Why You Should Outsource Supply Chain Management

April 5, 2021

5 min read

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You have an e-commerce business and you’re expecting the business to grow. The key to success in this stage is a combination of supply chain optimization and effective supply chain management (SCM). You can achieve both when you outsource supply chain management.

The Risks and Benefits of Outsourcing Supply Chain Management

It may sound optimistic, but the risks inherent to supply chain management outsourcing are minimal compared to the advantages. Studies show that nearly 80 percent of businesses with highly efficient supply chain operation and logistics operations enjoy greater than average revenues compared to others in their industries.

What’s more, nearly 95 percent of businesses that opted for supply chain outsourcing report a positive and successful relationship. In contrast, businesses that poorly manage their supply chain operation and logistics operations are usually overwhelmed by supply chain issues that arise from several areas:

unprecedented growth in inventory,
an uptick in customer orders,
evolving consumer demands,
last-mile delivery and logistics problems, and
inefficient replenishment, among others.

Encumbered by these supply chain management issues, businesses often lose sight of their core functions, i.e., expanding the customer base, increasing market share, and growing revenue.

Top 10 Reasons to Outsource Supply Chain Management

Though SCM issues are common, they can be avoided if you choose supply chain management outsourcing to a partner. That statement may sound like an oversimplification of a complex operation, but it’s true.

Perhaps unsurprisingly, most retailers are not logistics experts, and few ecommerce store owners have degrees in supply chain management. If they did, they would probably work for a third party logistics provider.

Like any outsourced service, the number one reason any business would opt for supply chain management outsourcing is because there is an expert out there who can do it better, faster, and cheaper than if you did it in house.

Improve Flexibility

Third-party logistics providers and partners are better equipped with the tools and technologies needed to manage a supply chain and, therefore, are in a better position to adapt to changing market conditions and consumer preferences. Those resources and expertise are particularly useful to brands looking to scale production and ecommerce fulfillment in line with fluctuating customer demands.

Boost Efficiency

Ecommerce retailers can outsource their supply chain to boost productivity, facilitate more efficient service, and accelerate business growth. By doing so, they avoid entanglements with the strategic and tactical details of supply chain management and optimization.

In other words, the less your team has to worry about managing your supply chain, the more they can focus on their core competencies — developing better products and services for your customer base.

Increase Value

Third party logistics providers and other external supply chain partners offer the capabilities, solutions and expertise that normally take years, man power and significant capital to develop in-house. The expertise a partner like Flowspace brings to the table can be extremely valuable, especially considering its distributed network of warehouses running Flowspace software.

Reduce Costs

Logistics and supply chain activities are some of the most expensive business operations any company can undertake. Warehouses, order fulfillment centers, and delivery vehicles all require trained professionals to operate.

Those professionals cost money, and so do the supplies and infrastructure they need to do their jobs. In most cases, it’s more cost-effective to outsource supply chain activities to a reliable third-party than to handle it in-house.

Meet Demand

An inefficient supply chain can seriously damage customer relationships and profitability. In most cases, customer satisfaction is only achieved when supply chains operate smoothly and with regularity.

By outsourcing supply chain management functions to an expert partner you can reduce the chance of an inefficient supply chain, and better equip your business with the human resources, technology and effective processes they need to ensure all supply chain processes flow smoothly and efficiently.

Mitigate Risk

Think of your supply chain as a ship. As it’s captain, you need lead time to execute avoidance maneuvers and mitigate disaster before it strikes. The best way to navigate uncertainties and strengthen your supply chain is by investing in new technologies that provide real-time supply chain visibility.

The Flowspace platform offers real-time visibility into orders, product inventory management, and more, and offers easy-to-implement control over supply chain systems.

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