Warehousing and Distribution: Ownership vs Outsourcing

March 03 2016
outsourcing-warehousing-and-distribution-or-in-house

Warehousing and Distribution: Ownership vs Outsourcing

There will come a time in all product-driven businesses when there’s a need to re-evaluate the profile and performance of warehousing and distribution operations. This pause-for thought could be kick started by rapid expansion, or the need to lower overheads at a time of increased market pressure. As a business owner or executive manager you will probably already have some instinct on which route is best for your business, and we thought we would perhaps help clarify your mind by defining what we see being the pros and cons to outsourcing versus owning and operating.

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PRO’S

Reduced Capital Investment

If you are to start or grow your own site operation, there are the obvious up-front costs to bear. But in addition to buying or renting space, you will become responsible for securing that space 24/7-365, recruiting and training staff, buying and maintaining plant equipment, installing the racking, and introducing the right HR and IT infrastructure to handle it all. There’s sure to be a substantial learning curve that comes with the big bill too!

Shipping Costs

Naturally, tapping into the accounts of a pallet or courier network provider can pass on significant cost savings to individual businesses. For example, we are able to offer reduced costs to our clients due to the relationships we have built with our networks and representatives and via the economies of scale that are derived by providing that service to numerous individuals.

Expertise & Compliance

Not only will you need to quickly learn how best to run your warehouse and operations efficiently and effectively, but also lawfully. Outsourcing your warehousing and distribution operations provides you with dedicated professionals who have substantial experience in the business and with made-to-fit systems to support them. Plus we are poised to remove a whole heap of HR and compliance related strains from you, allowing you to concentrate on sales and marketing and perhaps, world domination!

Flexibility

Paying for space you don’t use as demand fluctuates, or keeping masses of slow-moving stock on shelves is a bad idea. Having access to space in a warehouse that is able to offer you flexible storage arrangements and payments dependant on your stock and performance can make the difference between whether you suddenly ‘sink or swim’.

Single point-of-contact

If anything goes wrong or you simply want clarification on a matter, you will have one point on contact to sort it out. We will assign you with an Account Manager right from the get-go who’s job it is to take much of the headache out of running a product supply or ecommerce business away from you.

International Orders

At PDX we are well versed in dealing with overseas distribution. At great pains we have discovered but have overcome all the potential pit falls and red tape of importing and exporting goods. We are now so experienced in these areas that if we don’t know the answer we know someone who does, so you don’t have to worry! For example, trawling through Import Tariff Codes to ensure you pay the correct Duty & VAT is a nightmare and if you get it wrong it can be very costly.

Focus

If your sales are growing and you’re keen to capitalise on your potential for expansion, then it’s no longer viable to micro-manage the business. Outsourcing your warehousing, distribution and fulfilment operations will leverage your time so substantially, you will probably wish you had done it sooner.

CON’S

Control

For some owners and managers, being able to physically walk amongst their stock on a regular basis, seeing exactly where their investment lies and what shape it’s in, gives them a greater sense of ownership and security. We fully understand this but if that’s you, maybe instead of jumping in with both feet by moving all your stock to PDX, you could consider outsourcing just your fastest moving product, or a single product line just to test our processes and see how far our performance and provision of real-time online inventory management software might go to alleviate your concerns.

Low Volumes

Outsourcing your operations to a third-party isn’t suitable for all businesses. If you are running a fledgling business and are worried that the cost per cubic feet for storage space will eat into you profits, there is still no harm in talking to one of our experts to see if we can help as the flip side of that coin is, to remember you will also be investing in buying back the time you have lost to DIY and instead can focus on growing your business and increasing sales.

Costs

We always strive to be competitive in our industry but just like any other business our costs can fluctuate. Therefore it’s best to make sure that the financials of outsourcing aren’t small but significant. That way if we have to review our prices, you remain in a strong and profitable position.

Data Protection

We understand that sharing your sales data with a third-party can be a cause for concern. However we take our contract with you very seriously and we promise never to share your information with anyone.

Learning Curve

Never underestimate the time and energy it takes to introduce new teams, processes and equipment into your business. Whilst you may think it will be worth it in the long run, the hard journey to get there might just prove to be your undoing.

Conclusion

Our analysis takes the conclusion that the Pro’s out way the Con’s. Outsourcing may not be suitable for all companies, but for those of a certain size who are looking to expand it often is, similarly, those who wish to cut fixed costs also see the advantages of outsourcing their order fulfilment.

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