Startup companies often struggle to find the necessary capital needed to fund growth.. Oftentimes, they need warehousing and distribution services, which they try to do on their own. This may sound like a good idea, since the control of these aspects stays within the company. However, buying a warehouse, staffing it, obtaining the equipment and gaining experience are time-consuming and expensive. The truth is, warehousing and distribution for an expanding startup company is something that should be outsourced for some very good reasons.
Decreased Warehouse Expenses
Purchasing an existing warehouse is tricky. The space has to be large enough and set up in a logical and productive way. In addition, staff must be hired and trained, equipment purchased, procedures developed, the list goes on and on. Make no mistake, this adds up to a major upfront investment, and most startup companies simply can’t afford to do it all themselves. Outsourcing warehousing means the space, equipment, technology and staff are already in place. All of the overhead costs are the responsibility of the logistics company, not the startup, helping to decrease variable expenses.
Better Distribution Of Products
Distribution entails a physical transfer of products through one or more middlemen before it reaches its final destination. Inexperience in this arena leads to errors that interrupt the distribution process. An inability to distribute products can lead to a decrease in sales and customer service, which can quickly develop into a financial disaster. An experienced distribution company helps businesses expand their reach into new markets quickly and efficiently. In addition, many distribution companies offer other value-added services, such as packaging, to further aid in the distribution process. These types of services help companies streamline their supply chain and realize higher profits.
Improved Company Image
Inefficient processes, on any level, can have a devastating effect on the image of a company. Customers are easily put off by mistakes, and quickly jump ship once their tolerance threshold is exceeded. When a company’s warehouse facility lacks organization or adequate staff, products cannot be moved in an efficient way and customers are left empty-handed. Likewise, if the distribution channel is inefficient or poorly managed, shipments will not arrive at their destination in a timely manner, which disrupts the schedules of the receiving company. Outsourcing warehousing and distribution services overcomes these obstacles and creates a smooth process that benefits everyone involved in the supply chain.
No matter how small or large your startup company is, when you’re ready to expand, you have a big decision to make. Do use your capital to invest in a facility of your own, or do you outsource to a reliable logistics company? Take a look at the numbers and determine what other business operations you could improve with extra capital saved through outsourcing. Those savings could open up new avenues for further growth.