How Outsourced Distribution Can Improve Order Speed and Supply Chain Performance

 Timely and dependable order fulfilment is an essential factor to maintaining your customer base, particularly if you have a California business. But as your business expands, stock management, product storage, order assembly, and delivery organisation can become stressful. And they require time, employees, storage facilities, and rigorous planning.

Now here's the good news: outsourced distribution might just be the answer. When you partner up with a third-party logistics (3PL) company, you can hand off some or all of your distribution processes. Instead of managing it all in-house, you can tap into their warehousing services, transportation routes, and order processing capabilities.

Advertisements from manufacturers to wholesalers to online retailers, California companies are adopting outsourced distribution to increase delivery speeds, reduce operating expenses and create a more stable supply chain. But what is outsourced distribution?

What Is Outsourced Distribution?

In outsourced distribution, we contract a third party to handle the distribution (the transport of products from our distribution centres, warehouses or production units to retailers or directly to customers). The key roles are:

• Storing products and managing inventory.

• Receiving shipments from suppliers.

• Picking and packing customer orders.

• Preparing goods for shipment.

• Coordinating transportation and deliveries.

• Tracking shipments and managing order updates.

• Handling returns and restocking products.

Nearly every company outsources at least some of these duties to a third-party logistics provider, 3PL. However, the level of services provided varies based on customer requirements as well as the capabilities of the provider.

CONUS Suppose you are a manufacturer in Southern California. You make products locally but lack the warehouse space and delivery capacity to ship the products throughout the state. The advantage of third-party distribution is that you can leverage a proven logistics network without having to develop your own distribution system.

How Outsourced Distribution Improves Order Speed

It's not only time to move, the freight transport is just part of the process. You must have the right product, prepare the orders correctly and ship the goods on time. Here are four ways that outsourced distribution can improve those operations.

1. Products Can Be Stored Closer to Customers

Location matters too-the farther away your inventory is stored from your customers, the longer and more expensive delivery will be. A good logistics partner will recommend storage locations for your warehouse based on your customer base and order deliveries.

There are even nuances within the direct shipping model that can unlock bigger savings. If, for example, your product ships to Los Angeles, San Diego and the Inland Empire, having a warehouse in a major metropolitan area of Southern California may be a wise decision. This decreases the time it takes to travel to your most important customer bases.

2. Faster Picking and Packing

Picking is retrieving items for an order, and packing is assembling those items for transport. Ineffective processes mean items sit in the warehouse. Employees spend time hunting for items, resolving inventory discrepancies, or manually packing products.

Warehouse operations and inventory controls of distribution providers are typically designed to minimize the time required for these activities. For example, if you are a distributor handling 200 orders on a busy day, having everything organized so employees can easily find items, bunch them together and push complete orders to the loading dock can reduce processing time.

3. More Reliable Shipping Schedules

Warehouse staff, carriers, and customers need to coordinate to meet delivery schedules. Delay occurs when the order is not ready and the carrier can't pick it up, or if transportation is booked just before pickup. Third-party distribution assists with operational coordination, allowing logistics to schedule pickups, prepare shipments before time, and monitor delivery.

Delivery Coordination

This is important if you are a California firm delivering to retailers, wholesale accounts, and commercial customers who require prompt delivery. You can standardize deliveries and proactively set customer expectations.

4. Better Handling of Seasonal Demand

Highs and lows

Many companies experience variable order patterns over the course of a year. Retailers, for example, could experience a surge during the holiday shopping season, while manufacturers and distributors could have a temporary bump when new customers are brought onboard or new products introduced.

Internal handling of the peaks can be cost intensive. It's costly to put more temporary staff in place, expand the storage capacity and bring in more transport. The logistics company can potentially put more capacity at your disposal when the peaks come – provided capacity and your contract conditions allow.

Imagine your company is a California retailer preparing for a holiday sales event. Ordering temporary warehouse help ahead of a spike in orders allows your company to meet the demand without permanently modifying your operations and staff.

How Outsourced Distribution Strengthens Supply Chain Performance

Fast replenishments are only part of the supply chain story. You need effective inventory management, risk mitigation, a cost-effective product flow, and a service product. Here's why outsourced distribution may be the solution.

1. Improved Inventory Visibility

Inventory Visibility

Knowing what products are available, where they are stored and when you need to stock up is inventory visibility. With poor data you'll end up being placed with orders for items you don't have or holding too much stock in the warehouse.

Automate your ordering process

A warehouse management system or software will enable your logistics company to monitor inventory flow and stock levels as orders are filled. The system will also help you to make the right purchase decisions and identify any imminent stock shortages. But remember, visibility is dependent on data quality and integration.

2. More Efficient Transportation Planning

Transportation costs can increase dramatically with bad planning, partially filled vehicles or excess trips. A logistics provider can consolidate loads, synchronize pickups and design the most efficient routing plan to minimize handling and make the most of transportation capacity.

When working with California companies that are shipping product from Los Angeles, the Central Valley, the Inland Empire or the Bay Area, effective transportation planning is essential. This is especially true when delivery schedules and distances can vary widely. For example, a distributor sending a product to a large number of retailers may be better off consolidating shipments.

3. Greater Flexibility as the Business Grows

At the same time, building a distribution operation involves investments in warehouse space, equipment, people, software, and transportation. Managing these assets is challenging when order volumes ebb and flow. Outsourcing provides existing facilities and expertise to help you ramp services up or down.

The opportunity to decide the number of monthly shipments and delivery volume is a huge advantage for new e-commerce brands, OEM manufacturers opening new markets and wholesale suppliers. Just make sure your provider can keep up!

