Drop shipping vs. maintaining an inventory warehouse… What is the best option for your organization? As technology evolves and electronic ordering becomes a more prolific part of DME business, it’s clear that drop shipping is quickly becoming a more cost effective and efficient process, however, some items should be picked up in store when the cost of drop shipping plus product cost exceeds the reimbursement margin.
The key is understanding which products can be drop shipped and which ones should be in your warehouse to maintain profitability. We have laid some information below to help you better understand the advantages to automating your product delivery.
It’s critical to understand what product can be drop shipped and which ones
should be in your warehouse…
What are the advantages to dropping shipping vs maintaining a warehouse?
- Drop Shipping Advantages
- Same day shipping (This is a feature offered by most suppliers)
- Drastically reduced in-warehouse stock and warehouse space needs
- More cost effective than company warehouse delivery (Saves on labor, time, vehicle wear-and-tear, etc.)
- Direct shipping from vendors maintains tracking information for extended periods over Fed Ex, UPS, and USPS
- Fewer invoices
- Many vendors track back orders and ships for free
- Warehouse Advantages
- Stock immediately available for walk-ins
- Can ship using less costly shipping (USPS)
- Patients can pick up instead of shipping/delivery
What products should be kept in a warehouse?
You should keep things that you both sell and fit frequently. You may not want to have an expansive selection of these items (think no more than 3 of each SKU) but you should be able to service your walk in and ‘stat’ customers.
The Advantage of Shipping Automation
Automation of your shipping workflow gives you the ability to push sales orders directly to the vendor electronically plus receive shipment confirmation and tracking electronically. This also allows shipping information to be pushed back into the core software system which can help in eliminating mistakes, the need for manual entry, and timely processing.
Automating orders helps streamline your organization’s ordering workflow. This is best served by allowing your Customer Sales Reps (CSR) to process electronic Purchase Orders (PO) directly to the vendor when the sales order is completed. If oversite is needed, those POs can be reviewed at a secondary level and pushed through to the vendor. Receipt of shipment confirmation should be managed by the original CSR or confirmation staff for quick review and billing confirmation.
Do a Little Research…
If you are interested in the idea of drop shipping here is a list of DME suppliers. Click on the links to get some more information.
- Independence Medical (PAP supplies, incontinence, wound care, etc.)
- VGM (PAP supplies)
- PPM (PAP supplies)
- McKesson (enteral, incontinence, wound care, ostomy, etc.)
If you have more questions about which products to drop ship or how to automate your sales order process shoot us an email or give us a call at 678.626.1704. We would be more than happy to talk with you about inventory management and automation.