Outsourcing Your Fulfillment Services - Case Study
Outsourcing to or changing your fulfillment partner can be very stressful for any size business. However, doing so can be the one element of your business that can make or break it.
When you outsource you reduce your overall costs and worries over the details that are the key to your success. Some fulfillment companies state that a typical business can save anywhere from 30-60% of their operational costs from the start. This number, of course, varies depending on the services you employ your fulfillment partner to do for you.
At Verde Fulfillment USA, we have a wide range of clients using various services that we offer. Some clients use our Customer Service Team to answer their 800# and company emails; some use our billing service to invoice their retailers; some use our international logistics, and others use solely our order fulfillment services and warehousing. Each client utilizes a different part of Verde’s services, thus stating the overall savings by outsourcing to a fulfillment partner varies.
Here is a case study of a fairly typical business using several elements of our order fulfillment services.
Company ABC has been manufacturing for 4 years. When they started up they employed 7 people in their 6,000 square foot warehouse to oversee the logistics, warehousing and order fulfillment. To operate their warehouse, they had monthly expenses of $31,900:
1. Lease = $6,000
2. Payroll/Taxes/Insurance = $17,500
3. Warehouse Supplies = $2,000
4. Technology = $350
5. Utilities = $300
6. Monthly Orders = 350
7. Shipping Expense = $5,750
Total Monthly Expenses = $31,900
Verde Fulfillment USA was able to take Company ABC’s current inventory in their warehouse and condense it into 76 pallets for 256 SKU’s and transport it in three truckloads to Verde’s facility. Once the trucks and pallets were unloaded at Verde, the inventory was fully inventoried and compared to the packing list. Any discrepancies in numbers were noted in Verde’s web-based inventory management system, where Company ABC had full visibility and access 24/7. As the inventory was being staged and put-away into it’s new home in Verde’s secure facility, the pallet count was reduced to 48 pallets of back stock (excess bulk inventory). The remaining inventory was put into pick bins where Verde’s warehouse team can quickly and efficiently pick orders for retail stores and e-comm drop-ship customers.
With the inventory unloaded and ready for picking and packing, here’s a breakdown of the monthly expenses for Company ABC at Verde Fulfillment USA, based on 350 orders per month split between retailer stores and their e-comm drop-ship customers:
1. Storage/Warehousing = $1,276
2. Order Fees = $560
3. Pick Fees = $288
4. Materials = $425
5. Shipping Fees = $3,650
Total Monthly Verde Costs = $6,199
Total Monthly Savings = $25,701 or 75%.
Now that’s some REAL savings!
Company ABC can now reinvest their monthly savings into sales, marketing and production to keep up with demand. This case study is real and also very typical of what companies go through and what they can save. Don’t drive your company down financially, outsource your order fulfillment services to Verde Fulfillment USA and start saving immediately.