Your due diligence when considering a fulfillment house will involve researching, networking and following up on referrals. Carefully interview your select list of prospects and visit the facilities.
Here are a few things you will want to consider:
- Your contract – The Mailing and Fulfillment Service Association provides an industry model contract to which you can compare each proposed fulfillment contract.
- Storage fees – Be alert to per-pallet storage (warehousing) quotes. Some companies have a single SKU minimum per pallet, resulting in a minimum monthly charge for each SKU regardless of the actual number of items.
- Package sizes - Note the range of stock carton and Jiffy mailer sizes the fulfillment house offers. Use of excessively large envelope mailers or cartons can result in a substantial increase in postage or UPS/ FedEx charges.
- Avoiding split orders – The fulfillment house should be willing to use special cartons that you provide if its largest stock carton is inadequate. Splitting orders into smaller boxes because larger cartons are not available can lead to excessive shipping costs.
- Specialized cartons -You may need to use a special-size carton to avoid DIM surcharges. Even a fraction of an inch can make a substantial difference in your shipping costs if you ship low-density products in large cartons.
- Returned merchandise options – Be sure your fulfillment house gives you the choice of having your customers send returns directly to you or to the fulfillment vendor. With food and dietary supplements, for example, it costs less to have returned merchandise sent directly to you, since re-selling the item is not possible.
- Your shipping account – Some fulfillment vendors will use your shipping account and others prefer to use their own UPS, FedEx and USPS accounts. Rates and fees will be adjusted to accordingly. You might prefer to take advantage of reduced shipping fees offered by many fulfillment houses.
- Terms of service – Established fulfillment houses guarantee their work and will compensate you for any errors. Still, it’s a good practice to review the TOS for each potential vendor.
You can begin on a small scale by sending just a few SKUs in small quantities to sample the services of a potential fulfillment partner before entering a long-term contract.
Keeping sensitive company data secure is a major concern for any business considering outsourcing. But these apprehensions do not need to keep you from enjoying the benefits of outsourcing your business processes. By taking several precautionary steps, you can ensure your data is secure, even when using an offshore vendor.
- Have a practical in-house security strategy that includes classification of data and a plan for handling various types of data, making sure you differentiate general information from sensitive data. Your security guidelines should include clearly stated principles and procedures that organization managers and IT professionals within your company agree on.
- Ensure that the vendors you select have a security policy that is equivalent to or even more stringent than your own. This may mean you will need to do some additional investigating to find out whether the provider’s security policies are strictly enforced.
- Ask about the type of deterrence technology the company has in place and the policies involved in its use. Does the vendor enforce these policies among all of its employees, including IT staff?
- Use application firewalls and database monitoring gateways to enforce your company’s usage policy and deter abuse of privilege. Some providers combine both functions, which is optimal. Also, choose a vendor who diligently supervises outbound emails and Internet usage to prevent unauthorized data disclosure.
- Perform regular application, database and network security checks to identify any potentially vulnerable areas.
- Ascertain whether the provider has instructed its staff regarding the proper handling and protection of sensitive data. Information leaks are not always intentional. Some instances of data disclosure occur when employees mishandle data; for example, leaving unencrypted files open and unattended for a time.
- Within your own company, keep abreast of the most recent developments in data security. Staying informed of the technology and processes involved in keeping your data secure will help you stay in control of your company’s security when outsourcing.