All businesses want to succeed, but sudden growth can sometimes bring with it a lot of nerve-wracking decisions. As an ecommerce company’s supply chain operations expand to accommodate such growth, shipping processes can become a lot more expensive. Switching to multi-location fulfillment can be a viable option for some firms that have reached this point, but it is not a decision that should be taken lightly. Here is a look at the advantages and disadvantages of adopting this approach.
The biggest advantages of turning to multi-location order fulfillment are probably the most obvious ones: faster deliveries and lower shipping costs. Shipping from the location that is closest to the buyer cuts down on transit times and boosts the bottom line. Some 3PL setups allow for zone skipping, which results in further cost savings. This is a tremendous benefit that can make the effort of putting such a system in place well worth it.
One of the biggest cons of turning to multiple fulfillment locations is the fixed costs that come along with them. Each one will necessarily have storage and service needs, which means paying for more inventory and higher handling costs. A business might also find itself working with different 3PLs at each of these locations, which will involve different cultures, systems and services. Finally, there is the issue of technology. Extra planning and coordination will be required, which can be costly.
Ultimately, a firm will need to weigh these pros and cons to see if the extra outlay for infrastructure and multiple inventories will be worth it. In many cases, it will be, but this is not a given, so careful consideration must be made before proceeding. Some businesses might find it better to just add one new fulfillment center at a time instead of suddenly adding several at once.
This blog post was based off an article from IDS Fulfillment. View the original here.