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Category: Outsourcing

Over the past several weeks I have been discussing the six (6) major reasons that publishers, large and small, benefit from outsourcing their order fulfillment services to a third party vendor such as Ware-Pak.

Last week I discussed the cost-driven reasons and today, I am discussing the sixth and final topic – employee driven reasons. As promised, the combination of all of these is now available on our website on our new “White Papers” page. If you’d like to explore the white papers that are available there, please click here.

What are the Employee Driven Reasons Publishers Outsource?

Give employees a stronger career path. You should consider whether or not most of your warehouse employees are promotable to the publishing side of the businesses. If there is no possibility of promotion, what types of employees can you attract for the warehouse operation?

Increase commitment and energy to non-core areas. As a warehousing company, Ware-Pak focuses solely on warehousing. Each day, our job is to figure out how to provide publishers with the highest levels of service at the most economical cost.

If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Over the last couple months I have been discussing the important reasons why publishers, large and small, choose to outsource their warehousing and order fulfillment services. There are a number of benefits that publishers see when they choose a third party vendor such as Ware-Pak to handle their outsourcing. You can read about these benefits in the following blog entries:

  1. Organizationally Driven Reasons
  2. Improvement Driven Reasons
  3. Financially Driven Reasons
  4. Revenue Driven Reasons

I have two topics left to discuss, the first being the Cost Driven Reasons for publishers of any size to outsource their fulfillment to a third party vendor.

When publishers outsource, they experience the ability to reduce costs due to a superior provider’s performance and the provider’s lower cost structure. Typically, a publisher who performs their own warehousing function is paying a premium of 20% to 30% for this service. This does not even take into account the savings that a third party warehouse can achieve by combining the shipping activity of 50 or 100 different publishers in order to reduce overall shipping charges.

Turn Fixed Costs Into Variable Costs
One of the most difficult areas in business is the change fixed costs into variable costs.

For example:

If you own your own warehouse, and orders for the day are down, can your labor costs be reduced? Probably not. You cannot simply tell your employees to go home. They still expect to be paid for 40 hours each week. In this case, what typically happens, is that someone will find some type of make shift work for them to do. The employee stays busy, but the cost per order just increased.

If you reduce inventory levels will your rent go down? No, it is also a fixed cost. Your employees will not manage the inventory as aggressively as they should because there are no real benefits to the organization.

Stay tuned – the final entry of this series will discuss Employee Driven Reasons. The combination of these “Why Outsource” blog entries will be available as a white paper shortly. If you have additional questions, or are interested in receiving this white paper, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Last week, one of my entry’s discussed why location is one of the biggest factors to consider when choosing an order fulfillment service. But location is only one of several items that need to be taken into consideration when you are considering your needs during the fulfillment service selection process.

Today, I’m going to discuss another important factor to consider when considering an order fulfillment service:

Size and Volume

Your goal is to select a service provider that can cater to you and your daily order fulfillment needs. Fulfillment warehouses come in all sizes – ranging from very small with just a few employees, to large Fortune 500 companies with thousands of employees. On one hand you may need to ask yourself if you are the largest client, will you have to drive the organization to provide the services you need? On the other hand, if you are the smallest client, will you get lost in the daily operations?

Talk with your order fulfillment warehouse and ask about peak seasons and holidays. Peak seasons can impact fulfillment centers, and your fulfillment operation needs to be able to manage our peak season needs without any service interruptions. You will also want to know if the warehouse’s other clients peak seasons will have an adverse impact on our business. You will want to ask the following questions: How much additional staff do they hire during the peak season? How are the seasonal people trained? Do their standards for service change during this time?

It is essential that you know when the last time available is for you to send a file and the cut offs for rush orders. You will also want to know the house of operation, whether or not you will be able to contact a customer service representative during your business hours and the requirements for orders to be processed the same day.

