Dramatic peaks and valleys in order volume can be challenging to accommodate. Whether they’re caused by unpredictable forecasting or seasonal promotions, this variability is difficult to plan for in terms of space and staffing requirements.
If you handle your own fulfillment, you always need to have enough space and staff available to handle your highest potential order volume because you don’t want customers to experience service failures and/or delivery delays. That means you’ll be paying for the maximum level of resources even when there is a lull in the action.
That can add up. Labor costs can represent as much as 50 to 70 percent of the average company’s warehousing budget. In addition, demand for warehouse and distribution space will be strong in 2018, according to the latest CBRE report, so facilities may be costly and hard to find.
4 Reasons Why Your 3PL is Best Suited to Accommodate Inconsistent Volume
If your business experiences frequent fluctuations, it may be wise to consider outsourcing order fulfillment to avoid these burdens. Here’s why:
- Flexibility. One of the key advantages of outsourcing is the option to utilize a shared-space environment. In this arrangement, the provider balances the needs of multiple customers so that they can scale to meet the highs and lows of your business. If they need to run 8 lines one week and 10 the next, that’s their problem!
- No overhead investment. When you outsource to a 3PL, you only pay for the resources you use. You don’t have to make a permanent investment in space or staffing. What’s more, they may be willing to be willing to invest in additional resources (i.e., specific locations, specialized equipment, etc.) to meet your unique requirements.
- Expertise. An experienced 3PL is accustomed to accommodating business fluctuations. They’ll have proven processes in place and knowledge of best practices, so they can handle any surprises that might arise.
- Postponement strategies. With value-added operations close to the end customer, a 3PL can delay product configuration until the last minute, so you can react faster to changing business needs.
What does this look like in real life? Each year, Saddle Creek accommodates Coty Inc.’s fluctuating space and labor requirements during an intense peak period from June through September. Read the case study to learn more.
Ready to consider outsourcing to a third-party provider? Read our new ebook: the Ultimate Fulfillment Outsourcing Guide.