The Hidden Costs of Self-Distribution (and the Case for Selective Outsourcing)

Are you losing revenue by self-distributing non-revenue-generating items?

It's bold, we know, but it's a question enterprise customers should seriously consider. If your organization has self-distribution capabilities, the logistics of running your own fleet can seem like a point of pride and even a competitive advantage.

However, beneath the surface, the costs — both direct and hidden — can sometimes limit the benefits of an organization's self-distribution strategy.

In this article, we aim to shed light on the often-overlooked expenses of self-distribution and introduce the strategic value of selective outsourcing with Staples Business Advantage.

By focusing your resources on distributing profit-generating products and letting us handle the rest, you can streamline operations and reduce costs.

A Closer Look at Self-Distribution

For many organizations, self-distribution is the right way to do business. It's smart, logical and even empowering. It offers several benefits, like cost savings from less third-party reliance, enhanced inventory control, improved customer service and efficient resource usage.¹

However, just because you can self-distribute everything your organization needs doesn't necessarily mean you should.

In many instances, self-distribution could be costing your company millions of dollars — specifically, on non-revenue-generating items like cleaning supplies or bathroom essentials. When it comes to self-distributing items such as these, some common challenges tend to arise:

• Operational Inefficiencies
  Cyclical ordering and lead times can cause delays, impacting your entire supply chain.
• Underutilized Truck Capacity
  Every non-revenue-generating item on your trucks is space that could have been utilized by profit-making products.
• The True Cost of Truck Maintenance
  The hidden expenses of fuel, insurance and maintenance add up, eroding the perceived savings from self-distribution.
• Labor Costs
  Increasing lead times require more workforce management, incurring higher labor costs.
• Missed Opportunities
  The opportunity cost of using valuable resources to distribute low-value items instead of focusing on core business functions.