Does Outsourcing Mean Sacrificing?
It’s difficult to imagine how a 3rd Party Fulfillment Company, with dozens or even thousands of different customer relationships, could ever serve your brand as responsively as an In-House operation. For brands that are growing and evolving, with new selling channels opening up, new products getting launched, intricate needs for pack-outs, kitting/assembly requirements, hazardous materials, custom branding experiences, complex QC/refurbish requirements in returns, international sales… the conclusion may be that there is no way a 3rd Party could respond, react, collaborate and partner to the degree necessary to ensure the brand is properly supported.
The truth is if a brand relied on an in-house solution that is well-funded with proper staffing and expertise in all facets of warehousing operations, space for growth and strong fulfillment systems/technology… that would be ideal for responsive service that is dialed in on the unique needs of the brand. The singular focus is extremely helpful, communication is generally strong, and both strategic and day-to-day decisions are controlled by operational leadership within the brand.
In-House vs. 3rd Party Fulfillment
There are also challenges when a brand chooses to operate in-house. First and foremost is the fixed cost burden of in-house operations, which includes warehousing space, material handling equipment, warehouse infrastructure, systems technology and fixed personnel (executive leadership, warehouse leadership, IT support, HR support, HR/legal)… and as the business grows, needs will change as well, including warehouse space… which either must flex up or the brand must carry excess space in anticipation of future growth.
Variable cost is also a challenge for in-house operations, which mainly pertains to the warehouse staff that handles pick-pack-ship fulfillment, inventory receiving/management, returns management, VAS/assembly jobs…etc. It is very difficult for a single brand in-house operation to flex labor up and down on a day-to-day basis as the workload requirements change.
Excellent responsive service may require over-staffing, or service metrics may suffer when volume spikes occur. Yes, temporary labor can help through the spikes, but not every job on the floor can easily be managed by a new temporary associate, and it is very difficult to nail the proper staffing down each day to match up with order volumes, inbound receipts and other activity.
The other truth is that, unless the brand has an overabundance of capital along with patient investors that are willing to accept losses while the brand (hopefully) grows and matures, the best path for a dynamic, growing brand is outsourcing to a 3rd party fulfillment company. Fulfillment companies have the benefit of space and labor (fixed and variable) being shared across multiple brands, with most having strong warehouse management systems technology and some also have expertise in fulfilling through multiple channels (e.g. eCommerce, drop-ship, EDI wholesale, boutique store, company-owned brick and mortar). Your fulfillment “partner” carries the burden of accommodating growth and should flex to the dynamic changing needs of the brand.
Building a Strong Partnership with a 3PL
“Partner” is the key word for brands looking to outsource fulfillment operations to a 3rd party. Not all fulfillment companies focus on Partnership and Engagement the same way… and there are some where it is difficult to even speak to a human being! Incredibly simple programs can do well with fulfillment companies that lack sufficient client support and engagement. You follow their routing requirements, properly integrate systems/exchange data and (especially in eCommerce only businesses) orders should get fulfilled in a timely manner and without issue. Most brands have unique and evolving needs that go beyond the basics, so finding a fulfillment Partner is key.
If your brand is seeking a solution for fulfillment operations, pay close attention to their commitment to Client Services and understand how they engage, communicate, collaborate and care for your brand, ensuring that your unique needs are being managed as close to an in-house operation as possible. There are many other factors that come into play as well, such as operations capacity, warehouse automation, channel familiarity, geographic locations…etc. If those boxes are checked, find out about their administrative support services, or Client Service commitment… that’s how you ensure your brand gets the attention it needs to grow and thrive!
AMS Fulfillment is a company that is truly driven by Client Services, as they know that long-term successful Partnerships in operations are built on top-tier client support!
