Blog Posts Q&A: How Can Your 3PL Help Control Order Fulfillment Costs?
- Already on the rise pre-pandemic, order fulfillment costs now pose an even bigger challenge for retailers.
- Space, labor and parcel shipping costs are especially onerous for ecommerce orders.
- Third-party providers can help to alleviate the burden of fulfillment and control costs.
Order fulfillment represents an increasing share of retailers’ operational budgets. As ecommerce order volume grows, so do requirements for space, labor and parcel shipping. The COVID-19 pandemic has only compounded the problem.
Third-party logistics providers (3PLs) are uniquely positioned to help retailers to address these cost concerns, according to Mike Jennison, Saddle Creek’s vice president, supply chain engineering. He recently sat down with Digital Commerce 360 to explain how.
The interview appears in the 2021 Leading Vendors to the Top 1000 E-Retailers Report where Saddle Creek ranks #4 in the Fulfillment Services category. Following is an excerpt from the Q&A …
Managing rising fulfillment costs through the pandemic with the help of 3PLs
DC360: How can a 3PL help retailers reduce space and labor costs?
MJ: Experienced third-party providers have the resources and expertise to help retailers manage costs in a number of ways. Utilizing a 3PL’s conveniently located, fully staffed distribution facilities can be more cost-effective for retailers than investing in the permanent infrastructure themselves. They’ll have access to flexible space and labor but pay only for the resources they use. This is incredibly helpful when business fluctuates dramatically, as it has during the pandemic.
3PLs also can optimize fulfillment operations to ensure peak efficiency. They will often build out space with higher ceilings, narrow aisles, and customized racking solutions to increase storage density and maximize picking capacity. Automated fulfillment and material handling solutions can also help to enhance order velocity.
DC360: What can a 3PL do to help retailers control parcel shipping costs?
MJ: Retailers can tap 3PLs’ expertise and robust technologies to help manage and streamline the shipping process without a major overhead investment. By utilizing order management systems (OMS), parcel analytics tools and rate-shopping software, 3PLs can help to determine the most economical solution to meet end customers’ transit expectations.
3PLs also can help retailers optimize their network configuration to move products closer to end customers. With strategically located distribution centers, it is often possible to deliver products in two days using ground service instead of air to help reduce costs.
To learn more about how 3PLs can help to reduce order fulfillment costs, read to the full article on page 59 in the special issue of Digital Commerce 360.