There isn't a universal order volume at which outsourcing warehousing becomes worthwhile. For some businesses, a few hundred monthly orders may justify external support, while others can efficiently manage much higher volumes internally. The decision depends on storage costs, labour requirements, order complexity, and how consistently your business can fulfill orders.
At Links Corp, our third party warehousing solutions help businesses evaluate alternatives to managing inventory in-house. Companies with labour-intensive orders may also benefit from pick and pack warehousing and e-commerce fulfillment, particularly as product ranges and shipping demands grow.
Why Isn't Order Volume the Only Factor?
Two businesses processing 500 orders per month can have completely different fulfillment requirements. One might ship small, identical products that are easy to store and package. Another might manage hundreds of SKUs, multiple-item orders, fragile products, and special packaging instructions.
The second business may need significantly more labour and storage space despite processing the same number of orders. This is why warehousing decisions should consider operational complexity alongside sales volume.
What Are the Signs That In-House Warehousing Is Becoming Inefficient?
Look for recurring problems rather than relying on one unusually busy month.
Common indicators include:
- Inventory taking over office or production space
- Employees regularly working overtime to fulfill orders
- Increasing picking and packing mistakes
- Delays receiving or organizing incoming stock
- Difficulty handling seasonal order increases
- Growing expenses for additional storage and equipment
If these problems continue as order volume increases, outsourcing may deserve closer consideration.
How Can You Calculate Your Current Cost Per Order?
Start by identifying your monthly warehousing and fulfillment expenses.
Include:
- Warehouse rent and utilities
- Storage equipment and maintenance
- Labour for receiving, picking, and packing
- Packaging supplies
- Inventory management software
- Equipment and administrative expenses
Divide the total by the number of orders processed during that month.
For example, if your operation costs $12,000 monthly and processes 1,000 orders, the average operating cost is $12 per order before any excluded shipping or product costs.
This provides a starting point for comparing internal operations with external warehousing proposals.
When Does Pick and Pack Warehousing Become Valuable?
As order complexity increases, accurately locating, selecting, and packaging products becomes more time-consuming. Professional pick and pack warehousing may help businesses establish more consistent processes, particularly when they manage numerous SKUs or variable order sizes.
However, outsourcing doesn't eliminate the need for accurate inventory data and clear fulfillment instructions. Businesses should confirm how their warehouse provider handles stock receiving, inventory updates, packaging requirements, and order exceptions.
What Should You Compare Before Outsourcing?
When evaluating third party warehousing, ask potential providers about:
- Storage and inventory handling fees
- Receiving and order processing charges
- Minimum commitments and contract terms
- Inventory reporting and system compatibility
- Shipping arrangements and order cut-off times
- Procedures for returns and damaged inventory
Compare the total cost and operational requirements rather than focusing only on the quoted storage rate.
Explore Warehousing Options With Links Corp
Outsourcing becomes worthwhile when the operational benefits and costs make sense for your business, not simply when you reach a particular order count. At Links Corp, we provide Canadian warehousing and fulfillment solutions for businesses looking to improve inventory organization and order processing.
Contact our team to discuss your current order volume, storage needs, and fulfillment requirements.
