When it comes to ecommerce, optimizing order fulfillment and warehousing are crucial. A 3PL can help with these elements and a lot more. How exactly? In this post we are covering the various ways that an experienced 3PL can optimize your order fulfillment for increased efficiency and reduced mistakes.
What is an Outsourced Order Fulfillment Service?
Outsourced fulfillment services take over the running and managing of warehouses, including picking, packing, and shipping products. This means business owners don’t need to take on the hassle of order fulfillment and instead can concentrate on other activities that grow their businesses.
Many 3PL companies who specialize in ecommerce have order or inventory fulfillment services as part of their comprehensive set of solutions. In this arrangement, you would typically rent space from a 3PL business that warehouses your products and processes your orders for shipment as soon as they are purchased. They will help you to integrate your ecommerce store with their own inventory management system to streamline the entire order fulfillment operation. The 3PL will pick, pack, and prepare your orders for shipment and then coordinate shipment pickups with various carriers.
Benefits of Outsourcing Order Fulfillment to a 3PL
Working with a 3PL offers a host of benefits across a wide range of your supply chain. When it comes to outsourcing order fulfillment to them as well, there are some specific advantages. Here are some of the key benefits.
- You can avoid long-term lease agreements. When you keep fulfillment in-house, then you need to enter into lease agreements in order to rent warehouse space. Any time you can avoid a long-term financial commitment, it’s a good idea to try. This is particularly true if you plan to grow your business and may need to scale your warehousing solution eventually. Avoid that type of overhead by letting a 3PL take over your order fulfillment. Then, you’ll only be charged for the space you’re using, and they can help you to make changes as your business needs grow (or shrink).
- It keeps your business structure leaner. Backend logistics can be a labor-intensive process. When you keep ecommerce fulfillment internal, then you need to deal with a more complicated business structure. Consider the space you need to rent, the staff you need to hire (not to mention training them, etc), and investing in all of the tools necessary to pick, pack, and ship orders accurately. By outsourcing, these tasks all fall to the 3PL, which keeps your own business structure simpler and leaner (and less costly).
- Business leaders can focus on their strengths – When you started your business, chances are you weren’t passionate about the aspects of packing and shipping your products. You probably viewed that as a necessary aspect of doing business, but can think of several areas where your talents would be better spent. As your business grows, it can become too easy for staff to get bogged down in these operational processes that are cumbersome and time-consuming. As a business leader, it can be difficult to know where to spend your valuable time. In order for your company to really thrive, something has to give. A 3PL warehouse has an experienced team and a streamlined process for order fulfillment. Let them handle these day-to-day operations while you focus on the bigger picture. In truth, an experienced 3PL can do it faster and better than you – so why not let them?
- Better management of seasonal and sales fluctuations – Many organizations have some form of seasonality to their business – highs and lows. When you maintain order fulfillment in-house, your costs are the same across these seasons. You still have to pay your workers and other overhead even during slow periods – which can lead to periods of costs beating profits. On the other hand, when you entrust order fulfillment to a 3PL, you will experience savings on warehouse staff, lease obligations, and other cost components. Just as importantly, you’ll only pay for the space you’re actually using with the 3PL. If you hit a slow period, you can adjust the warehouse space that is being used. The opposite is also true: if things suddenly pick up, the 3PL can move quickly to accommodate your increased demand.
- Lower shipping costs – Shipping can have a huge impact on your overall margins if you don’t have a good strategy. By having goods stored closer to your customers, you can reduce shipping costs and times (and keep customers happy). How can that be done, though? Many 3PLs have warehouse locations across the country, which makes it easier for them to offer lower shipping rates. For instance, Taylored has operations in several areas of both the east coast and west coast, with facilities in major port areas to make it easier for goods to get to customers anywhere in the country. On top of that, 3PL companies can negotiate discounted shipping rates from couriers because of the large volume of orders they process. Additionally, they have access to powerful technology that lets them browse and compare shipping rates, which can make a big impact.
- Better technology and inventory management – Inventory management can be quite a headache and not only use up a lot of time, but lead to costly mistakes. When you work with a 3PL company, you eliminate much of this headache. Their inventory management systems use the latest technology and most modern tools to process and ship your orders. When you work with a 3PL on fulfillment, you can integrate with their systems and eliminate risk and shipping errors. 3PLs have more sophisticated tools that can ensure accurate and efficient order fulfillment. Using state of the art inventory management technology, you can more easily track stock levels, process payments, select carriers, and streamline the packing and shipping processes. Simply put: a 3PL is likely to have better technology than your company, with the most experience in using it. Why not take advantage?
If you are at the point in your business where these advantages sound appealing, it might be time to consider outsourcing fulfillment to a 3PL. Taylored offers robust 3PL solutions including multi-channel fulfillment, warehouse management, ecommerce fulfillment, and other value-adding services that can make your job easier.
