Like many people, I have made purchases online or over the telephone, and while I waited eagerly for my package to arrive I usually assumed it was coming directly from the supplier. I have recently learned that this is not always the case. In fact many retail companies tend to outsource their warehousing and shipping needs to supply chain management companies that provide pick and pack and other logistic services to their clients.
I found this discovery to be very eye-opening and thought I would share what I have learned. Apparently, by outsourcing shipping and warehousing requirements to third party companies there are tremendous benefits to be had by both the suppliers and the consumers alike.
Benefits to the Supplier
1) Reduction in Expenditure: the total costs for retailers to manage their own warehousing and shipping needs can quickly skyrocket. They would have to take into consideration the cost to maintain one or more warehouses, staffing requirements and inventory management; all of which can be very expensive. By contracting a supply chain management company to handle these requirements (such as to pick and pack products), the company can save a considerable amount of money.
2) Greater Efficiency and Effectiveness: another benefit is that when these services are outsourced to a company that specializes in these areas (storing and shipping inventory etc.), there is greater efficiency in the entire process. Furthermore, this allows the suppliers to focus exclusively on producing and/or selling their products.
Benefits to Consumers
Just as there are benefits to the suppliers there are also some direct benefits to the consumers as well.
1) Lower Charges: sometimes consumers will benefit from a suppliers decision to outsource to a supply chain management company. These companies usually have warehouses at a number of different locations therefore if the product is shipped from an outlet nearer to the consumer, their shipping and handling charges will be significantly reduced.
2) Quicker Service: another potential advantage of closer warehouses to the customer is that their purchases will likely reach them quicker than if they were shipped from a supplier who is much farther away.
