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The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
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Editor's Note: If you are interested in becoming an expert on Supply Chain Management (SCM), take a look at Flevy's Supply Chain Management (SCM) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.
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The speed and efficiency with which your supply chain moves can make or break your company. Inefficiencies add up, costing money unnecessarily. In today’s cutthroat business environment, with consumers focused on value and speed, only the most efficient companies thrive.
Many companies find that working with a third party logistics (3PL) provider helps them operate more effectively and ultimately boosts their bottom line. Supply chain management is our main business and tapping into that expertise — it’s all we do, all day, every day — allows you to elevate your business to the next level.
Read on to discover 5 reasons for why outsourcing supply chain management can improve your business operations.
1. Limit supply side capital expenditures.
Companies that manage their own supply chains must figure out how to ship their products. This process often requires purchasing trucks or other special equipment to transport products to consumers. By contracting with a third party logistics company, whose specialty is delivering products to the market, you needn’t worry about investing in expensive equipment to get the job done.
2. Your company becomes leaner and more efficient.
Managing supply chain in-house requires additional staff and brainpower. If something goes wrong, you’re inevitably called for input, adding stress and added work onto your already packed schedule. When you hire an experienced 3PL provider, there is no need to pay a salary plus benefits to a staffer — or multiple staffers — to manage logistics. Plus, if the shipments experience delays or an unexpected problem arises, you can rest assured that your experienced third party logistics team will find the best, quickest solution to minimize disruption.
3. Increased supply chain efficiency.
Because supply chain management is our only business activity, we’ve had the opportunity to develop significant expertise in responding to the intricacies of shipping and product delivery. We can help you ship products faster and cheaper, which ultimately creates happy customers and contributes to your business’ success. From bad weather brewing on the other side of the country to road construction that could delay shipments to the complexities of working with multiple shipping companies, 3PL offers the expertise to help you navigate the complex supply chain and get your products to market as efficiently as possible.
4. Greater insight to inventory and controls.
Imagine having instantaneous access to knowing when more of your product is needed on the shelves. Third party logistics companies can track trends in sales, helping you to make informed, strategic decisions regarding inventory and manufacturing levels. This valuable insight helps your company respond to otherwise invisible market conditions and accurately ride the ebb and flow to maximize profit.
5. Availability of value-added services.
The availability of crucial services such as order fulfillment, labeling, inspection and sorting makes 3PL providers even more indispensable to your business, helping to achieve greater efficiency. With logistics taken care of by a trusted third party logistics partner, you can focus on other important business tasks. Instead of focusing on cross-docking and consolidation, you can develop new marketing strategies to increase market share and grow your company. Third party logistics providers are partners in your success.
This guest blog post was published compliments of Steve Updike Vice President / Principal at Updike Distribution Logistics, LLC, a Phoenix, Arizona-based distribution company.
Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.
Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.
In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.
COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.
Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.
