Savings Potential
ProLog provides a tremendous opportunity for businesses to reduce their costs for warehousing, fulfillment, and/or customer care. ProLog’s pricing reflects the efficiency inherent in its people, processes and automation, and as a result clients find that the total cost of ProLog’s services (and related support structure) is usually well beneath what their cost is for “doing it themselves.”
Furthermore, ProLog’s pricing is structured as a variable cost to its clients. For order fulfillment, pricing is set on a per-order and per-piece basis. For warehouse storage, clients pay according to the space they utilize within the ProLog distribution centers. Within the call center, clients pay on a per-minute basis for the utilization of customer care staff. As a result, ProLog’s clients’ fulfillment, warehousing and/or customer care costs are truly variable…they only pay for the services they utilize.
When evaluating the potential savings of outsourcing with ProLog, it’s important to establish an accurate baseline of the current (or projected) cost of “doing it yourself.” Although the direct costs are relatively easy to quantify, the indirect or “hidden” costs inherent in every organization should be factored into the equation. The following is a list of costs that should be considered when establishing the true baseline of doing it yourself. Once this internal baseline is established and compared with ProLog’s pricing structure, we are confident you will find great savings potential in working with ProLog.
Cost Drivers for Fulfillment and Customer Care Operations
Direct Labor
- Receiving and stocking inventory
- Picking, checking, packing and shipping orders
- Kitting, repackaging and/or labeling products
- Receiving, processing and dispositioning returns
- Cycle counting and/or performing physical inventories
- Setting up and maintaining the distribution and/or call center
- Responding to in-bound phone calls and e-mails
- Creating and updating customer records
- Overtime requirements (and the related premium) for the above functions
Direct Supervision
- Managing the distribution center
- Managing the call center
- Overtime requirements (and the related premium) for the above functions
Labor- and Supervision-Related Overheads
- Social security
- Medicare
- Unemployment
- Other state employer taxes (e.g. training tax)
- Payroll processing
- Workers compensation insurance
- Employee practices liability insurance
- Vacation or paid time off
- Medical, dental and vision benefits
- 401k or other retirement or profit-sharing plans
- Certifications (e.g. forklift)
- Training
- Employee acquisition (e.g. ads, postings, referral and temp agency fees)
- Employee screening (e.g. drug and alcohol, background, credit, and driving record checks)
- Employee retention (company events and employee recognition)
- Employee separation (e.g. severance payments)
- Safety and regulatory compliance
Facility
- Distribution center facility space
- Call center facility space
- Increased common area requirements (e.g. break rooms, rest rooms)
- Permits and licensing
- Heating and air conditioning
- Electricity
- Trash and recycling
- Monitored security or guard services
- Telephone and internet
- Facility maintenance and repair
- Common area maintenance charges
- Insurance
- Property taxes
Equipment
- Telephone system
- Cubicles and office furniture (call center and warehouse management)
- Material handling equipment (e.g. conveyors, carousels, sorters)
- Forklifts, pallet jacks and order pickers
- Pallet rack and shelving
- Warehouse work stations and tables
- Bar code scanners
- RF hand-helds
- RFID readers and tag creators
Systems
- Software development or purchase for warehouse management, manifesting/shipping and customer relationship management (CRM) systems
- Integration of CRM and warehouse systems with core accounting, order entry and/or e-commerce systems
- Software module or seat licensing
- Software maintenance agreements
- Software and network security
- Network set-up, hardware, management, and maintenance
- Network servers and server room
- Redundant systems/hardware
- Off-site back-up and data storage
- Software customization and report generation
- Desk-top and warehouse computers and printers
Freight
- Outbound shipments
- Returns
- Single ship point versus multiple ship points
- Surcharges (e.g. bad address, oversize, residential)
- System and network integration with freight carriers
Packing Material
- Shipping cartons
- Void fill (e.g. peanuts, paper, inflatables)
- Packing tape and packing lists
- Pallets, shrink-wrap and pallet protectors
- Storage bins
- Kitting and repacking supplies
Quality/Cost of Error Rectification
- Return and replacement freight
- Expedited shipping
- Direct labor and packing material costs (see above) for replacement shipment
- Restocking and/or repackaging
- Accounting and credit
- Customer reaction and negative “word of mouth”
- Customer retention and lost sales
General Management
- Senior level time and attention on fulfillment and customer care functions
- Multi-site management (time and travel related expenditures)
- Senior level human resource management and policy development and enforcement
- Employee acquisition (e.g. resume review, interviewing, screening)
- Accounting time and support
- Legal
- Incremental general liability insurance
- General office supplies