Running a business isn’t easy. As the business owner, you need to wear a lot of hats that are crucial to the business’ operation. Many of these jobs aren’t industry-specific. Rather, they are required across most, if not all industries. These types of roles include human resources, maintenance, payroll, janitorial services, etc.
Any successful business has to distribute their goods or services to their customers in a timely fashion. Business owners often can outsource their distribution efforts to a third party. By doing this, you can put this job in the hands of experts who can efficiently accomplish this task so that you can focus on creating the product and growing your company. The following is a guide that will help inform companies seeking to outsource their distribution efforts.
Advantages of Outsourcing Your Distribution
For business owners, there are many advantages to outsourcing distribution. Too often, small business owners have to juggle many different tasks. By outsourcing, you can focus solely on improving the products and services while also growing your market share. Distribution companies only have one job: distribution. They have the requisite expertise in this field and they know how to manage inventory and transportation requirements. These organizations can even adjust based on the changing dynamics of your company and can re-scale based on your distribution needs. The distribution company will also handle warehousing and transportation, where they have a network of providers, which allows them to accomplish tasks in the most cost-efficient way possible.
A third party distribution company will have also invested in equipment, which otherwise would be very expensive to own, including radio frequency identification and other forms of technology that can move product through the system more quickly. By allowing a third party distribution company to handle your shipping and transportation needs, you can save money and allocate it towards other important functions of your business.
Disadvantages of Outsourcing Your Distribution
There are some disadvantages to distribution outsourcing that are worth considering. By entrusting this service to another company, you are forfeiting some measure of control over the distribution of your products, including product pricing. A distribution company may also ask your business for privileged credit information or, in exchange for their services, expect discounts on product purchases. You also need to carefully examine the terms of any contract with a distribution company. There are times when business owners can be the victims of unfavorable contracts. If the distributor convinces you to sign a long-term, exclusive agreement and then fails to satisfactorily handle your distribution needs, you could be stuck in a bad relationship with little-to-no chance of a quick resolution. Always have a legal professional review any contract before signing it.
By outsourcing your distribution needs, you can put this important task in the hands of a third party with expertise in this area, so that you can focus your time and effort on other aspects of your business. There are many advantages to outsourcing your distribution, but it doesn’t work for everyone. When making this decision, you should be well-informed and should know whether this will be a good decision for the future of your business.