November 16, 2023 | Supply Chain Strategy
Outsourcing business operations has been a tried and tested way of improving operational efficiency and cost savings.
But these are not the only benefits of partnering with an external partner specializing in supply chain management.
With service providers offering advanced supply chain technology solutions, enterprises can expect a lot more than cost savings and operational efficiency.
In the prevailing uncertain environment, the objectives of partnering with a supply chain service provider include gaining end-to-end visibility, faster speed-to-market as well as accessing data and insights to improve processes.
By partnering with the right service provider, businesses can succeed in building an agile and resilient supply chain and even turn their supply chain into a competitive advantage.
The outlook toward business process outsourcing (BPO) has also changed significantly. Most enterprises now look at outsourcing service providers as strategic partners that can offer specialized skillsets and business acumen and help them navigate a complex business landscape.
Supply chain business process outsourcing involves contracting with third parties for specific operational tasks and processes. Think of outsourcing as handing over complex supply chain processes to external partners who specialize in them, thereby allowing in-house staff to focus on core and strategic business functions.
Outsourcing involves delegating the planning, execution and control of supply chain operations such as sourcing, procurement, logistics and distribution to third parties.
From demand forecasting, supply planning and inventory management to accounts payable and logistics, most enterprises today outsource some part of their supply chain operations.
The economic and business environment has become increasingly uncertain in recent years, and disruptions have become more frequent than ever before. Amid these unpredictable market conditions, businesses need to identify and work with reliable external partners who possess the necessary technical and human expertise.
Here are 5 reasons for businesses to partner with a supply chain BPO:
Supply chain operations are today powered by artificial intelligence, machine learning and automation. By partnering with a supply chain BPO, companies can leverage advanced technologies to streamline their supply chain processes. They can accurately forecast demand, optimize inventory and even predict disruption.
Along with rising raw material and input costs, labor shortage has affected production in several industries. A supply chain BPO provides the human talent with desired skillset needed to derive more value from supply chain processes. Businesses can tap into the expertise and benefit from specialized services.
Too many disruptions and demand fluctuations in recent times have made it vital for businesses to quickly adjust and pivot. Supply chain service providers give businesses the flexibility needed to adapt to fast-changing market conditions.
Supply chain service providers can provide a better understanding of real-time operations and detect potential risks. They enable a business to take preventive action and mitigate the impact.
Businesses of all sizes are today looking at different ways to lower costs. Outsourcing of supply chain processes such as warehousing and inventory management can help businesses reduce overhead costs and minimize errors at the same time.
The scope of supply chain services has grown considerably, with external partners offering end-to-end supply chain management capabilities.
Here are key supply chain processes that can be outsourced:
Businesses can partner with service providers for sourcing and procurement operations. As service providers have access to a vast network of suppliers, they can assist the business in supplier selection, negotiations and contract management.
Many businesses entrust external partners for warehousing and distribution. These partners specialize in managing storage facilities, order fulfilment and transportation. They leverage their infrastructure and expertise to improve order accuracy and ensure timely delivery to customers.
Supply chain service providers are ideally suited for transportation and logistics. They can efficiently carry out logistics operations with the help of route optimization, carrier selection and freight forwarding.
Businesses can outsource the all-important task of inventory management to third parties who can leverage advanced technology and analytics to maintain optimum inventory levels. By forecasting demand and tracking stock movement, service providers can maintain the right amount of inventory on hand.
Businesses can also entrust third parties with managing reverse logistics such as product returns by customers. They can handle these tasks efficiently, comply with regulations and maximize the value of returned goods.
In the prevailing uncertain environment, partnering with an external supply chain services provider can benefit a business in many ways.
However, this does not mean that a business should outsource all operations and not build supply chain competencies within the enterprise.
Instead, it should keep core competencies within the enterprise and outsource processes that can be best handled by external partners.
Additionally, businesses must work in close collaboration with their supply chain service providers and monitor their performance regularly.