Protactix

Sounds like double talk. But with the economy getting (staying) more unpredictable, now is the time to focus on what your business can lose so that it can gain (or at least survive).

I believe Sales and Customer Service must stay inside.  Warehousing and Fulfillment should be outsourced by utilizing an Outsourced Warehousing & Distribution Solution.

The approach: Outsource functions that your customer does not “see”.

We had a client that wanted to expand into the US market.  They ran the numbers and determined that with their budget limitations, if they were to duplicate their offshore business in the US, including Order Fulfillment Services, they could not afford the quality level of marketing and customer service they knew their product required.

The cost advantages of outsourcing warehousing and fulfillment in this client’s case were: One, reduced upfront costs, since personnel did not have to be relocated from the home country, no fixed office, warehouse or staffing commitment had to be made in advance. Two: Shorter learning curve for staff. Three, and perhaps most importantly, flexibility.  Because outsourcing fees were set as a percentage of sales, costs followed success, rather than being fixed and a drag on free cash, especially in the early months.

By outsourcing their US warehousing and fulfillment, but keeping their marketing and customer service in house, they reached their five year plan goals in a little over three years.

Although this client’s opportunity for outsourcing was a result of “opening” in a new country, similar, although perhaps not as dramatic results, can be achieved by most any business.

Their process of analysis can apply to any function that any company and particularly any small business is considering outsourcing.

The process:

One.   Looking at your business from the customer’s side, what does your business do for them? Use only one verb. Example: “install”, “supply” or “manufacture” as in “install window blinds”, “supply paper goods” or “manufacture precision instruments” .

Two.   List every area or department or function, however it is classified, in your business.

Three.  Highlight the departments that deal directly with the customer.  In the case of our client, they believed (and we believe they were 100% correct) that sales and customer service could only be handled directly by their people.

Four. Scratch off the list the departments that the customer does not “see” on a day to day basis. Example: your warehouse or packing department. This doesn’t say that the functions that are scratched don’t have to be done, but they are not or should not be seen by your customers. In other words, if customers are hearing about or “seeing” your order fulfillment process, it’s usually because you have a problem.

Depending on your business you know the departments or functions that you can “scratch”.  Departments or functions that may be candidates are payroll, tax, IT, warehouse, order processing or fulfillment.  The specifics of this list will be specific to your company.

Now the implementation steps:

Five.  Look at the employees in the “scratched” department(s).  Any retirements coming up? Any employees that can or have been cross trained for the keeper departments?  Any under performers in  any departments that you know you should have terminated some time ago?

Six.  Once employee impact is minimized, begin to consider outsourcing the “scratched” departments or functions.  Our customer knew that warehousing was a function that could be quantified and managed using outsourcing.  In our client’s mind,  the it was quantifiable function not a creative function.  Outsourcing applied.  Similarly order fulfillment was a process that would lend itself to be monitored, measured and managed as an outsourced function.

Our client believed that the sales and customer service/contact piece of its business, although subject to metrics, was the most creative and intangible aspect of its business, so they wanted absolute, day to day,  micro input and control.  In their analysis, outsourcing of warehousing and fulfillment were the functions that met their “scratch” criteria.  www.allianceshippingusa.com

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