Supply chain management refers to the overseeing of all the design, procurement, manufacturing, transporting, packaging, and redesign components involved in your company’s supply chain process.
This process takes place across a number of locations and businesses. It begins with the initial raw components and lasts through the delivery of a final product to the consumer. With so many moving parts, supply chain management can quickly become overwhelmingly complex.
That’s why so many companies are turning to outsource partners, like Chainlogix, as they explore possibilities for supply chain management outsourcing. Supply chain management outsourcing means hiring an outside business or organization to handle either specific parts of your supply chain or the entire process. Doing so can help minimize overall costs, offer greater flexibility, and more readily meet demands.
Why Supply Chain Management Gets Outsourced
But why are companies increasingly trending towards supply chain management outsourcing? We are now living in a time that is more interconnected than ever. Globalization has opened up endless possibilities and ways to do business.
For that reason, it’s important to appreciate just how critical it is for companies to effectively manage their supply chains. Think of a company’s supply chain as an interconnected web linking its various suppliers. All of these players hold a key role in producing and distributing a unique service or product that is critical to the business’s operation.
According to a study conducted by Deloitte, companies with superior supply chain management capabilities were significantly outperforming on both growth and revenue compared to companies with average or subpar supply chain management capabilities. In fact, it was reported only 8% of organizations with lower performing supply chain had above average revenue growth. As you can see, high performing supply chain management is vital.
But a number of companies simply don’t have the resources to keep up with their supply chains, or it’s simply inefficient for them to do so. At that point, they will call in external supply chain logistics and management experts.
These experts will often already have relationships established with a number of suppliers and can leverage these relationships to get clients much better prices. They also tend to offer a number of other benefits and services that help reduce overhead
Risk Associated with Supply Chain Management Outsourcing
While the possibility of supply chain management outsourcing can absolutely make a company more competitive, reduce the possibility of supply disruptions and resulting headaches, and free up human and actual capital, there is still a major risk: selecting the wrong partner.
If you are considering supply chain management outsourcing and looking to ease burdens associated with procurement, as well as the storage and movement of raw materials, consider Chainlogix.
9 Benefits of Supply Chain Management Outsourcing:
- Better Prices
Often times, supply chain management outsourcing will result in a lower price for both your business and the consumer. - Cost Control
It can be more reliable to outsource to the right logistics company rather than perform the operations in-house to control and manage cost. - Alleviate Quality Issues
When you pick an appropriate 3PL or 4PL for your supply chain management, you are opened up to their network, industry experience, and web of resources you would not be exposed to otherwise. - Increase Redundancy
A lot of different infrastructure is utilized during the supply chain management process, a third-party can properly outsource appropriate steps in the process rather than handling it all in-house. The benefits include improved reliability and availability of the system. - Manage Complexity
If you’re getting lost in the details, it may be time to hand over your supply chain management process. The appropriate 3PL or 4PL can navigate through the complex portions of the process, saving you the headache. - Reduce Pressure on Staff
Rather than bulking up on staff, or straining current employees, it is more effective to utilize outsourcing. With proper staffing, tasks can be delegated and completed efficiently without impeding on other areas of your business. - Supplement Your Engineering Skillset
Planning, designing, and creating can require expert knowledge your business may not be equipped for, outsourcing can expose you to expert engineering and design knowledge to handle your business needs. - Boost Efficiency
Increased efficiency leads to meeting customer demands in a timely and effective manner. Outsourcing some parts of the supply chain process can lead to saved time.
- Increase Your Competitive Edge
Outsourcing can give you an edge over the competition because you are exposed to expert knowledge, resources, and business conduct your competition does not have access to while relying only on in-house supply chain management.
Supply chain management outsourcing allows you to spend more time focusing on the more important aspects of your business, such as scaling and networking. You can spend more time building stronger customer relationships, offering customer support, and being more present in your business.
Choosing to outsource some or all of your supply chain operations can be a very big decision for your business. It takes a lot of courage to choose supply chain management outsourcing partners to fit your needs. If your business is struggling to keep up with the never-ending issues related to supply chain management, it may be time to pass the baton.
Talk to the experts at Chainlogix about assisting you with your procurement needs so you can achieve a more sustainable competitive advantage and reduce your total acquisition costs. CHAINLOGIX’s supply chain management services cover everything from product development, sourcing, and production to logistics and the information systems needed to coordinate these activities. Click here to find out more now!
