The word “logistics” can be intimidating for many Canadian small-business owners. It’s often the domain of major international companies.
Three years ago, our business was selling its product through a website. Sales were modest and it was a challenge to attract big orders from stores across Canada. To grow, we needed a logistical solution that would allow us to deal with large orders in a cost effective and efficient manner.
It turned out to be the catalyst that helped us build a $2-million a year business, with sales in more than 1,500 stores across Canada and the United States.
Here are several tips for fellow entrepreneurs looking to expand nationally or beyond our borders:
Outsource your warehouse
If your business carries considerable inventory, this will reduce the need to pay additional employees, freight forwarders and landlords. We use several warehousing companies, located in Toronto and across the United States.
Regionalize distribution points
One of our objectives was to expand across North America. We decided to outsource our Canadian distribution centre near Toronto in order to take advantage of the concentration of people in southern Ontario. We knew that we also needed a U.S.-based warehouse situated in a central location, helping us expand on the east and west coasts, which made Chicago a logical choice.
Capitalize on lower shipping costs
One of the biggest advantages of outsourcing our distribution centres was the reduced shipping rates we receive by piggy backing on what they call “high-volume courier accounts.” We incur substantial savings every time we ship our product to one of our locations across North America.
Pay as you go is the way to go
Your business will benefit from another major cost savings – you only pay for the space and labour used and nothing more. It provides you with the flexibility to expand or contract storage requirements with ease, depending on the annual sales cycle.
Automation is key
When researching various warehousing options, be sure to ask about software integration capabilities. When we enter a new order it is sent electronically to the warehouse and automatically shipped out the same day. The automation means there is less room for human error and it reduces the amount of work force needed to manage logistics.
Focus on fixed costs
One of the benefits of outsourcing your warehousing is the fixed costs associated with storing your products. This gives your business greater control to accurately plan for the year ahead. We know exactly how much it is going to cost to store each product for any given period of time.
Abby Gnanendran is the CEO and co-founder of Montreal-based Earth Rated PoopBags, which sells eco-friendly products to more than 1,500 stores across Canada, the United States and Europe.