Today over 40% of all small to medium sized businesses outsource their payroll. This evolution to payroll outsourcing has been occurring for the last few decades and most individuals immediately understand the value of making this transition for their business. We believe fulfillment is in the early stages of a very similar important migration – for all the right reasons.
Here are the primary reasons that companies we work with consider outsourced fulfillment as a strategic initiative:
- Fulfillment is not core to their value creation. Most businesses are not driving profits or significant differentiation with their products/services via fulfillment activities. Any effort focused on this non-core value is taking time away from opportunities to create direct value for your clients.
- Expertise and technology are hard to source and are expensive. Most small to mid-sized organizations can’t compete for the skills and technologies used by larger multi-national companies or dedicated fulfillment organizations. This combination of skills, resources and technology put many smaller organizations in a competitive disadvantage when they can’t stay current.
- Managing costs becomes extremely challenging. Studies show that internal fulfillment costs continue to increase and are harder to manage as an organization grows. Using a third-party fulfillment company with a variable cost model provides an opportunity to both manage costs while gaining the benefit of handling high fluctuations in seasonal volumes.
- Improved reliability and speed. Most fulfillment companies can ship products from multiple locations. These multiple points of presence create immediately redundancy for the fulfillment system and will solve issues created when there is a large regional storm or a local power outage. Additionally, multiple points of presence can optimize delivery by being geography located closer to clients resulting in speedier delivery times and lower costs.
Decades ago moving your payroll to a third-party seemed strange and risky. Today this practice is commonplace. This trend is also common in the migration of in-house computer systems to hosting companies for organizations of every size. The trends are clear for outsource fulfillment companies since they are experiencing dramatic growth rates. Don’t miss out; maybe it is time for you to evaluate options for your company?