Do You Need a Supply Chain Management Company?
Often times, businesses are faced with the difficult decision of managing transportation, distribution, storage, and handling of materials themselves or contacting full-service supply chain management companies about an outsourcing solution. In most cases, a business does not have the staff, infrastructure or means of transportation needed to manage an entire supply chain system in-house.
This article is meant to:
- Address common circumstances that might cause a company to outsource its supply chain management solutions
- Answer a few of the frequently asked questions received when a company is considering making the switch from internal to external distribution and warehousing solutions.
How to Know if You Should Outsource Supply Chain Services
- A company who cannot expand its existing facility due to land restrictions may need a company who can safely warehouse and distribute its stock to consumers. This situation is happening with increasing regularity in the automobile industry. Handwork such as packaging services can be successfully outsourced to distribution centers designed to handle the space and labor associated with seasonal fluctuations and rapid turn times.
- An organization with limited technology can benefit from a warehouse management system used by larger supply chain management companies. Orders, receipts, tracking and other critical info can be updated in real time, giving companies more control over their inventory.
- A company with a great product but limited supply chain knowledge and experience may want to consider working with supply-chain experts that already have an existing network of warehousing, transporting and distribution services included packaging.
- Fast growing or start up companies who’s time is spent selling and building the foundation of the company often do not have time or funds to build up and manage their distribution channels. Full service supply chain management companies, especially those with powerful warehouse management systems (WMS) take the stress away from the organization.
- A company experiencing issues internally or with their current supply chain management company will want to consider an option that ensures product delivery without handling, shipping or inventory accuracy issues.
- Manufacturers that have to build inventories over a period of time and ship them out quickly, but do not have the storage to keep their stock without becoming over-crowded, may require warehousing, packaging services and advanced distribution solutions.
- Sales and Brokerage organizations with a need to warehouse or consolidate product lines, will benefit from hiring full service supply chain companies with a reputation for handling complex supply-chain solutions.
FAQ When Considering Supply Chain Management Companies
“When using a third party trucking, warehousing, or distributing company wouldn’t my costs go up instead of down?”
Not always. Many times the internal cost of utilities, taxes, insurance, maintenance and labor (health insurance, vacation and holiday pay, management time, etc.) outweigh the costs of using outside supply-chain management companies.
“How do I know I can trust someone else with my customers?”
Any full service supply chain management company should have a plethora of supporting information available to you, such as:
- how long they’ve been in business
- the maximum capacity it can operate at (number of employees, trucks, shipment methods, etc.)
- case studies or written examples of past supply chain solutions
- a warehouse management system with the ability to update in real time
- a strategy for determining the most beneficial and cost effective system for your specific company
- testimonials, reviews or high ratings online and by past customers
“Is it safe to have my products warehoused far away from me?”
If you take the time to ensure that supply chain management companies you are working with are responsible, delivering on time, handling products with care, distributing without problems, etc. then you should have nothing to worry about. With the ability to update the condition of the product in real-time through WMS you have complete access to and control over your own inventory. Progressive supply chain companies have created a network of owned/internal distribution centers that increase the likely-hood of a facility being geographically near you!
“I don’t understand what a logistics company truly does…”
Don’t worry, that is exactly why you should trust an expert! 3PL logistics services (full service supply-chain management) ensure that every aspect of your warehousing, trucking, and distribution channels are operating smoothly so that you can focus your attention on other things.
If you’re confused, the 3PL logistics companies worth using will take the time to sit down and explain in full detail what they provide and in which ways they can help your company.
