6 Struggles with In-House Order Fulfillment
Date Posted: 12/29/14
Original URL: http://www.tradeglobal.com/blog/top-6-struggles-house-order-fulfillment/
In-house order fulfillment is a simple enough concept: Process, pick, pack and ship your orders yourself. Pretty straightforward, right? Not necessarily… There’s machinery and materials, not to mention staffing, to consider. Add to that the constant burden of managing your inventory internally and finding the time and space for your growing in-house operations.
As a full-service e-commerce provider with more than 14 years in the field, we’ve heard all kinds of horror stories from clients about their past struggles with in-house order fulfillment. If you’re doing this already, some of these struggles may sound familiar. If you’re considering moving toward in-house order fulfillment, you may want to keep these in mind.
- Figuring Out Where to Start
Launching or expanding a successful fulfillment operation is a complex process with a steep learning curve. You’ll need a space to hold all of your operations, a full warehouse staff and equipment – and that’s just for starters. It also requires a fully optimized order management system, warehousing and inventory management system, back office program management and complete IT infrastructure. Then there’s the matter of establishing a broad carrier network and negotiating shipping rates. An outsourced fulfillment provider has the expertise, connections and resources to help you launch an operation quickly, decreasing your time to market so you can hit the ground running.
- Coming to Terms with the Endless Expenses
You might assume that bringing your fulfillment operations in-house will save you money since you won’t be paying a third-party fulfillment provider for their services, but that’s not always the case. In order to have an efficient operation, you’ll need a space that meets the needs of your business – which means you’ll need to build or rent a facility (or multiple facilities) to house your goods. Once you have the space, you’ll need to fill it… With machinery and people to operate the machinery. You will also need to set aside money for regular maintenance to keep your operations running smoothly. Your order and inventory management systems will require software licensing fees as well.
Aside from the cost of regular operations, you won’t be able to cut any corners when it comes to shipping either. Discounted shipment rates are usually reserved for outsourced fulfillment providers. They get better freight rates because they ship a higher volume of packages, so they receive volume discounts. As a stand-alone operation, unless you are shipping a substantial number of orders on a daily basis, you might have a difficult time negotiating better rates.
- Allocating Your Time
In-house fulfillment takes your attention off of developing your business and forces you to focus your attention on things like staffing, inventory management, vendor pricing negotiations and warehouse maintenance. Working with an outsourced provider allows you to eliminate these non-core tasks and concentrate your resources on marketing your products, generating new sales and increasing revenue.
- Supporting a Growing Inventory
You may have found a space that suits the needs of your current inventory, but what if your business grows? Can your space be expanded upon or will you be forced to move elsewhere? When you choose to fulfill your orders yourself, it’s important that you have a plan for growth. If not, your space could become overcrowded very quickly – and that’s never a good thing. Tight spaces mean the potential for your items to become damaged, leading to irritated customers and an increase in angry customer service calls.
Implementing multiple fulfillment centers can help decrease shipping costs and time, while potentially expanding your customer base. This is a huge added expense, so this should only be considered if you have the resources for expansion. Many outsourced fulfillment providers already have multiple fulfillment centers, so you could use their reach to your advantage.
- Tracking Your Inventory
If you don’t have an automated inventory management system in place, fulfilling orders can be a nightmare – for you, your warehouse staff and your customers. You risk the potential for stock shortages and backorders, increased order picking and delivery times and inaccurate orders. To retain a happy and loyal customer base, it’s essential that you deliver the right products and a reliable customer experience – each and every time. Specialized fulfillment providers are equipped with the knowledge, experience and technology to handle inventory peaks and ebbs and ensure accurate and efficient order processing.
- Maintaining Sufficient Staff
If you think about all of the various tasks that need to be performed in a warehouse on a daily basis, it’s easy to see why you’d need such an extensive staff. There’s the order pickers and packers, receiving and replenishment staff. If you offer any type of gift wrap or personalization, you’ll need additional staff for those roles as well. Then you’ll need to hire managerial staff to run the various warehouse departments and keep everyone on target. Staffing a fulfillment center is a constant cycle of hiring and training new staff members – especially during peak season, where your staff should be doubled in order to handle the influx of orders.
We’ve covered many of the top struggles with in-house order fulfillment, but that’s not to say outsourced fulfillment doesn’t have its struggles as well. When you outsource, you lose some of the control over your products because you’re relying on a third-party company for shipping and handling. Outsourcing also requires that you keep a clear line of communication open with your fulfillment provider so you can relay specific inventory details and instructions and keep them aware of any upcoming sales so they can prepare for order spikes.
What works for one company may not work for another, so it’s important to weigh the pros and cons against your unique business model to find the option that’s best for you!