Order fulfillment plays a vital role in your business. The way in which you receive, process and deliver orders to your end customers has a direct impact on the customer experience – and that can make or break your business.
Chances are, you’re currently using one of the following fulfillment options:
- You fulfill the orders yourself, supplying products from a manufacturing facility, distribution center or retail stores.
- Orders are filled and shipped directly to the customer from the manufacturer who has ownership of the product and the process.
- You outsource fulfillment to a third-party fulfillment company.
Each of these options can be effective. The challenge is to make sure that you’re using the right option for your particular fulfillment needs – and their level of complexity.
When should I keep fulfillment in-house?
Handling fulfillment internally can be a viable option for many companies. If you’re just starting out, your production space can be a suitable place to pack and ship customer orders. This arrangement often works well for small-scale operations on a shoestring budget.
Many companies, however, find that there is a growth tipping point where they need to pursue a more scalable fulfillment option. The most common options are to invest in a larger distribution center and/or technology or outsource to a third-party provider who will handle warehousing and fulfillment.
Distribution space usually requires an initial overhead investment for space, equipment, technology and labor as well as time and attention to oversee operations. If you have ample budget and staff and logistics experience, this can be a viable fulfillment solution.
When should I explore outsourcing options?
If you find yourself short on space, staff and fulfillment expertise, or have system limitations, it may be time to consider educating yourself on utilizing a fulfillment provider. A qualified partner will have scalable resources (space, labor, technology), a network of strategically located facilities, more buying power for things like small parcel freight and packaging supplies, and extensive experience and knowledge of best practices. They offer a practical alternative to the significant overhead investment required to add your own distribution centers.
Is it time to upgrade my fulfillment provider?
If you currently outsource fulfillment operations, it is important to evaluate your provider regularly to ensure that they are still the best fit to meet your needs. The provider you selected when your business was just getting off the ground may not be able to handle the complexity of operations as you grow. Often companies find they need to transition to a new third-party partner when they add a new sales channel or expand into new product lines or markets, for example.
Watch for signs that you may have outgrown your current provider such as service failures, delivery delays, increased costs and incompatible corporate cultures.
How do I get started?
If you decide that outsourcing is right for you, take time to research potential partners carefully. Ask colleagues for recommendations, attend trade shows, read industry publications, leverage social media and talk to consultants.
Give careful thought to your overall business goals and specific fulfillment needs – share these with potential partners and spend time reviewing them together. When they understand the bigger picture, they’ll be able to design solutions that address your current needs as well as issues you haven’t yet anticipated. Talk about how you’ll define a successful partnership.
Ensure that your potential partner has the experience you need, keeping in mind any specialized needs you may have – omnichannel, subscription, direct selling, etc.
Since you’ll need to collaborate closely with your provider, consider their company culture and make sure it’s a good fit with yours. Verify the company’s financial stability as well. You want to find a partner that can go the distance with you, so you don’t need to repeat the search process just a year or two down the road.
With thoughtful consideration, you’ll find the right fulfillment company to meet your needs… today and tomorrow.
For more on the in’s and out’s of order fulfillment and tips on finding the best provider, read our new ebook: the Ultimate Fulfillment Outsourcing Guide.