pack the items and deliver them.
Many businesses are happy to let another business handle these tasks. Here’s why:
Businesses using an outsourced service don’t pay the service’s workers. They just pay for the service. The service’s business pays the workers and gives them benefits.
Even if businesses just outsource their delivery drivers, it can save them a bundle.
Shipping logistics companies often handle shipping supplies as well. This could save the business from having to pay for these supplies themselves.
Plus, shipping logistics services handle a large number of businesses’ shipping needs at once. They can buy shipping supplies in bulk without losses.
Outsourced shipping companies take shipping operations out of a business’s hands. The business’s workers can instead focus on other important tasks.
Cost of Storage
Some outsourced shipping services offer product storage. The business that hires them can attract customers and get orders. Then the outsourced company can ship the products right to the customer.
In this situation, businesses won’t need to pay storage costs. They will just need to pay the storage and shipping company their fee.
We Offer Outsourced Shipping
As you can see, outsourced order fulfillment takes a lot out of a business’s hands. This can save businesses money and labor time. With more time and money, a business can become more successful.
If you’re interested in outsourced shipping services in Ottawa, try us. We provide punctual and reliable deliveries at competitive, flexible prices. Learn more by filling out the form on this page.