Outsourcing Inventory Management: 5 BenefitsJanuary 15, 2020
Inventory management requires significant time, money and resources. Doing it effectively is also critical to the profitability and growth of your business. Today’s buying environment, however, is anything but forgiving. According to a recent report by the National Retail Federation, consumers increasingly expect free shipping as well as options like picking up their online purchases in-store. Adapting to new and constantly-shifting fulfillment options is a new reality for retailers. So what’s the best way to adapt to your customers’ evolving demands while managing your inventory both efficiently and profitably? Consider outsourcing your inventory management.
When we talk about inventory management, we are generally referring to the supervision of products a company has in stock. This includes ordering, restocking, storing and inventory forecasting. As a retailer, you always want to make sure your products are available when your customers want them, without running low on goods—or having too much of anything. And when you’re busy running a company, especially one that’s growing, inventory management can be a drain.
The Benefits of Outsourcing Inventory Management
What are some of the benefit of outsourcing your inventory management? Here are our Top 5:
1. Storage and Warehousing
Outsourcing your storage and warehousing can keep your costs down in many ways. That’s because warehousing costs go beyond square footage. They include pallet racks, forklifts, warehouse employees and facility management costs.
Using a third-party logistics company (3PL) for warehousing also allows you to easily scale your business so you won’t, for example, need a bigger warehouse for your growing number of SKUs or overpay for storage when you have less.
2. Faster Order Fulfillment
While it may seem convenient to ship your products in-house, it might not benefit your customers. A dedicated 3PL can usually deliver your products to your customers faster—and with lower shipping costs—because of their established relationships with carriers. A 3PL with multiple warehouses can also optimize distribution by shipping from locations closest to your customers.
3. Advanced Inventory Management Software
An advanced and up-to-date warehouse management system is key to your inventory management, but a WMS is expensive to purchase and maintain. By outsourcing your inventory management, you won’t need to worry about a WMS, or adding new features as your retail business changes.
A 3PL’s robust WMS can also reduce product shipping errors, trace ordered items within the warehouse and help you fulfill orders faster.
4. Inventory Levels
Outsourcing your inventory management will help you reduce waste and money tied up in old inventory. Your 3PL will have an inventory control management team to ensure the right products are available at the right times to meet your customer demands during promotional spikes and seasonal volume increases.
You’ll also be able to easily keep in step with current inventory stock levels to better manage and control your overhead costs and accurately project future demand.
5. Costs and Savings
Outsourcing your inventory management can also reduce costs in many areas, such as:
- Warehouse costs
- Logistics and carrying costs
- Management administration costs
- Unused inventory costs
- Purchasing costs
This will help reduce management distractions and minimize inventory costs so you can focus on growing business.
Is your business seeking inventory management support? Contact us to find out more about our services!