The 7 Hidden costs of In-house Fulfilment
1st December 2017
Whether you manage back issues of magazines, delegate bags for your events, sending out samples or something else – you may think you are saving money by doing it in-house.
However, although there are costs associated with using a fulfilment company you will ultimately be able to save money and grow your business. Below are some of the hidden costs in warehousing and storing your own product which can help you weigh the cost benefits of using a fulfilment company.
Here are the top 7 hidden ‘profit hoovers’ of a DIY fulfilment solution.
#1 – Holding stock takes up space. Have you calculated the cost'
Whether you are renting warehouse space or storing your materials in your office or home, the cost and inconvenience of storing products is high. Space requirements are often close to double the size of your inventory as you will need to access and move materials easily as well as have enough space to accommodate large shipments. Product packaging like boxes and packing materials also take up considerable space and need to be factored in.
#2 –How much value do you put on your time'
Nothing is as valuable as your time. Even if you do not account for your time as an expense, the opportunities lost by warehousing, managing or fulfilling your own product can significantly affect the growth of your business. What’s more, if you have several duties what gets left' Even if you have an employee to delegate to, there’s the expense of their salary and time in training.
#3 – Is your inventory management accurate'
Ensuring your products are stored securely is important to protect your goods from being damaged or lost. In order to fulfil items quickly and have accurate stock levels you will need to invest in some form of inventory management and ensure you’re correctly receiving and deducting shipped items as they are dispatched.
#4 – Are your packaging costs competitive'
Ordering in large quantities of packaging materials generally allows for packaging discounts. But what about the storage space, cash tied up and the time it takes to get through the bulk order – not to mention the possibility of your packaging requirements changing.
#5 - Are you getting the best mailing prices'
If all your mailings are the same size, weight and relatively similar postal areas, you may be able to negotiate a competitive rate. But if your packages vary in size, weight and different countries or postage tariffs, the likelihood is you’re not getting the most competitive rates or best service levels.
#6 – Are you accurately costing your fulfilment or just guessing'
You could be over-calculating costs or not factoring in enough. Either way it is difficult to get an accurate figure for what the total fulfilment of your product is, which is a problem if it’s a ‘one-off’ but could be catastrophic if it’s an ongoing requirement. You can benchmark several outsource fulfilment houses and take a view on costs and service levels. It’s difficult to get this objective perspective when managing the process in-house.
#7 - What’s the lack of expertise costing you'
How much do you know about fulfilment' It can be more complicated than it appears and might be more trouble than it's worth to attempt a DIY solution. By outsourcing order fulfilment to a company that doesn’t charge high fixed rates or impose big minimums, your business becomes more flexible and scalable. It’s also less affected by seasonality, typically resulting in a lower and more consistent, predictable cost per order.
Our fulfilment team spends their days on one thing and one thing only
Managing your own fulfilment can provide additional control and comfort but there are many hidden costs that you will need to take into account when evaluating your options. Using an outsourced fulfilment provider like Spatial Global will reduce your costs and help improve your efficiency with proven systems and processes. If you want to know more then please request our free audit.