Reducing Fulfillment Costs

How Can a 3PL Help to Cut Your Fulfillment Costs?


Order fulfillment typically represent the lion’s share of operational costs. And with more and more shoppers moving online, warehouse space, labor and parcel shipping expenses are likely to continue climbing.

Looking for ways to reduce your order fulfillment costs? A third-party fulfillment provider could be a good resource. Armed with scalable space and staffing, robust technologies, and extensive expertise and best practices, 3PLs offer creative ways to control costs.

3PLs can help to reduce order fulfillment costs in 3 key areas:

Warehousing Space

30%in past 5 years1

Ecommerce has driven up rent for light-industrial warehouse space (<120,000 sq. ft.).

What your 3PL can do:

Provide established distribution centers (DCs) that allow you to avoid the overhead investment.

Equip space with high-efficiency solutions for racking systems and space-saving facility design.

Flex to handle fluctuating order volume with shared-space facilities.

Labor costs

Ecommerce fulfillment operations require

2-3x more labor

than traditional warehousing operations.2

What your 3PL can do:

Scale staffing to meet fluctuating needs

Increase efficiency by optimizing order fulfillment processes

Assumes overhead investment and allows you to pay only for the labor you use.

Provide fulfillment automation and robotics solutions to increase productivity.

Parcel Shipping

In 2020, major parcel carriers instituted general rate increases averaging

4.9% - 5.9%3

What your 3PL can do:

Use parcel analytics to evaluate demand distribution and optimize parcel management.

Identify opportunities to minimize surcharges due to DIM weight, delivery area, peak season, etc.

Use order management system (OMS) to route orders for fastest delivery at lowest cost.

Configure strategic DC network to reach 90% of U.S. consumers in 2 days via economical ground service.4

Leverage rate shopping software and economies of scale to secure the best rates.

1. https://www.cbre.us/research-and-reports/2020-US-Real-Estate-Market-Outlook-Industrial-Logistics. 2. http://blog.naiop.org/2017/05/e-commerce-is-growing-and-so-is-demand-for-warehouse-labor/ 3. https://multichannelmerchant.com/blog/breakdown-2020-rate-increases-fedex/; https://parcelindustry.com/article-5365-UPS-2020-General-Rate-Increase-Announced.html. 4. https://www.sclogistics.com/wp-content/uploads/2019/01/Parcel-Whitepaper.pdf

Want to see how a 3PL can reduce your order fulfillment costs? Contact us today!

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At Saddle Creek, we help customers across the country increase supply chain efficiency, streamline their businesses, and manage operational costs. Find out how our integrated solutions can be tailored to meet your specific business goals and give you a competitive edge.

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