5 reasons to outsource your supply chain management
Supply chain management, full transparency and visibility on supply chain as well as improved quality qualified as hot topics of the manufacturing industry even before the pandemic, but certainly are even more critical in a post Covid-19 world.
Supply chains are transforming, today more than ever. Transitioning from linear integration between buyers and suppliers to an interconnected network involving multiple stakeholders spread across continents and time zones, with different agendas, goals and interests. Indeed, supply chains are complex, incredibly complex.
In order to face the ever more demanding customers, the hectic trends dictated by e-commerce, the need for efficient lead-times and improved bottom lines as well as lack of visibility, an increasing number of retailers are outsourcing strategically relevant chunks of the supply chain to remain agile and protect their business from unexpected risks and future disruptions. Strategic outsourcing appears as one of the solutions to face economic disruptions and give you a competitive edge.
If outsourcing has sometimes bad reputation, it is in fact not a dirty word. Used strategically, it’s a key to unlock value and opportunities for your organization and your supply chain. It will greatly support your efforts for cost saving, speed to market, global expansion, and help you grab some much needed market shares.
Supply chain management outsourcing has many benefits, we’re presenting you in this post 5 reasons why you should consider it.
Full visibility on your supply chain: you see what’s happening almost instantly.
One of the main issues of the modern supply chain is the opacity. Orders are being managed by multiple stakeholders, on different continents and time zones, from multiple cultures (backgrounds) and languages. Each participant in the production having different agendas, sometimes opposite goals. For that reason, communication is scattered, unreliable, and having a grip on production status is a challenge.
Relying on an external entity to manage your supply chain, order fulfillment and quality allows you to have are presentative on the factory floor working in your best interest. Not only they can monitor production, catch defect at needle points, they can also alert you on future disruptions and most importantly, give you an instant update anytime you need it. Supply chain management partners are your eyes and ears in the production countries and they make sure your agenda is pushed forward. Poor communication, and unreliable information are two of the biggest roadblocks for a smooth supply chain operation. Outsourcing helps you keep control through transparency, reporting and accountability monitoring.
Better prepared for disruptions: you stay agile.
As you gain full visibility you can understand what’s happening and what could happen. But outsourcing can also allow you to remain agile and flexible being able to scale up or down in no time to adapt to the current situation. Having an office and a team on your payroll comes with responsibilities and even if you might want to scale down quickly when crisis arise. Covid-19 is a perfect example of this. As the crisis came, many retailers had to scale down, wondering if they should close offices or not, wondering if the end of the pandemic was far or near. Retailers using third parties, paid based on the production volume, didn’t have to struggle with this.
Outsourcing supply chain management indeed allows retailers to be equipped with the proper tools to adapt. Adaptability, agility and flexibility are key to remain relevant in a world where everything moves so fast and where we know now the next crisis could come from anywhere.
By embracing strategic outsourcing, you reduce direct and overhead costs. As you choose a partner on-ground helping out on targeted business functions, you cancel the need to open an office, with all the risks that investing in a new location encompasses. You have the power to enter relationships with expert companies in a flexible way, project -based, season based, short or long term.
You’re also much better prepared to deal with customer demand fluctuations boosted by e-commerce. You can scale at ease while you follow demand and keep up with the intense pace dictated by this new mode of consumption.
Better quality and lead time: you get good products on-time.
There is no doubt that having someone dedicated to watching your production lines and manage deadlines, in direct contact with your supplier is the best way to monitor your quality and your processes. A supply chain management agency will run daily audits and manage your production closely as it is their core competency.
As a result, you get higher inspection pass ratio due to better quality. This having a direct impact on your customer satisfaction and your overall brand image. While your outsourcing partner focuses on processes and quality, you can focus on your core competencies and effectively add value to your core business. Remaining close to your core allows you to grow in a better, more sustainable way. Strategic outsourcing helps your organization for the short and long-term goals you have set.
Increase speed to market: you can answer fastmoving customer demand.
By empowering a third-party partner to manage your orders, you transfer the pressure to deliver on-time to an entity who’s expert at it, does it every day and knows how to leverage stakeholders and timelines to make sure your products are shipped on time.
Lead-time and order fulfillment rely on an intricate management of various stakeholders and logistics. On-time delivery become a clear KPI of your agency and you can track it easily season after season. They are immediately able to assess when it is necessary to open an additional line and then make sure it’s properly implemented on the factory floor.
Access new technology: enter the digital world.
More and more retailers are adopting automation and robotics to keep up with the intense pace dictated by e-commerce trends. By choosing the right agency retailers get a chance to transition slowly towards new processes, enter the world of digitization that, until today, remain seen as unreachable. Usually agencies, and service providers are the first to adopt new technologies, allowing them to remain relevant and have edge on their competition. Much smaller in size, it’s easier for them to implement new technologies in their processes.
If most organizations know digitization it is the right way to grow, majority of them have not solved the challenges separating them from embracing digital technologies in the everyday practice of their industry.
By leveraging agency capabilities well, you get a chance to see new ways of working, positive processes trickle down your organization as your teams get more and more familiar with the latest technologies and solutions.
Your organization produces tremendous value every day, in the form of production data. This data is gold and needs to be gathered, analyzed and built upon to make sure brands and retailers start leading better and protect themselves from turbulences. As they start seeing the full picture, foresee trends and prevent risks, organizations can drive pro-actively towards a smarter, more efficient and certainly more sustainable supply chain
Strategic outsourcing is definitely one of the routes worth considering when planning your organization’s future. However, remember that you need to have a clear vision and strategy to make the most out of outsourcing. Without a strategic approach, the benefits of outsourcing outlined previously wouldn’t be as impactful.
Avoid giving away the full supply chain operations’ responsibilities, select specific chunks where you see potential for added value and truly positive results, measurable and scalable performance. Clear expectation towards the service provider and focused goals are the key. Identify your core competences and keep them in-house, let experts manage the rest.