Supply Chain Management: Benefits to Outsourcing and What to Look For

Outsourcing… to many small business owners and startups, the term outsourcing essentially means expense. While it is true that outsourcing various tasks will result in some type of expense, in many instances, the return on investment makes the initial costs worthwhile.

Supply Chain Management

Though there are some responsibilities that can easily be handled in house, there are others that are best left to companies and professionals who have the experience and means to get the job done in a more effective manner – such as supply chain management.

No matter how great your product is, if you’re not able to effectively assemble, package, and distribute these products to your customers in an effective manner, the reputation of your company can easily be tarnished.

Top Reasons to Consider Outsourcing

There are a plethora of advantages that small business owners can benefit from outsourcing their supply chain management needs. A third party logistics or 3PL provider offers businesses a one stop shop solution for all their assembly, inventory, packaging, warehouse, and distribution needs. In fact, small businesses who have invested in working with a reputable logistics provider have maximized their profitability and improved the quality of the service they provide to their customers. Below are a few reasons you might consider outsourcing such needs:

1. Established Relationships – an established 3PL provider has already done the groundwork necessary to build a diverse resource network. These developed relationships allow 3PLs to execute your supply chain needs in the most efficient, yet cost effective manner. Whether you’re interested in finding a supplier for packaging or shipping materials, 3PLs can leverage their established relationships to receive quality materials at a fraction of the cost. This means less overhead and improved productivity.

2. Saves Time and Money – When you outsource to a firm that has logistics and 3PL services that include inventory management, warehousing, assembly, packaging, and distribution under one roof, this saves you a great deal of time and money. It reduces the time and money that would be put into finding suitable space to store your products, a means for transporting your products, and qualified staff to carry out the execution process.

3. Experience – Learning an effective way to manage your supply chain could essentially take up a great deal of time. The same goes for hiring a team of staff and providing them with necessary training. As such, a third party logistics provider is ideal. They already have the industry experience to make sure that your supply chain needs are handled professionally. They are aware of the best methods to get the job done, and are essentially on top of the latest developments and technologies that can streamline processes to improve productivity and customer service. Ideally, hiring a 3PL provider frees up your time (and the time of your staff) to focus on other core business tasks.

4. Scalability and Flexibility – Another advantage to outsourcing your supply chain management needs is scalability. As your business needs grow or fluctuate, you’ll need to be able to adapt accordingly. Not having enough space, manpower, or transportation could prove detrimental to your business. Equally is detrimental is having too much space, manpower, or means of transportation when during an “off season” or down time. A 3PL provider on the other hand has the means to adapt to the needs of your business no matter how often those needs might change.

Finding a Quality 3PL Provider: Questions to Consider

If you’d like to take advantage of the many benefits that can come from outsourcing your supply chain management needs, it is important to take your time in finding the right service provider. Jumping the gun and working with a company that isn’t necessarily experienced, or does not have the capacity to meet all of your needs is a waste of time and money. Below are a few questions you should consider asking as you search for the most effective 3PL provider.

1. Can you scale your operations as my company’s need fluctuate? – If you’re planning to expand or sell products that are seasonal, you’ll want to work with a 3PL provider that can easily accommodate your needs.

2. Do you utilize the best technological platforms to provide efficient and effective services? – New developments in technology make inventory and supply chain management more efficient. In order to stick with the competition you want to ensure that you’re working with a company that has the means to continually streamline processes to give your customers the best experience possible.

3. Do you have an array of services that include warehousing and transportation? – The best way to get a true return on your investment is to work with a 3PL provider that has a plethora of services all under one roof.

4. Can you provide me with a few references? – Any company eager to do business with you will tell you that they can do an exemplary job for your business. The only way to truly find out how reputable a 3PL provider is would be to inquire about a few references. These references should be able to account for the level of professionalism that the 3PL provides. If they do not have references to offer you, this is a sign that they’re either new, or may not have the best reputation.

When it comes to supply chain management and shipping suppliers, small businesses have various options they could consider. While most will try and complete the tasks in house, when you consider the amount of time and money that will need to be invested, sometimes outsourcing could be the better choice.

Should you decide that outsourcing these needs to a third party logistics provider is the most beneficial option for your business, be sure to ask the above mentioned questions to ensure that you’re working with a company that can accommodate your needs at all times and provide the best customer service experience, all while streamlining processes in an efficient and timely fashion.

Shares

1 Comment Supply Chain Management: Benefits to Outsourcing and What to Look For

  1. Martin Lindeskog

    Ivan: As a former purchaser with long experience of supply chain management, I am interested to learn about the possibilities to write a post on this topic, with a twist… 😉

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *