Outsourced Warehousing and Fulfillment: A Comprehensive Guide

Steve Schlecht
Written by
Steve Schlecht
Published on
June 14, 2024
Warehouse for outsourced fulfillment services

Outsourcing warehouse and fulfillment services can provide numerous benefits for businesses looking to streamline their operations and improve efficiency. This comprehensive guide will explore the ins and outs of outsourcing warehousing and fulfillment and how to find the right partner for your business.

What Is an Outsourced Warehouse?

Outsourced warehousing, or third-party warehousing, is when a company hires an external service provider to manage and operate its warehousing needs. This arrangement allows businesses to focus on their core operations while leveraging the expertise and infrastructure of specialized warehousing companies.

Outsourced fulfillment services visual representation, illustrating the concept of outsourcing logistics and supply chain management.

What Is Outsourced Fulfillment?

Outsourced fulfillment refers to receiving goods for inventory, processing them as the company receives orders, and delivering the products to the agreed recipient. When using outsourced fulfillment services, a third-party logistics partner will handle these steps to ensure seamless processing of goods and orders.

Benefits of Outsourced Warehousing and Fulfillment

Efficient warehousing and fulfillment are essential for maintaining inventory levels, reducing lead times, and enhancing customer satisfaction. Here are the top benefits of outsourced warehouse and outsourced fulfillment solutions:

1. Cost Savings: Outsourcing removes the necessity for hefty investments in warehousing facilities, equipment, and technology. Companies can shift from fixed costs associated with in-house warehousing to a variable cost model, allowing them to adapt to business volume and demand fluctuations.

A study published in the Economic and Business Review noted that reduced operational costs and increased profits were the main factors why more companies have utilized outsourced warehousing services. 

2. Scalability and Flexibility: Third-party logistics providers can swiftly adjust to market changes. Outsourcing partners, for instance, can effectively manage seasonal spikes in demand. With outsourced warehousing and fulfillment, companies can access the necessary resources during peak periods without committing to permanent investments.

At Buske Logistics, we’re always ready and prepared for situations when clients need to scale, especially during in-demand seasons. Let us know your business needs, and we’ll make the right adjustments for you.

3. Expertise and Efficiency: Companies can enhance operational efficiency by leveraging their third-party logistics partner’s cutting-edge technology for warehousing and fulfillment. For example, Buske’s contract warehousing services give its partners access to advanced warehouse and transportation management systems developed by Made4Net and NetSuite.

4. Focus on Core Business Activities: By sourcing critical logistics processes, companies can reallocate resources towards their core business activities, including product development, marketing, and customer service. With fewer logistics operations to manage, businesses can more easily focus on their strategic growth initiatives and gain a competitive advantage.

What to Consider When Outsourcing

To make it easier to decide if outsourcing warehousing and fulfillment is the best route for a company, here are some things to consider:

1. Cost Analysis:

Cost savings are one of the main benefits of outsourcing warehouses and fulfillment. Companies must also be fully aware of the direct costs of outsourced warehousing operations. Get the information on direct costs, such as storage fees, handling fees, and transportation expenses. Then, assess whether it’s more practical for business growth. Companies should also be aware of potential additional charges, such as handling inventory and orders during peak seasons.

2. Location and Accessibility:

Choose a third-party logistics provider with strategically located facilities to ensure quick and efficient access to key markets and customers. Buske, for example, has 30 locations across the U.S. and Canada that can handle storage and shipping operations for its partners.

3. Technological Capabilities:

Warehousing goes beyond just storage of goods, as it also deals with efficient inventory management. Opt for a provider that is equipped with a state-of-the-art Warehouse Management System (WMS). Some companies, especially manufacturers of food and beverages, may require specialized storage for their goods to meet safety and industry standards. Through Buske, companies can access food-grade facilities that follow strict safety protocols. Our notable clients, including Coca-Cola, Dairy Farmers of America, and Pepsi, are evidence of its expertise in handling complex food storage and logistics.

4. Data Security:

Ensure the provider has strong security measures to protect sensitive information from clients. 

Frequently Asked Questions

What is the difference between fulfillment and warehousing?

Warehousing primarily pertains to storage and inventory management and storage, ensuring that products are stored securely and efficiently.

Fulfillment, conversely, encompasses the entire process of receiving orders and delivering the products to customers. It may also involve value-added services, including kitting, customization, and handling returns.

Is fulfillment the same as logistics?

Although fulfillment and logistics are related, they are not the same. Logistics refers to the range of activities in managing goods throughout the supply chain. 

Fulfillment is only one part of the entire logistical process, which also includes transportation, warehousing, inventory management, procurement, and distribution.

What is a fulfillment warehouse?

As the name suggests, a fulfillment warehouse is a building designed to store, process, and ship products. It can be operated by third-party logistics (3PL) providers that offer outsourced order fulfillment or companies with their e-commerce operations.

This type of warehouse has become more prevalent with the rise of e-commerce as it streamlines the order fulfillment process. It allows businesses to efficiently manage inventory, process orders, and deliver products to customers on time.

Find the Best Outsourced Warehousing Partner

The operational needs for warehousing and fulfillment typically progress as the business grows. The good news is that companies don’t have to exhaust their resources to navigate emerging logistical challenges. 

Contact Buske today to find an expert and trusted partner for logistical needs.