Drop Ship Fulfillment is a supply chain technique wherein the Medical Device Company does not keep any stock/inventory, but transfers complete responsibility for Order Fulfillment to the contract manufacturer. Under this scenario, it is the contract manufacturer that handles both Inventory Management and Shipping of products to the end-user.
Building a medical device distribution business / system generally takes a great deal of capital. A large portion of this start-up capital is in the gathering of inventory. It is difficult to accurately predict exact figures for the consumer’s demand. This means that at any time excess inventory / merchandise may be sitting on your shelves for a long period of time, which is money out of your pocket that you are not redeeming. Drop Ship Fulfillment is a cost effective and efficient solution to drastically reduce the Medical Device Company’s Inventory and Shipping costs. Here are some advantages to having drop shipping for your business:
- Saves you the large investment of building your own inventory.
- Reduction in expenses incurred for shipping, Inventory Management, Human resources, Facility(s) / Warehouse and other resources
- Eliminates duplication of effort as only one warehouse will pick, pack and ship the product thereby reducing costs in the supply chain.
- You don’t have to keep a regular inventory, you can get specialty and fast moving products to your inventory list instantly
Full-service Medical Device Contract Manufacturers such as LSO Inc. offer their clients Drop Ship Fulfillment. The following are standard Drop Shipping policies and procedures at LSO:
- 48-hour fulfillment (on most items)
- Regular inventory availability updates
- Multiple order consolidation
- Branded packing slip (included with each shipment)
- Overnight or next day shipping (upon request)
- Support shipping via UPS, FedEx, DHL, and USPS as well as selected LTL carriers
- Daily monitoring and control of specific order fulfillment
- Item substitutions
- Direct-to-supplier returns
- Fill rate measurements
- Shared view of data
Ultimately each Medical Device Company must decide for itself, whether the advantages of Drop Shipping far outweigh the risk of outsourcing the process to a third party. What is of reassurance to these companies though is that Drop Shipping is by and large a ‘transparent’ process and as such is highly conducive for outsourcing.