Not all fulfillment companies specialize in certain types of projects. Some warehouses only handle full pallets in and out, and some will pick down to full cases level, while others will pick individual units, cases lots and full pallets. You will want to know what types of clients they service, if they include B2B, direct to consumers or large chains.

It is important to know whether or not the facility has the equipment in place to handle complex assembly of kits for multiple products in one single order. One method for increasing the average selling price is to develop a kit. You can have a personalized order processing system, shrink-wrapping and many other benefits. These additional services may also include returns management, confirm receipt, inspection, testing, re-packaging products and the disposition of returns. In terms of order fulfillment, what more could a company ask for?

One additional factor of size is shipping options. Make sure the fulfillment service provider you choose offers the shipping options your customers are currently using or may want in the future. Some of the smaller facilities may only work with one carrier, such as UPS or FedEx. Most facilities will work with all of the different carriers. A good question to ask is whether or not there are certain carriers that the fulfillment house does not work with.

In the coming weeks, I will continue to discuss other important items to consider when choosing an order fulfillment service. But, if you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

As you investigate the process of outsourcing to an order fulfillment service, you should begin by thinking about what you really need and want in a business partner to help grow your business. After all, the main goal is to increase sales and grow the organization both organically and externally.

On the surface, all order fulfillment services may look alike and offer similar services. However, when you take a closer look at their individual methods of delivering those services, you will find large differences. Remember that not all warehouses are created equal and the goal is to choose one that is appropriate for you and your business.

It is essential to develop a list of criteria that will enhance your companies operation. The ultimate question is what is important to your clients. Over the next few weeks, I will be discussing these important items – beginning with location.

Remember – these are only suggestions and it is crucial that you spend time developing a list of your specific needs.

1. Location

Location is one of the single most important factors to consider. While order fulfillment warehouses can be found in every state, it is essential to select a fulfillment warehouse that is close to your clients, rather than your place of business. By doing this, you will accomplish three critical actions:

  • Shipping costs will be lower
  • Transit time will be reduced
  • You will operate in a more eco-friendly manner

Did you know that shipping costs are almost equal to the fulfillment warehouse fees? If you are strictly a West coast publisher, then your warehouse needs to be located on the West coast. If your scope is national, then a Midwest location makes the most sense. With a Midwest location the savings are substantial. For example, when shipping nationally from the Midwest, you can save as much as 7% over an East coast or West coast operation.

In today’s world, when you’re competing with companies such as Amazon, clients expect quick delivery of their orders (especially internet orders). Your fulfillment center should be located in an area that can provide 1 to 3 business day transit times to the majority of your recipients.

When your warehouse operation is located centrally to your clients, you can operate in a more environmental friendly manner. Not only will you be saving money, you will also be reducing the amount of greenhouse gasses required to deliver your product to the customer.

Over the next few weeks I will be discussing other important items to consider when choosing an order fulfillment service, such as size and volume, percentage of error, technology and more. These will also be available in a Whitepaper on our website later this week. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

The number of units shipped for the month of November was very strong, when compared to the previous year. We believe the main reason for the increase is due to a timing issue with Christmas orders for the smaller publisher. In October, Ware-Pak experienced a shortfall due to Christmas orders being pushed into November by the smaller retailers. When we analyze the October shortfall and the November increase, they average out to a normal season.

One interesting thing we did notice during the month of November was that even with return orders increasing, the number of books returned was down by almost 36%. My impression of this is that our clients have done a much better job of managing inventories in the retail market.

Below are Ware-Pak’s November Outsourcing Performance Numbers:

Orders: Units:
Outbound 17,568 Outbound 702,467
Inbound 2,479 Inbound 568,664
Returns 2,359 Returns 60,165
Total 22,406 Total 1,331,296

Speed and Accuracy Statistics:
Accuracy = 99.97%
Same Day Shipping = 92.1%
Shipped within 24 hours = 98.6%
Returns Processed Same Day = 87.7%

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