Outsourced Warehousing and Fulfillment for Small Businesses

January 22, 2013 at 6:23 AMScott Frederick
The following guest blog post is being published compliments of Will Schneider, the Co-Founder and CEO of WarehousingAndFullfillment.com.

Is Outsourced Warehousing and Fulfillment Right for Small Business?

At some point in time, most small businesses that sell product will be faced with the option of either keeping the warehousing and fulfillment of product in house or outsourcing it to a third party fulfillment company. This is a very difficult decision for small business owners, in large part for three main reasons. First, this is your company and your product — and despite the wonderful things that outsourced providers will tell you, no one will care about your business as much as you. Second, many small businesses face cash flow issues that make it seem easier to use internal resources. Third, change is painful, especially when you consider that you'll be moving your inventory and the logistics of establishing new processes and procedures. But be careful of letting these factors make the decision for you. Performing a full comparison may reveal that outsourcing is a better option than anticipated.

Is Too Much Control a Good Thing?

It's certainly true that no one will ever care as much about your product as you — but there are countless providers that will care about your product enough to get the job done extremely well. And on top of that, fulfillment companies specialize in the distribution process, so they will most likely be able to perform these services more efficiently and effectively than you — which can translate into cost savings and happier customers. The best fulfillment companies will have standard procedures in place for product training so that they fully understand your product and business as well as quality controls and performance metrics that can be used to hold them accountable just as you would any employee. Finally, consider the fact that warehousing and fulfillment takes a great deal of time if done right. Is this really where you want to allocate your valuable time? There may be more beneficial things for you to pursue with this most precious resource.

Does Outsourced Warehousing Really Cost Too Much?

Sometimes finances can cause small business owners to shy away from outsourced fulfillment. In fact, this is the area of the analysis that causes the greatest amount of challenge — largely because small business owners fail to account for all of the relevant costs and because they struggle with comparing —apples to apples.' When running the cost comparison, be sure to include the following in the analysis:

  • Include all —in house' costs, such as salaries, benefits, insurance, leased space, utilities, depreciation, materials, packaging, equipment, etc.
  • Don't forget to allocate any management time or support services such as customer service
  • Pay close attention to —hidden' in house costs, such as shipping supplies (scales, postage software, etc.) — these costs can add up to more than $3,000 per year and are often ignored
  • Include all opportunity costs — such as the cost of spending time on shipping when it could be spent on value producing activities
  • Ask the outsourced providers to help you determine any cost savings from using their freight account
  • Account for the value from paying a fulfillment company on monthly invoice terms rather than paying expenses, such as payroll, more frequently

The bottom line is that there may be significant cost advantages of outsourcing if all costs of in house operations are considered.

Don't Let Fear of Change Inhibit Future Freedom

Moving inventory to a third party warehouse requires a good amount of work. Think of how much fun you had moving to a new residence. No wonder many businesses refrain from outsourcing because of the fear of the logistics of moving! But keep two key points in mind when deciding if the pain of moving is enough to stop you from outsourcing. First, be aware that fulfillment companies have created processes and procedures to make a move as streamlined as possible. From integrations with shopping carts to procedures for quickly receiving product into inventory, they've mastered the art of bringing a customer on board while minimizing pain. Second, be careful to remember that the only way you can free your plate of the large amount of time spent on shipping is to overcome the hurdle of the transition. Getting over this hurdle is necessary to achieve the freedom that comes with having another provider take the heavy burden of shipping for you.

Unfortunately, there is no all inclusive answer as to whether or not outsourcing is the best option for your company. However, the only way to determine the best course of action is to take a look at all of the pros and cons. By looking at each factor, you'll be able to make the best decision for your company.


The 'Golden Rule' for 3PL Customer Service

January 10, 2013 at 6:22 AMScott Frederick

PartnerShip Contact Us PictureI stumbled upon an article today written a while back by John Rodeheffer of Inbound Logistics. The article is titled "Does Your 3PL Provide 'Golden Rule' Customer Service?" It caught my eye because PartnerShip, being somewhat of a 3PL ourselves, aspires to provide excellent service to our customers day in and day out. So I was curious what the author had to say.

