One day a couple of years ago, we felt it was finally time to reclaim our daughter's bedroom for sleeping instead of storage, and we discovered the garage was pretty much packed to capacity with product.
That same day, we realized we were spending way too much time and energy on receiving shipments, organizing inventory and repacking product to send to our retail customers. This was time, after all, that we could have been spending on sales and marketing efforts, rather than the seemingly never-ending task of sorting through boxes and packing accurate shipments.
Not that I was complaining. After all, this was one of those "good" business problems. It meant our sales volume had grown and that we had more inventory and orders than ever before. It also meant, though, that we needed to find a solution in order to ensure our customer service remained up to our standards because there simply wasn't enough time in the day anymore to handle it all ourselves. We needed a place where we could store our ever-growing inventory and someone who could make shipments for us.
I use our story to illustrate that there comes a day when almost every "kitchen table" business must decide to outsource certain tasks. Warehousing and fulfillment is one of these tasks, and outsourcing can be a great solution when you begin finding yourself spending too much time on receiving, storage and shipping--time that would be better spent on what you see as the core activities to building your business.
So what's the solution?
There are a number of avenues to pursue when you begin needing more storage space or, even more important, more time. There are companies that conveniently offer both warehousing and fulfillment under one roof. There are also companies that offer these services separately, if that makes more sense for your particular needs or if, right now, you simply require only one piece of the puzzle. The key is finding a company or companies that do these things well and at an affordable price.
Warehousing and Fulfillment Basics
First, let's define these two functions in detail. For your storage needs, you'll require a warehouse--a company that can accept shipments of your inventory from your manufacturer and store them safely. The options range from the completely informal--renting a friend's unused garage space to self-storage facilities where you can drop off and pick up inventory yourself--to tightly-run warehousing operations that manage hundreds of thousands of square feet of inventory, as well as handle receiving and shipping.
You can also get creative. For instance, in the course of conversation one day, I discovered that one of our online retailers had extra storage space and offered fulfillment services (which we'll get into more detail about next), so we created an arrangement where they provided all our warehousing and fulfillment operations.
So what exactly is fulfillment? A fulfillment house (which is often an added service of a warehouse, a combo that can help simplify this task even further) will send out your orders as instructed. In other words, if XYZ store orders 50 of your widgets, you would simply send word to your fulfillment house in whatever mode of communication they prefer (e-mail, fax, etc), and they handle the order for you. Seems simple, right? Well, it is, but there are specific factors you should be aware of before making a final decision on your warehouse/fulfillment center.
First, examine your specific business needs right now as well as your anticipated needs for the near future. Even if you can still handle your orders at this time, think ahead to six months or a year from now. If you anticipate relatively fast sales growth, you may want to find a solution you can grow into rather than reinvent the wheel in a few months.
Also, you should look for a company with a good track record and reputation. Find out how many years they've been in business (although new companies can be good partners, too), the types of customers they service, the specific services they offer, their quality control processes, their knowledge of postal regulations and changes, and their client service practices.
Some companies can also provide value-added services, such as suggestions about increasing efficiencies or decreasing postage costs. Find out if there's a contact person who'll help you come up with strategic solutions for your overall shipping needs.
Also, it's critical that you understand the costs involved and price-compare multiple vendors. Costs are typically line-itemed, and they vary from operation to operation. These line items include:
- Setup fee
- Receiving-packages fee
- Storage fee by square/cubic foot or by pallet
- Stacking or shelving fee per box
- Per-order fee
- Per-item fee (if you have more than one SKU)
- Packaging fee and box fee (if warehouse must break open an existing box)
- Shipping-label fee
Also, some warehouses may charge you a percentage of each order to handle your needs. Be sure to get all details in writing to ensure you're both on the same page. These details should include extra costs and estimates of work to be done.
Once you've narrowed down your options, ask for a list of current or recent customers as references. When you call them, ask about customer service, quality control and timeliness. Quality control is a big factor because if orders are sent out incorrectly, retailers may penalize you with a chargeback fee. Ask your potential vendors what they do in the event orders incur a chargeback fee.
To cap off your research, you may also want to schedule a facility tour. Look to confirm the things you've been told and to get an overall impression of how things are run.
Finding a Provider
So how should you establish this short list of potential vendors? There are a number of resources that can point you in the right direction. First, ask colleagues, other businesspeople or even the U.S. Postal Service for referrals in your area. Your local chamber of commerce may also have some good leads. And the tried-and-true Yellow Pages can also be a smart place to look.
Also, keep your eyes open when attending trade shows to determine which companies specialize in servicing your industry. Finally, you can search for companies via the International Warehouse Logistics Association ( www.iwla.com ) and at http://www.MFSAnet.org . Members of both these organizations provide the kinds of services you're looking for.
Start outsourcing your warehousing and fulfillment, and soon you'll be well on your way to claiming back your living space--and some very valuable time--as you put away that packing tape forever. Good luck with your search!