The Strategy of Outsourcing Fulfillment

Outsourcing a fulfillment operation is a proven strategy that may very well fail if you do not plan it carefully. It requires expert planning and execution on your third party logistics provider’s part. A cost effective, sustainable solution to support your business needs and growth without incurring in excessive expenses is crucial to your business.

Since virtually any potential target market and customers can be reached via the Internet today, a one-person home business can set up a highly profitable business on a low budget. However, such a small operation will not be able to handle business effectively and successfully as it grows. Storage space and logistics are a major concern for this type of operation or any other for that matter. Knowledgeable entrepreneurs utilize fulfillment services to properly store and process customer orders.

Here are some of the key steps that are important to making outsourcing successful:

The Strategy

A decision to outsource a third party fulfillment provider is reviewed and evaluated. Also, a business owner needs to decide how much of the operation to outsource. The entire ordering and shipping process can be outsourced, or just individual functions.

Selection of Provider

Selecting the provider is a very important step which covers the definition of the work and tasks to be outsourced. Lastly, is making the selection of not only the ‘best-value’ vendor or vendors but the ones that have the necessary expertise and long standing reputation. This would include the reporting criteria to ensure that the partnership is going to deliver the expected benefits.

Contract Negotiation

This step in the process includes the negotiating of the contracts and the final contract signing. Sometimes this is completed after the implementation phase has begun, depending on the complexity of the company and the vendor’s review processes.  

Operation Implementation

Implementing involves the activities of planning the operation and execution of the outsourced agreement, as well as establishing the budget and functions needed for its management and launching.

Vendor Management

This encompasses all ongoing staff and activities required to manage the business and achieve the contracted results. Specifically, this includes appropriate warehousing, liaising with the customers, performance monitoring, vendor or partnership management and delivery integration.

Contract Review

Every outsourcing contract is different, so the detail necessary for your specific needs may be greater or lesser depending on what you are trying to achieve. The fulfillment outsourcing contract should be subject to review and modification and this may include either minor or major changes regarding the process and/or specific product.