Rapid growth is always the goal but the path to that growth may be daunting. As demand for products grows, all aspects of that business must grow along with it.
Increasing capacity to meet demands can take money needed to service new customers. Because of this, businesses should consider outsourcing fulfillment during times of rapid growth. This allows businesses to focus efforts on servicing and expanding their client base.
Outsourcing fulfillment offers many solutions to growing businesses. It is the most cost-conscious, adaptable and accessible solution for a growing enterprise. This guide will show how fulfillment services can help with business growing pains.
Be Cost Conscious
Business owners might see increased revenue as an excuse for short-sighted spending. This is until the increased costs of servicing new clients and markets begin to mount.
Companies could invest large sums to expand manufacturing only to find that they do not have money left to grow other aspects of the business. As important as it is to meet demand, servicing new accounts is key to retaining customers. Because of this, these sunk costs represent a real hazard to a growing business.
Cost savings from outsourcing fulfillment free up funds when a company needs it most. As a business grows, it may be necessary to set up an entirely new division or hire a representative in new areas. Adjustments to your marketing efforts will be necessary to remain relevant in new markets. Many new costs can come up as your customer base expands.
These services and many others are important to sustaining growth. Companies with money tied up expanding production might find themselves short when it comes to these essential services. More than anything, this is an important reason to consider outsourcing fulfillment.
Adapt to Changing Demand
Growth for a developing business is never on a straight line. Seasonal effects may still cause lulls in the short-term. Bulk orders by retailers could cause quick spikes in production demand that don’t need to be maintained. It may be very difficult to adapt to changes in volume if you decide to handle fulfillment in-house.
Outsourced fulfillment services are designed with this specific problem in mind. These manufacturing and logistic specialists use their expertise to make scaling operations seamless. During times of high demand, these companies do not need to expand capacity. This lowers up-front costs. They are also able to sell their excess capacity to other customers. This saves on sunk costs during times when demand is growing at a slower pace.
Many of these services will handle the entire order fulfillment process. This takes away the need to make changes in inventory management or the costly business of expanding warehousing. Their ability to scale is what people often find most attractive about this solution.
Access to Expertise
As stated above, fulfillment service companies are experts in manufacturing and delivering products. Their entire business is based on their ability to perform high-quality fulfillment services at a low cost.
Companies that outsource fulfillment services get these companies expertise as an added bonus. Most fulfillment services specialize in a specific market. It is likely these companies have experienced the shortcomings and shortcuts in the market already and found which to avoid along the way.
Those same experts can be hired when expanding production in-house but the cost may be prohibitively expensive. The experience these fulfillment companies have, on the other hand, is invaluable. The best opportunity a growing business may have to consult production experts could be to hire a fulfillment service. It is certainly the most cost-effective way.
Fulfillment services are a great resource for a growing business. The decision to use these services does not prevent you from expanding your own production in the future.
It is important to realize all the costs involved in growing a business to meet demand. If those resources and time can be saved by using a fulfillment service, it may be a good idea to explore this option.