Deciding to outsource operations is a tough decision. In the early days, you serviced customers from your apartment, your dad’s garage, or maybe a spare office where your sister worked. Somehow it all came together. After a while, you generated enough working capital to start buying inventory and needed a place to store it. You probably carved out some industrial space, bought shelving and a forklift, and were on your way.
Then, somehow, things got worse.
Should you invest capital and effort into fixing it, or is it time to outsource operations?
How will you know?
We’ve put together a list of five telltale signs indicating that it’s time for you to find a 3pl partner. If any three of these apply to your organization, you should consider finding a best-in-breed supplier and letting go.
You need to have the answer to one really important question before proceeding. What is it that differentiates my offering from similar brands?
It might be that you kill it on the sourcing side – you have relationships in every region, can procure quality goods from sources nobody else would think to access and at prices and turnaround times nobody else would think to ask for.
Or, perhaps, you have the best designers. You compete on style and innovation and the rest of the space waits to see what you are releasing next. Maybe you have access to the most trendy boutiques or “it” retailers.
Those are examples of competitive advantage. Maybe you really do compete on service – calls are answered, orders are picked and customized, fulfilled and delivered, in amazingly short timeframes – you might even custom-fit or install. Do your social media reviews always include positive references to delivery and customization? If so, operations is part of your competitive advantage and you should keep it close. Or, maybe you are not so good at those things – it’s even possible that trying to manage them keeps you from focusing on other functions that you know you do well, like designing the most convenient camera bag, or most comfortable sheets.
Is managing operations something you, or others in your organization, do in addition to a “real job?” Do you have an operations specialist, with real operations experience, on your team? Or, do several smart people in your organization with other responsibilities share accountability for distribution and service? You could be missing out on the best practices and agile systems that can support growing businesses.
If every new initiative is an exercise in inventing the wheel, you may be holding on when you should be letting go. Underestimating the complexity and effort required to turn an aspect of operations into a core-competency is another surefire sign that it’s time to turn them over to someone else.
Do you remember a time when you were surrounded by superstars? Do you remember a team that could do whatever it took to get an order through customs at the wrong port, or find an alternate source in one day, or launch a new campaign a few hours after thinking it up at the corner pub? Is that same team now letting you down? Did your best people go from superstars to duds even while your business is growing?
You need to stop and consider that sometimes it is not the people that are failing the business, but the business that fails its people. Going from adventure-to-adventure is not the same as grinding out the day-to-day monitoring phone calls, counting inventory, and responding to labeling complaints.
The same people that thrive on adventures may fail as jobs evolve and become more specialized. If your best and brightest start to fail, it may be because you have placed them in the wrong roles and you need to give them higher quality problems to solve, letting someone else sweat the repetition.
When you talk up your team, is your highest praise reserved for the person who works the longest hours because you have nothing else to celebrate? Do you have the right systems and metrics in place to know if you are getting a long-term return on today’s extra efforts, or are you working your team long hours without a plan for future support and structure?
If your team is punched in around the clock to make up for system and process gaps, and not because they are engaged and solving high-quality problems, then you have turned a dangerous corner and may be on the cusp of burning out and losing your best employees. If your team is bogged down in low-quality problems, you either have to fix the processes and systems, or find a partner with optimized systems and processes already in place.
We’ve all asked the question, once or twice – should we hold back on budgeted marketing spend until things are working better? Is this a regular conversation in your organization? Do you consistently sacrifice sales because you can’t make the shipments or take the calls? If you have the goods and you have the buyers, then physical operations should not be your constraint. If they are, then they are not your core competency.
If any three…
If any three from this list apply to your organization, then you need to look at finding a partner to deliver on your behalf – be it eCommerce fulfillment, call center, import, export, or quality control. At this stage of growth, any distraction needs to be treated as exactly that and moved elsewhere so your team can focus on those functions that differentiate your organization from its competitors.
Almost every brand started the same way. Operations were a series of point-in-time adventures tied to the arrival or product from the manufacturer. Your team could order pizza and muscle through problems in a few nights. As you grew, that approach simply stopped working and your newer customers expect the kind of experience that can only be accomplished with predictable processes and regular staffing. It’s up to you to decide whether you want to invest in capable operations or outsource operations.
If you’d like to talk to someone from our team about what might be best for your growing eCommerce brand, click here to contact Dotcom Distribution.