Effective supply chain management (SCM) is vital to business successe.

Effective supply chain management (SCM) can reduce costs, increase profitability and improve customer satisfaction. However, mismanaging a single link can negatively affect the rest of the supply chain, costing businesses money and customer satisfaction. Given the risks of ineffective supply chain management, many companies choose to outsource various steps in the supply chain to third-party providers with years of experience in this vertical. Let’s explore some of the benefits of outsourcing your supply chain.

1. Strategic positioning

Companies can outsource their supply chain to facilitate efficient service and business growth. Getting entangled with the strategic and tactical details involved in SCM can sidetrack businesses from their core competencies. Outsourcing supply chain processes enables companies to focus their time, energy and resources on what they do best — developing better products and services for their customer base.

2. Increased value

External supply chain partners bring capabilities, solutions and expertise that will take companies several years and significant capital outlay to develop in-house. The expertise they bring to the table can be extremely valuable, especially if they specialize in your region, industry and vertical. They also leverage operational excellence tools that help to boost efficiency and productivity in your business operations.

3. Reduced operational cost

Supply chain activities come with a lot of infrastructure, overhead and staffing costs. Such operating and capital expenses can quickly add up and significantly impact a company’s profitability…if not handled properly. It’s often more cost-effective to outsource supply chain activities to a reliable third-party than to handle it in-house. The savings may be greater if the supply chain is outsourced to an overseas partner.

4. Improved ability to meet customer demand

Customer satisfaction is key to any sustainable, long-term business enterprise, and this can only be achieved when supply chains are operating optimally. Outsourcing such functions to an expert partner helps to reduce the chance of an inefficient supply chain, which can seriously damage customer relationships and profitability. Third-party suppliers are better equipped with the human resources, technology and effective processes to ensure all supply chain processes flow smoothly and efficiently.

5. Flexibility

Since third-party suppliers are better equipped with the tools and technologies for managing supply chains, they are in a better position to adapt to changing market conditions and consumer preferences. Their resources and expertise are particularly invaluable when companies need to scale production in line with fluctuating customer demands.

6. Increased working resources

When you partner with third-party supply chain companies, you gain access to their working resources and industry expertise. Leveraged correctly, these resources can help you gain an edge over larger players in your industry.

7. Risk mitigation

Working with 3rd party supply chain partners can help you achieve better visibility, security, and control into areas like compliance, quality, lead times and inventory levels. This enhanced visibility allows you to identify areas of risk and take proactive steps to mitigate the impact. You can work with your supply chain partner to reduce lead times, prepare for audits, secure back-up suppliers and optimize safety stock.

What we can do for your supply chain in China