Inhouse vs Outsourced- Costs involved
To setup and run your own warehouse will need the following considerations (something that we can also assist with):
- Bond/Security deposit
- Vehicles for delivery
- Premises Rental
- Staff wages
- Regulatory burden
- Forklifts & maintenance
- Pallet purchase
- Stock tracking and locations
- Organisation, training and downtime
How’s that for a laundry list of capital outlay and ongoing costs?
You are easily looking at $20 000 to $100 000 investment off the bat and you still wouldn’t have moved a single item to a customer yet. It could take you years to recover up-front expenditure. Then there are the economies of scale issues- most carriers require a volume commitment to offer competitive pricing. Then when things go wrong- there is a lot of running around to get it sorted.
These facts aren’t listed to scare you, if need be- MTM is able to provide consultation and help you set up your own operation. We can advise you and train your team on best practices and find the correct management and software solutions to ensure things don’t go wrong.
In addition to this we are also able to provide staff, equipment and racking on a contract basis. Essentially you give us a budget and we’ll go ahead and set things up for you.
Now I am an advocate of this method. What usually works out to be the cost of renting your own warehouse- you get a fully managed service. Maybe you are just starting and will only ever have 1-2 pallets arrive a month- no point buying a forklift just for that! Maybe you have a need for large amounts of storage but only a few orders or a large number of dispatches with from a few pallets. I can tell you that our customer base encompasses all those scenarios.
Those different needs and timings fit together like clockwork and allow for greater utilisation of resources. You might only require 10 labour hours a week to fill your orders. Some might require 20 hours. Some days you might have 30 orders to go out, other days only 2. It’s these peaks and troughs that outsourcing can help with.
In many cases it works out that the $2000-$4000 you would spend on rent alone, you can have your entire fulfilment process done for you, without you lifting a finger.
It can also work out that you are bit of a go-getter and want to be involved, that you have the pick and pack done for you and you get to deliver yourself to keep that customer connection strong. Depending upon how involved you wish to be and how much you wish to do- a 3PL provider such as MTM transport and logistics is able to scale to your needs.
A little history
I started working out of a little warehouse in Eagle farm. From this warehouse I helped do deliveries, organise stock, streamline operations and keep our customer base happy. Thanks to this experience (and the many mistakes made in the past) I have the know-how and background to not only successfully run a small business but understand the paramount importance of timeliness and efficiency that is required in this fast paced, often fickle industry.
There are 3 pillars upon which MTM is designed to be successful:
- B2B customer satisfaction
- B2C fulfilment
- FMCG operations
Our focus lies heavily in ensuring that these are the strong points at MTM.
Long gone are the days of faceless corporations that can jerk their responsibility to their clients and get away with it. They may have economies of scale working for them for the longest time- but how many times have you rang an conglomerate run entity only to be directed to an off-shore call centre? Off-shoring has its place in the business world however reactive problem solving is not a capacity that anyone can trust to be done correctly by someone who isn’t on the ground.
Not only is it frustrating waiting on the phone but often after wasting an hour you are still left at square one- a dial tone in your ear and the feeling of dread that you have just missed a deadline.
This is where MTM comes into the picture
MTM- Made to measure logistics, a term we have taken from the textiles industry (at least according to wikipedia). We deal with this for you. We don’t only pack boxes but track them till they reach the customer. A process that you can follow along with as well via our client portal where you can find tracking numbers, notes, live inventory and the status of your orders (including our internal notes). Our goal is to take the burden off you so you can focus on making the sale while we focus on keeping the customer happy.
Do we always succeed?
No. Not 100% of the time. Not even 99% of the time. I’d realistically say that we have a 5% failure rate. Any warehouse, fulfilment provider that is providing a 100% up-time service with 100% customer satisfaction guarantee is going to be charging exorbitant amounts for an over allocated service that is exploiting someone somewhere.
The flexibility we offer does come with a downside: meeting the needs of every client whilst taking advantage of economies of scale is paramount for success but a difficult and complex endeavour. There are however many strategies to mitigate the risks and we have developed and employ many of them to ensure that when things do go south, we can pull it back up and point it in the right direction.
Our staff have one directive- understand what you are doing and the impact that it has on our clients. We are careful, we are considerate and when a mistake is made we are reactive in trying to get it sorted. Beyond that, we have decades of experience in solving problems. Our service is not for everyone, we have turned down clients whose needs were far beyond our scope.
If your company, entity, distribution requirements are something we can help with- we will do so with a smile and support your business to the best of our abilities. We don’t make outlandish and silly promises and are realistic in our offerings. Companies in this industry that attempt to undercut, operate at cost or low-ball usually fall apart sooner or later. Our pricing is fair and meets our costs whilst still saving you from forking out the extra capital and doing it yourself.
Your expectations should be as follows:
- An operating cost saving between 10-45% depending upon scale and movement
- An upfront capital expenditure saving of up to 95%
- No lock in contracts or long term commitment
- A substantially smaller learning curve to overcome
- The ability to hit the ground running
- A long term partnership that is mutually beneficial