There are situations when an intermediate fulfillment service is ideal and others where it is not. The decision can determine the color of your bottom line.
If you need to move tons of product locally or internationally, a logistics company can save you hundreds of thousands of dollars or more per year. Logistics and fulfillment companies greatly reduce warehousing, staffing, and shipping costs. You send pallets of your products to them. They integrate inventory management with your company.
You no longer pack or ship orders. This works best for non-fragile pre-boxed items. If your product has a short shelf life, fulfilling orders requires assembly, or items can be easily damaged during packing or shipment, this may not be a good option for you. There are other things to consider besides cost.
ClinicalPosters designs and manufactures some products, and fulfills most orders in-house. Dozens of material suppliers are also used. At least a couple of suppliers use logistics companies for fulfillment. Learn from their mistakes.
Posters are fragile and not prepackaged. Stacks of them sit on pallets or open shelves. Someone counts individual sheets by hand before placing them into a box and shipping via the most economical carrier. The manufacturer loses quality control. Shipping boxes are not thick enough, often overpacked, and lack sufficient contents stabilization. Product often arrives bent.
On average, it takes 2.2 shipments to receive undamaged goods from one company. Another has a success rate less than 30 percent. Resellers who place orders are as frustrated as the manufacturer who loses more than 50 percent of potential profits. But the manufacturers save so much in salaries and warehousing that they repeat the same errors over and over again. This is not the impression you want to leave your customers.
A manufacturer of several prepackaged products that are sold and boxed in lots of 144 is ideal. Several of the boxes are affixed to a pallet and shipped with minimal damage. If you have products that transport well, save money with logistics. It will help you remain competitive.
Do not let the impressiveness of mega-warehouses enamor you to the point of losing focus on customer needs. You might be able to find a niche logistics company. If each order requires a personal touch or special handling, you may be better off with in-house fulfillment, like ClinicalPosters.