Friday, 03 April 2009 16:48 Written by Ware-Pak 0 Comments

Publishers feeling the pinch are looking for ways to cut back on costs without sacrificing quality service. Many have turned to outsourcing warehousing and fulfillment services as a way to eliminate fixed costs and increase supply chain efficiency.

Outsourcing warehousing services allows you to accomplish two main goals:

1. Redirect your focus on your core business
2. Convert a fixed cost into a variable cost

Today, I am focusing on the second goal – converting a fixed cost into an expense that can fluctuate with sales.

For publishers who handle their own warehousing, one of the hardest (if not impossible) things to do is to cut expenses by an amount equal to their decrease in revenue. This is because the biggest expenses are fixed expenses:

• Rent – Landlords don’t care whether your building is running at 80% or 60% of capacity. They still want 100% of their rent.
• Utilities, taxes, depreciation and building maintenance costs remain fixed whether the warehouse is at 50% or 60% of capacity.
• Labor costs in the warehouse are very difficult to cut, especially if you already have a small staff.

By outsourcing, these items become variable costs, not fixed expenses, AND the responsibility for managing them is shifted to your fulfillment center. If orders drop by 10%, the charges for picking will be reduced by that amount. When you look at your inventory and decide to remainder a slow moving item, your storage costs (rent) will fall by each pallet you remove from the facility. In other words, your expense will fluctuate in a manner that corresponds to your level of activity.

Another advantage offered by Ware-Pak – Virtual Warehouse technology – helps publishers eliminate excess stock. Customers view their inventory items and orders being processed in real time. They see which items need to be replenished and which are fully stocked – eliminating excess.

Finally, because warehousing is our only business, outsourcing to Ware-Pak means more same-day shipments. Our performance records show that 90% of all files received by 5:30 PM CST will ship the same day – 98% within 24 hours.