As an outsourced fulfillment and distribution company, one thing we do is provide warehouse space to our clients. Obviously I’m a fan of outsourcing, it’s our business and I’m always telling prospects a big reason you outsource is to trade fixed costs for variable costs. At TAGG, like most order fulfillment providers, you only pay for your actual activity – how many inbounds you have, your storage space, each order. Therefore you have no large fixed overhead. It’s a great thing and I’m realizing it more these days as TAGG is growing and we are looking for additional warehouse space.
How do you know how much space you will need next year? How do you know how much space you will need in the next 5 – 7 years? Nearly the only certainty is that you don’t know. Those of you that have decided to go it alone and lease or purchase a warehouse have been faced trying to figure this out. Maybe you are growing and adding volume or product lines requiring additional space. Maybe your are shrinking or moving to a just-in-time inventory and will need less space. Under any scenario, wouldn’t it be nice instead of entering into long-term commitment and a large fixed overhead, to be able to just rent the space you want on a month-to-month basis? That is what our outsourced fulfillment and distribution clients do from us. As I look around at buildings and face very challenging decisions, I can truly realize the benefit of an outsourced warehouse. Now if I could just find someone to outsource to I could avoid this space anxiety….oh wait, that is the business I am in! Nevermind.