Your procurement costs refer to the price you pay for your goods and materials, such as your packaging. Procurement costs also cover the cost to have your goods shipped to you or your fulfilment centre. Procurement costs may also cover your goods in cost, which is the process of receiving goods, booking them in, and then putting them away in the warehouse.

Storage costs refer to the cost involved in storing your goods in a warehouse or fulfilment centre. If you are leasing your own warehouse, these costs will cover the storage space, electricity, staff, and any other resource within the warehouse used for the purpose of storing inventory. If you use a fulfilment centre, this overall cost will cover the same areas but it will be spread out amongst you and other clients, which generally makes it cheaper.

Its always a good idea to insure your stock to help protect you in case your stock becomes damaged or stolen, but the cost of your insurance will vary depending on the sector you are in, and depending on the insurance company you use. It is always recommended to insure your stock during transit and storage to ensure you are not left out of pocket should something go wrong.

If you have good inventory management systems and processes in place, you hopefully won’t have to deal with too much dead/obsolete stock. However this is still a cost that cannot be overlooked. Sometimes there’s a sudden decrease in demand and interest for certain stock, which can’t always be helped. However, you will still have to pay to continue storing it, or to eventually have it disposed of.

Some other inventory costs to consider (if applicable) included;

• Equipment used for handling
• Vehicles
• Training
• Health and Safety
• Inventory management software

Budgeting for your business is essential. Without budgets, you risk quickly eating away at profits and other resources due to lack of proper cost allocation.

Your budget is important when it comes to; your supply chain management, inventory management, stock replenishment, storage, fulfilment, materials, product development and launch, etc. Basically, every area of your business should have a budget, and this includes your inventory.

Inaccurate calculation can result in you overestimating your profit margins, which can be extremely detrimental to your business as you may end up making purchases you can’t actually afford, therefore putting you in a deficit. This could also lead to things such as debt, missed payments, and incorrect pricing overall.

So, its important that you calculate your inventory costs accurately.

Everyone has to pay tax, and your inventory cost contributes to how much tax you need to pay. Incorrect calculations of your inventory can lead to incorrectly calculating the amount of tax you pay, whether that’s overpaying or underpaying.

So, proper calculation will help to ensure you are remaining compliant while also avoiding the risk of fines or legal action, which can be an absolute nightmare.

As mentioned, the longer it takes for your inventory to turn into a sale, the higher your costs will be overall. This is why demand planning is another crucial component when it comes to inventory management, as demand forecasting will help to ensure you have the right amount of inventory, and this helps to avoid excess costs on storage or disposal since you won’t have an excess amount of stock.

Explore our guide on demand planning here

If you are running a business, you’ll probably know that every stock order you place is not exactly the same as the last one, and this could be due to many things, such as fluctuating demand or interest.

Regularly reviewing your inventory costs will help when placing stock orders as you will have a better understanding of what to order, and what your costs will be.

As mentioned, storage will account for a high fraction of your overall costs, and the more inventory you have, the higher your storage cost will be, especially if you have slow moving or dead stock.

If you’re with a 3PL, they might have a policy in place whereby slow move stocking results in a higher storage rate overall, though each company varies. These policies are usually put in place to incentivise you to sell stock quicker by any means possible. Not only this, but these policies are usually put in place to ensure they don’t lose out on money too, such as through the picking and packing stages. If you aren’t selling, they aren’t making as big a profit since they cant charge you to pick and pack orders that don’t exist.

When you place an order for inventory, you will have to also pay to have those goods transported to yourself or to your fulfilment partner. If you are placing large orders, or placing orders with suppliers that are located overseas, your costs will of course be much higher. Similarly, using fast track services can result in higher overall costs, so this is something else to take into consideration when it comes to exploring the external factors that contribute towards your overall inventory costs.

You may consider switching suppliers, or finding a supplier closer to your end destination since this can help to lower the overall costs associated with having your shipment sent to you or your 3PL.

At TSP we handle everything, starting with the storage, picking, and packing of your products.

We serve a range of markets so we have experience storing, picking, and packing a variety of different products, so we’ve got you covered regardless of what you sell.

Outsourcing your pick and pack with us will help free up your time, while also improving the entire process due to our highly experienced team of staff.

Regardless of whether you just do B2C or B2B, or a mixture of both, our team have the knowledge and resources required to successfully get your orders picked, packed, and shipped to your customer or chosen retailer.

While we handle your B2B and B2C fulfilment, you can focus on putting more time and money back into other areas of your business, such as your sales, marketing, and product development.

After we pick and pack your orders, we ship them too.

We ensure you get better deals on shipping and packaging by letting you leverage our buying power, meaning you can save money and put it back into growing your business.

We also partner with a range of couriers, ensuring the needs of your business are being met through a diverse choice in reliable couriers.

We are your one stop solution for all Amazon seller services, including FBA, FBM and SFP. With over 20 years of industry experience you can be assured that we are fully equipped to support you..

So regardless of what Amazon service you’re using, or if its a mix of all 3, we’ve got you covered. Check out our Amazon page for more information regarding our Amazon fulfilment services.

Our cloud-based system, MintSoft is easy to navigate and provides you with real time updates so you can always make informed decisions about your stock.

We also run our own in-house system that can provide accurate information for the following;

• Notify you of stock replenishment needs
• Notify you of when and when not to re-order
• Ability to track inventory
• Ability to automate orders
• Respond to trends

Returns are inevitable when it comes to your eCommerce business, but managing them correctly is a critical aspect on 3PL services. Here at TSP, we will handle the entire process from start to finish, helping you to main a high level of customer satisfaction.

Are you a sustainable business? Looking to become more sustainable? Working with us means you can do your bit for the planet too, since we are a certified carbon neutral 3PL company.

Do you sell custom bundles or kits? We’ve got you covered. Our team is trained in kitting and bundle building, so you can be assured your customers will receive their orders in an accurate, timely manner.

Do you require international shipping, or are you looking to expand into global markets? We’ve got you covered with our extensive network of couriers and global warehouses.

Explore our global fulfilment solutions page to see how we can help you dominate the global market, right from the heart of Newcastle.

Here at TSP we are one of the very few Newcastle based order fulfilment companies with a dry bonded warehouse license.

Our network of freight forwarders means you can easily utilise the power of cross-border selling, allowing you to boost sales and drive growth.