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Whether you’re a start-up eCommerce business or a longtime retailer, understanding the advantages that an outsourced inventory management strategy can provide is key to taking your success to the next level.
Outsourcing your inventory management processes is a strategic business decision that offers numerous benefits, including:
The resulting boost to your order fulfillment operations makes this move a no-brainer. Read on to learn more about how making the decision to outsource this vital part of your supply chain can pay dividends for your business.
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First things first: Outsourcing inventory management refers to the practice of contracting with a third-party logistics service provider (3PL) to manage and control certain aspects of your supply chain – namely, the management of your inventory.
This can mean everything from the physical storage and distribution of your merchandise, to digitally monitoring and managing stock levels.
Let’s be honest: running a warehouse isn’t cheap. Leasing space, hiring staff, investing in security, and implementing tracking software all come with a hefty price tag. Take this calculation for hiring a warehouse worker as an example:
| Annual Salary | $30,000 |
| Healthcare Benefits* | $14,500 |
| Hiring Costs | $2,000 |
| Onboarding Costs | $2,000 |
| Total Annual Budget Needs: | $48,500 |
Source: Kaiser Family Foundation
And that’s just for a single employee. Now imagine having to staff an entire warehouse; not to mention all of the equipment and resources needed to run it. Outsourcing your inventory management allows you to cut out a lot of these expenses.
Third-party logistics (3PL) providers already have the facilities, technology, and workforce in place, which means they can spread those costs across multiple clients and offer you a more affordable solution. You’ll only pay for the space and services you actually use, which is especially great if your inventory needs fluctuate.
Plus, outsourcing can also help you avoid tying up money in excess inventory. 3PLs are equipped to help you maintain just the right amount of stock, reducing storage fees and freeing up your cash flow. You’ll have fewer headaches over balancing costs, and more funds available to reinvest in your business.
Managing an extensive inventory can take an overwhelming amount of time and energy, especially when you factor in the shipping, receiving, and valuation of your entire stock. But what if you could hand that part of your business over to a partner who could efficiently handle that for you, while charging a fair price that allows you to still reach your own financial goals?
With a 3PL managing the behind-the-scenes inventory tasks, you can shift your energy back into core activities, like refining your products, boosting marketing, or enhancing customer service.
It’s not just about freeing up time, though. 3PLs are experts in the field; they’ve refined their processes to be as efficient as possible, which can lead to faster order fulfillment and fewer errors.
They’ll be able to handle day-to-day logistics with an efficiency that’s hard to achieve without a dedicated setup. This means your customers get their orders quicker and more reliably, and you get the peace of mind that comes with knowing your logistics are in skilled hands.
One of the biggest advantages of outsourcing is the flexibility it brings.
Say you’re gearing up for a big sales season or planning a product launch — with a 3PL, you can quickly scale up your storage and fulfillment needs without the hassle of finding extra space or hiring temporary staff. And when demand slows, you’re not stuck with extra warehouse costs; you can scale back just as easily.
Many 3PLs, like us, also have an established network of facilities in regions around the country, which can be a game-changer if you’re considering expanding into new markets.
Instead of figuring out the logistics on your own, you can lean on your provider’s experience and infrastructure to make your expansion smooth and efficient. It’s like having a shortcut to growing your business, without all the usual growing pains.
If you’ve ever looked into advanced inventory tracking systems, you know they can be pricey. For a small business — or any business really — the upfront cost alone can be prohibitive.
Fortunately, outsourcing to a 3PL that already employs these systems means you get instant access to cutting-edge tools like automated ordering systems, real-time tracking, and even predictive analytics, all baked into the cost of third party support.
These tools can make your inventory process far more efficient, helping you keep up with demand while avoiding stockouts or overstocking.
And it’s not just about the technology, either. 3PL providers are filled with logistics experts who handle these tasks everyday. They stay up-to-date with the latest best practices, industry trends, and regulations, which means they bring valuable expertise to your operation.
It’s literally like having a team of logistics pros on standby to support your business, minus the hiring and training.
