| Nipperbou - Small Business Guide |
| Customer Fulfillment Options For Small Business |
The small business owner who manufactures or sells a limited number of product types could enjoy significant benefits by outsourcing certain necessary activities. We will look at certain options available to the businessperson and a couple actual case studies.
Let us look at the small business owner who operates an Internet based mail order enterprise that retails a consumer product delivered directly to the customer. Perhaps it is a part-time home based venture operated out of a well organized office built into the closet of a one bedroom apartment. At the other end of the spectrum would be the professional businessperson running a company with multiple employees located in an industrial park or high up in a glass and steel office building.
Whatever the size, outsourcing business activities can save the company much time and money. Most business outsource a number of activities including janitorial, payroll processing, and their bookkeeping and accounting requirements. We are going to specifically address the outsourcing of order fulfillment from the time an order is received until the product is delivered to the customer. This process also includes the warehousing of the merchandise.
Many firms offer these services, including UPS (yep, Big Brown,) often referring to themselves as 'logistics' providers. It can be impractical for a business to warehouse and then ship their products. Many firms employ people just for this task, as well as leasing the additional square footage needed. When these costs are specifically accounted for, it may came as a shock to see what percentage of the ' selling and general administrative expenses' they represent. Another method, one requiring much less skills in cost accounting, is to describe the operating requirements of the business without the need of these requirements. For many small firms, the owner would be pleasantly surprised to note that only a single desk, phone, and computer workstation are necessary. This is of course an extreme case, but is indeed true for many.
Let us now look at exactly how such an outsourcing relationship could work. Suppose you sell specialized sensor assemblies for use in various machinery. The product is manufactured and assembled in Taiwan, then packed into boxes which are put into a shipping container that shows up in San Francisco before finally being shipped to your loading dock. You take orders from your customers over the phone or via the company website with an average order size of one or two units. The product is packed and picked up daily by UPS or Fed Ex.
Based on this operational model, we look at the results of outsourcing. When the product arrives at The Port of San Fransisco, it is picked up by, let us say Nipperbou Solutions, who facilitates the customs process, and ships the material to their own warehouse, located in Salt Lake City. The sensor assemblies Sit on the shelf until your customer calls and orders one. Then Nipperbou Solutions takes one of the units off of the shelf, packs it using your labels or logo, and ships it via UPS. The communication between your company and the Nipperbou Solutions computer which printed the label is entirely automated, as is the accounting and reporting system. To add a flourish to this example, imagine if the customer's telephone calls to your 'order line' were handled by a call center operated elsewhere by another company, easily allowing you to offer customers 24/7 order placement while freeing you of the staffing and overhead costs.
No business is to small to take advantage of the opportunities to significantly reduce costs and increase overall efficiency by outsourcing customer fulfillment activities. As you will see in the following two case studies, such outsourcing can mean all the difference in operating a viable going concern.
Case Study 1: Molly's Mail Order – A part-time business becomes the day job. Specialty Bicycles
Case Study 2: Trafficator – 10 hours per week and $100,000 per year.
Written By: Owen R Matthews
Copyright 2007, All rights reserved.