In the article, Mr. Rodeheffer paints a picture of the ideal third-party logistics provider (3PL) that does whatever it takes to fix shipping problems, believes there is no such thing as "just a transaction," and treats every customer interaction as a chance to build a trusting relationship. To achieve such 3PL harmony, he suggests that shippers look for a 3PL that employs the 'Golden Rule' of customers service. Additionally, he offers the following tips for determining if your 3PL values and delivers Golden Rule customer service:

  • Browse the company's Web site. What kind of ethics do the owners say they embrace? Read the Mission and Values statements and check for membership in the local Better Business Bureau and service organizations. Note any local, regional, and even national service awards.

  • Get to know the provider. What kind of experience does your 3PL have? Does it strive to do the right thing in every dicey situation? Does it push to get positive results for customers and live its values in every decision? A corporate culture establishes itself in every company, no matter the size. The best corporate cultures are intentionally cultivated and reinforced by management— from the CEO to the college intern.

  • Consider the provider's communication policies. What communications channels are available when weather, mechanical problems, or road conditions delay shipments? Do you have to babysit your provider and worry about your shipment, or are you kept informed throughout the entire life of a load?

  • Talk to your peers. Ask industry colleagues who they prefer to work with, and what kind of experiences they have had. Have they pulled contracts from the logistics company you work with? Has the 3PL's employees treated others with honesty, integrity, and loyalty? Also talk to carriers. Who do they prefer to take loads from? When a small hauler likes a 3PL, you can bet the company is worth a look.

The PartnerShip Test

As I think about these four areas for Golden Rule customer service, I am comforted by the fact that PartnerShip is doing its part to pass every one of these tests. Specifically, we here is how we stack up:

  • PS Live ChatBrowse the PartnerShip.com Web site. While our current site is fairly transparent, I am excited that later this month we will be introducing a brand new PartnerShip.com website that includes a detailed company overview (mission, values, etc.), local and national recognition and affiliations (including top workplace awards Better Business Bureau membership), and a variety of prominent ways for customers to contact us (by form, email, phone, or even live chat).

  • PS Employee DirectoryGet to know PartnerShip. In addition to a detailed company overview, our forthcoming new website will include pictures and contact information for every employee of the company - now that's transparency! We'll also introduce you to our senior management team, and provide you with even more details and tips on the services we provide and how best to access them.

  • PS Contact UsConsider the PartnerShip communication policies. Unlike many 3PLs, I am proud to say that PartnerShip assigns a small, dedicated regional team with one primary contact to every new customer. This team has total accountability for customer satisfaction, including regular communication regarding service issues, weather delays, and claims resolution. And as I mentioned above, we don't bury our contact information - we display it prominently on our website.

  • PS Recommendations WebTalk to your peers about PartnerShip. I continue to be impressed by that fact that PartnerShip receives customer recommendations and business referrals on a regular basis. So if you ever have a chance to talk to one of our customers - we'd highly encourage it. Being founded as a small business subsidiary of a non-profit organization twenty years ago, we know how important the 'small stuff' can be to a small business that is trying hard to succeed. That's why no request is too small or big in our minds when it comes to helping a customer be successful.

If you took the time to read this blog post and are interested in learning more about PartnerShip, please give us a call or send us a note. I promise that you'll receive Golden Rule customer service from our team!

2013 Small Package Rate and Accessorial Increases Report

January 2, 2013 at 8:45 AMLeah Palnik

2013 Small Package Rate IncreasesNear the beginning of every New Year, the shipping experts at PartnerShip dig into the small package carriers' annual rate increase announcements. We like to read between the lines for our customers, digest the tables and charts, see what information is out there that FedEx and UPS didn't say, or maybe just hinted at. As always, how much more expensive your particular small package shipments will be in the New Year largely depends on many factors, including shipment volumes, sizes, weights, and modes.

Here are some quick facts regarding this year's small package rate increases:

  • UPS rate increases in effect December 31, 2012
    » 4.9% average rate increase for UPS Ground (5.9% average increase -1% reduction in the fuel surcharge)
    » 4.5% average rate increase for UPS Air (6.5% average increase -2% reduction in the fuel surcharge)
  • FedEx rate increases in effect January 7, 2013
    » 4.9% average rate increase for FedEx Ground and FedEx Home Delivery services (5.9% rate increase -1% reduction in the fuel surcharge)
    » 3.9% average rate increase for FedEx Express services (5.9% average increase -2% reduction in the fuel surcharge)
  • UPS will enjoy an extra week of the rate increases by beginning 12/31/12 to FedEx's 1/7/13

Interested in learning more? Our exlcusive report includes detailed tables and insights. Click the button below to read on ...

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