Fulfillment-as-a-Service

Analyze – Optimize – Grow

Life is a continuous circle of progress. From the moment we are born we continuously develop through learning and encountering life’s different aspects. This cycle of continuous learning and development is also widely prominent in the corporate world. In order for Businesses to grow and scale they must find ways to improve and optimize, even at peak moments. This usually means businesses are looking for ways to gain a competitive advantage within their current market. A highly attractive way of gaining such competitive advantage is by outsourcing part of your activities that are highly resource intensive. This make outsourcing Fulfillment a great option to look at for many businesses that are looking to scale (Busby, 2019)

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The main reasoning behind the attractiveness of outsourcing Fulfillment is that the Fulfillment concept is broad. This essentially means that the number of areas of potential improvement are usually high. By outsourcing your Fulfillment and effectively acquiring ‘Fulfillment as a Service’ Business can gain a strong competitive advantage. This can be achieved as Fulfillment professionals are able to optimize many aspects of the logistical and Fulfillment process from Packaging to Returns, IT systems, Customer Service etc. Many areas of improvement/optimization thus result in many potential ways for businesses to leverage their market value and increase their competitor position. The well-known optimization circle, Analyze – Optimize – Grow is highly applicable here. Companies that are looking to outsource their Fulfillment process should follow these steps in order to do so effectively (Thill Inc., 2021).

  • Analyze

As mentioned before, outsourcing Fulfillment is highly popular due to the mainly potential areas of improvement. In order to get the best results up front, a strong analysis has to be made that identifies key areas of improvement in the Fulfillment process. This, for instance, could mean a detailed lead time analysis, a performance courier report, return efficiency overview, etc. Professional Supply Chain experts often provide their insight before working with their potential partners. This allows the cooperation to flow smoothly and allows expectations to be met. Once the key Areas of improvement have been identified, the actual optimization commences.

  • Optimize

The optimization process of course changes depending on the area that requires optimization.

The main red line within the process is often the same. Professional Fulfillment experts that hold up-to-date knowledge on the current Fulfillment innovations are often very able equipped to implement disruptive measures to drastically improve the Fulfillment process for businesses. The best Fulfillment companies make use of the most innovative technologies such as IoT (Internet of things) e.g., temperature sensors for Cargo loads, AVG (Automated Guided Vehicles) to maximize warehouse efficiency. Common but effective measures are also often implemented such as a more effective returns process, or the implementation of a ‘same-day delivery’ Fulfillment option.

  • Grow

The most important indicator of successfully outsourcing your Fulfillment process is of course continuous and stable growth. Outsourcing your Fulfillment process should effectively reduce your resource utilization rate and improve the efficiency of your overall business as you are able to focus on other internal aspects. Evaluating periodically will result in a better partnership and will ensure that expectations are met accordingly. An important thing to keep in mind is that knowledge and insight of professional Fulfillment companies should always be considered. A small ‘bump in the road’ can often be overcome by staying with the partner in question and keeping the partnership alive.

Key benefits

There are plenty of benefits that come with outsourcing your Fulfillment services. The main one, optimizing resource allocation, has already been covered. A couple of additional benefits are mentioned below.

Cash flow optimization

Handling Fulfillment services internally can potentially require a high investment cost. Warehouses need to be rented, Customer service staff must be hired, trucks and other moving vehicles have to be purchased etc. Making use of a Fulfillment provider essentially turns these fixed costs into variable costs as the costs often scale with products/sales moving through the Supply Chain. Making use of a Fulfillment provider can often impact your Cash flow substantially by increasing the cash in hand and reducing fixed costs.

Tap into new markets

Looking for competitive advantage will always be a key element that businesses decide to focus on as it yields them the opportunity to outpace competition. The cycle is simple yet highly effective. Fulfillment as a service increases your resource effectiveness by reducing resource intensiveness, in turn allowing you to allocate your resource in a different manner. This opens up doors to diversify by tapping into new markets that provide you new prospects.

Expertise results in lower costs

Costs are almost always going to decrease when making use of a professional Fulfimment service provider. This has many reasons behind it. An example would be bulk transport contracting. Some Fulfillment experts make use of their connections which yields them cheaper transportation fares due to bulk consolidation with other loads/companies. In the Transportation sector, volume often means cheaper pricing per kg. Professional Fulfillment companies often know exactly how to leverage this concept which results in cheaper transportation prices overall, thus reducing your costs.

There are plenty more benefits to using Fulfillment as a Service. Would you like to know how to choose a correct Fulfillment partner, and what to look out for? Read our next Blog article (here). Or talk to a ModusLink Expert today by clicking here!

Bibliography

Busby, A. (2019, 24 oktober). Fulfillment As A Service, Why The Future Of Delivery Is In The Clouds. Forbes. Geraadpleegd op 26 februari 2022, van https://www.forbes.com/sites/andrewbusby/2019/10/23/fulfillment-as-a-service-why-the-future-of-delivery-is-in-the-cloud/?sh=6b83309d4af1

business.com editorial staff. (2014, 25 juni). Benefits of Using an Order Fulfillment Service. Business.Com. Geraadpleegd op 2 maart 2022, van https://www.business.com/articles/benefits-of-using-an-order-fulfillment-service/

Roggio, A. (2011, 4 november). 5 Reasons to Consider Fulfillment Services. Practical Ecommerce. Geraadpleegd op 5 maart 2022, van https://www.practicalecommerce.com/5-Reasons-to-Consider-Fulfillment-Services

Thill Inc. (2021, 21 oktober). Fulfillment Center Pros & Cons. Thill Inc. Geraadpleegd op 5 maart 2022, van https://thillinc.com/blog/fulfillment-center-pros-cons/