Managing a supply chain can demand a large amount of management resources. That is the reason why several companies tend to outsource their supply chain management (SCM) operations. If you have not yet given serious thought to the matter, here are issues that you should consider and a few reasons why you should.
What to look for from an SCM company
There are important issues that should be kept in mind when deciding on outsourcing SCM. A few important questions need to be asked and answered satisfactorily.
- Is the company able to provide you with a specific SCM plan that meets your needs? If not, you could be faced with unexpected costs and inventory shortages that could nullify the advantages of outsourcing the operation.
- Is the company able to offer you realistic timelines that suit you? Look at the record of the company and check if it had been able to provide and meet supply chain timelines in the past.
- Is the company willing to invest the time and resources needed to integrate operations? If there is any hesitation, the integration will suffer and this will affect not only the supply chain but also have a cascading effect on manufacturing and sales.
- Does the company have the experience and knowledge to ensure material quality? If not, efforts to reduce costs could affect product quality and become very detrimental to your reputation and push down share price.
Freedom to focus on core areas
Although SCM is a critical link in any business chain, it takes up a lot of time and manpower. Efficient SCM will reduce costs but not generate additional profits, which is the core of all business. The resources saved by outsourcing SCM can be utilized for marketing, improving customer relations and developing new business plans and concepts. This is where profits will come from.
SCM is a very specialized field and how efficient it is has a huge impact on manufacturing costs. A specialized SCM company will be able to use expertise in the field and its business connections to manage your logistics in the most cost-effective manner. The benefits can include less expensive materials supply, improved inventory management and optimization of transportation expenses.
Ability to meet market demands
Resource crunches can affect the ability of a business to respond to the market fluctuations. Inability to offer more products or upgrade them to meet competition can have a major impact on share price. A professional SCM partner will be able to help in finding supply resources that can reduce the constraints and allow your business to be proactive in difficult times, and stay ahead of the competition.
Increased operational flexibility
An SCM partner will have extensive resources of its own which will be at your disposal. This can add to your business network, and often open up new operational avenues and allow you to improve your overall infrastructure.
Any form of outsourcing, especially that of SCM, is faced with an element of risk. The uncertainty can be resolved by employing a specialist organization that will be able to optimize your operations, reduce costs and ensure that materials are available in the right place at the right time.