Access to information and time to market are both critical components of a successful business. With outsourced inventory management, you get real-time access to your stock levels, inventory movement, and even sales trends.
This kind of visibility gives you the control to make better decisions. If you see that a product is selling faster than expected, you can reorder quickly to avoid running out of stock. Or, if demand slows, you can adjust ordering to avoid excess stock. At any given moment, you can:
This responsive approach helps you stay agile in a competitive market.
Keeping your customers happy means delivering their orders quickly and accurately, and a reliable 3PL can help you do just that.
These providers have the systems and expertise to manage fulfillment with high accuracy and speed, regardless of valuation, which means fewer delays and errors in getting products to your customers. When customers receive their orders on time, they’re more likely to have a positive experience with your brand, boosting loyalty and building your reputation.
A lot of 3PLs, including Fulfillment and Distribution, also have strong partnerships with carriers, so they can often get you better shipping rates or quicker delivery times than you could get on your own. This can be a real differentiator in today’s market, where fast and affordable shipping is something customers expect.
Inventory management comes with risks, from compliance issues to logistical hiccups. By outsourcing, you can shift many of these risks to your provider.
They’re equipped with contingency plans and insurance, and often have a broader network that allows them to adapt quickly if something goes wrong, like a natural disaster or a supply chain disruption.
Plus, 3PLs are accustomed to handling complex compliance requirements, so they’ll ensure your inventory processes meet industry standards without you having to dedicate resources to monitoring regulatory changes. You get the security of knowing risks are being managed professionally, while you focus on growing your business.
A big perk of outsourcing is gaining access to your 3PL’s network.
A good provider will already have established relationships with carriers, suppliers, and distribution centers strategically located throughout the country, which means faster, more reliable logistics solutions for you. These connections can also lead to cost savings through negotiated rates, and you get the benefit of efficient service from day one.
Fulfillment and Distribution has dedicated partnerships with other facilities and carriers nationwide. With these connections in place, you’re in a better position to expand into new markets or adjust your distribution network as needed. This network lets you deliver a seamless experience to your customers, wherever they are.
Staying compliant with regulations is essential, but it can also be time-consuming. 3PLs are accustomed to navigating complex compliance requirements, so by outsourcing, you ensure that your processes are up to date with industry standards. This is especially valuable if you’re expanding into new regions, where regulations might differ.
Knowing that your logistics are compliant gives you peace of mind and frees you up from the burden of monitoring regulatory updates. It’s a practical way to stay focused on business growth without risking potential fines or disruptions.
When inventory is mishandled or miscounted, you’re losing money. Inventory shrinkage — losses from theft, damage, or misplacement — can really eat into profits, and keeping tabs on it is a job in itself.
Outsourcing helps minimize these losses. 3PLs use advanced tracking systems and security measures to prevent shrinkage, plus they train their teams to handle inventory with precision.
With a strong inventory management system in place, you’re less likely to lose stock and more likely to keep your margins healthy. This not only preserves your bottom line but also means more reliable inventory counts for better forecasting and planning.
Before making your final decision, there are some important points to keep in mind. After all, you are basically giving up direct control of a major part of your business.
You’ll want to consider:
Choosing the right provider for inventory management services is a decision that will have a long-lasting impact on your business operations. It’s the most visible part of your business to customers, so keeping them satisfied is key.
Take your time, do your homework, and ensure that your chosen provider meets your specific requirements. Remember, at Fulfillment and Distribution, we have decades of experience and are always looking for ways to expand what we can provide you.
Once you’re prepared to take the plunge and start outsourcing your inventory management, contact the experts at Fulfillment and Distribution to handle all of your needs in that arena. We offer warehousing and systems to manage the supply chain of all your products.
Gain access to:
This way, your focus can be deployed where it matters — on the making and marketing of your products.
As a full-service 3PL provider, we can handle every aspect of your supply chain, from the warehousing and inventory management, to the order fulfillment and distribution of your products. With our decades of industry experience, you’re truly in good hands. Fill out a risk-free quote or get started by calling us at (866) 989-3082 today.
