Up until now our warehouse operations have been focused on very little production work, mostly pick and pack for our franchisees. With just one warehouse, the inventory control has been relatively easy to manage.
But now that we are expanding, the warehouse manager and I are considering two primary options to handle the increase workload and just in time inventory methods of so many franchisees that require a quick turnaround and delivery window. the first option is obviously opening one or two more warehouses in other parts of the country. Our warehouse on the west coast has a lot of advantages, but with the price of real estate so high and our hours of operation not matching people on the east coast, we could easily justify a second warehouse located on the east coast. My thought was to put one in the mid Atlantic states, such as southern Virginia, because of the lower cost of real estate and excellent transportation network. Then we can consider a third warehouse somewhere in the midwest, with my preference being the Oklahoma City area.
The warehouse manager has suggested a second option that we are investigating – using a third party fulfillment service. We have been checking out a company called AMS Fulfillment and I like several things about their services. They can handle warehousing, inventory, and shipping for us without the expense of renting our own space and hiring more employees.
It will be simple enough to perform a cost analysis of the two options once I gather a little more information. AMS is a california fulfillment company that handles both business to business operations and also business to consumer operations. So if we want to start offering our products directly to our customers we can use their fulfillment to handle the orders, most likely placed over the internet and possibly using inbound telemarketing. We hope to have both of those in place by the end of the year to increase revenue at the corporate level.
I also like that AMS offers OnGuard Inventory Protection. When you have so much of your product located in one place, your risk of loss due to natural disasters, arson, and other factors is much higher. Of course you never want anything bad like that to happen to your property, but bad things don’t always happen to other people. You have to be prudent in protecting you assets and being prepared for the worst, while hoping for the best.