4. Fewer Operational Errors

Errors such as mis-ships, missing items, damaged goods, and inventory errors create returns, higher shipping costs, and frustrated customers. A good distribution operation has rigid processes for receiving, inventory control, picking, packing, and shipment verification.

Provider technology and quality-control measures can reduce provider mistakes, but consistent usage of these measures is what counts. Consistently reviewing orders, inventory, damage reports and the reason for returns may identify issues and can help improve performance.

5. Better Control Over Distribution Costs

Wish you knew how to conquer the beast called distribution costs? You're not the only one. When you take charge of distribution yourself, you've got new DEWA (direct and indirect costs) to budget for - including warehousing, rent, payroll, machinery, software, utilities, packaging supplies and transportation. Phew!

Here's the problem: outsourcing might flip the equation with these costs. You could be paying storage and handling charges, shipping fees, and other services according to set prices. That can make expenses more predictable and allow you to avoid some capital investments.

But don't get ahead of yourself-outsourcing isn't always less expensive.

Monitor storage fees, minimum monthly fees, peak-season surcharges, premium handling, and other service costs that could crank up your expenses.

Before you begin, it's important to weigh the total costs of outsourcing against what you are currently paying for your distribution system.

What to Look for in a Distribution Partner in California

Choosing your logistics partner isn't just about price. It's about asking whether they can deliver your deadlines, handle your product and provide the growth plans you need to succeed.

Warehouse Location and Transportation Accessibility

Where will your customers be and how will your product reach them? Choose a location based on where your customers are and how your product will be delivered. If your product will be shipped from your location, factors such as proximity to freeways, freight terminals, ports, and regional markets may be factors, especially if you're located in Southern California and you require facilities close to commercial/industrial centers.

Technology and Inventory Tracking

Do you want to know how the seller takes stock, receives an order and uploads shipments? You need to ensure that their systems are capable of integrating into your order management, enterprise resource planning (ERP) or e-commerce system. The goal is to keep the data accurate, and not have systems not talk to each other or input data manually.

Service Range and Capacity

Are you clear what it is that you need? Some forwarders may only deliver storage and transportation services. Others may have an expanded offer of distribution and fulfillment solutions.

Make sure you understand clearly what is included and what will incur additional fees.

Perhaps you need customs-related resources, especially if you are importing freight through the ports of California. An FTZ warehouse might be a good solution if it makes sense for your business and depending on your needs.

Performance Reporting

How does the provider monitor its performance, and how often do they report? Think of some helpful indicators like order cycle time, delivery and shipment adherence, picking accuracy, inventory accuracy, damage and returned items as a percentage of total, and transportation cost per order. Establish smart service levels early on so you both report on the same indicators and problems can be identified early.

Experience With Your Type of Business

Is the provider experienced in your market? Storage requirements can be extremely different. For example, a company that supplies food products may be in the market for their product to be chilled, while an electronics company might require rigorous security standards and careful packaging. Someone familiar with your industry can already have the space and specifications that you require, instead of assuming a warehouse can handle anything.

Understanding Third-Party Distribution Services

Distribution setup may involve just storage and shipping while other companies may look for a provider that offers everything from inventory management to order processing and transportation. With a third-party logistics provider, distribution tasks are coordinated through a single organization, possibly saving you time spent dealing with multiple vendors and helping you keep better track of activities throughout your distribution network.

Inquire about whether the 3PL distribution services company will be able to accommodate your order size, product specifications, locations, and future expansion plans. Check the pricing, service requirements, reporting process, and who will be accountable for any loss or damage to inventory. It's important to have an agreement that sets expectations on both sides and helps prevent confusion.

How to Measure the Results of Outsourced Distribution

Write down how well you're doing before you outsource. This provides a benchmark for measuring the success of the new process or workload, and helps you see which improvements actually save time and money. For example, even if your orders go out at a good pace from your warehouse, they could still be arriving late because of carrier delays.

You can regularly analyze this data on a monthly basis to identify the root causes for your stagnating performance and to guide your decision making.

Practical Steps for Outsourcing Distribution Successfully

The right-paced transition reduces any potential disruption and helps the logistics provider understand what you need.

Step 1: Review Your Current Operations

Where are the delays and costs? Check the following order volumes, stock accuracy, delivery times, warehouse space, customer complaints.

Step 2: Know Your Requirements

Decide Which Activities to Outsource Are you considering storage, transportation, order preparation, returns, or all of the above?

Step 3: Compare Providers

Ask for information on rates, warehousing, technology, capacity, service levels and industry knowledge. Seek a complete breakdown of possible charges, rather than simply shopping on headline rates.

Step 4: Plan the Transition

Complete how inventory will be moved, the handling of orders during the transition, and the communication between systems. Test the migration using a small sample of products or orders if possible.

Step 5: Track Results

Compare the results to the goals you established when first considering outsourcing. Hold periodic meetings to review delays and excessive cost, and to identify inventory issues and opportunities. This approach transforms outsourcing from a one-time vendor relationship to a continuous operational alliance.

Conclusion

Using outsourced distribution can allow California companies to process orders faster, improve their warehouse management and establish a supply chain that quickly scales to meet demand. You'll have access to transportation, tracking and warehouse management you can count on, which can lower delays and errors and improve the response your customers get.

For the best results, select a vendor that truly understands your business needs, provides open reporting on performance, and can grow with you. Carefully compare total cost, set objectives, and monitor performance regularly to ensure that outsourcing is actually saving you money.

If you're looking to optimize distribution in California, evaluate your existing processes and operations - a wise initial move toward accelerated shipments and a better supply chain.