Setting Up an Efficient Supply Chain: The Benefits of Outsourcing
Setting up an efficient supply chain is vital to the success of your company, and one of the simplest ways to do it is to choose a professional third party, like Howard Tenens, to help you.
Some business owners are initially reluctant to hand control of such a fundamental part of their strategy over to an outside body. However, it makes little sense to do otherwise – why burden yourself with running a side of your venture that a third party could manage more cheaply, efficiently and successfully?
If you still need a little convincing, read on to find out more…
Outsourcing is Economical
It may seem hard to imagine, but employing a third party to control your supply chain is actually more economical than doing it yourself.
To start with, many professional logistics companies have business contacts who offer them rates you couldn’t hope to negotiate. They pass these savings on to you, offering a far cheaper solution than buying or renting your own warehouse space. They make similar savings on the running and maintenance of their fleet.
Using a third party also means that you don’t have to employ an internal body to oversee this side of things, which saves you money on both wages and management costs.
Additionally, there is no need to invest in ancillary equipment to furnish and run your warehouse, as everything from pallet racking to safety barriers, mezzanine floors, and forklifts will be provided and paid for by the logistics company you choose, including their maintenance costs.
Outsourcing is Flexible
One of the major downsides of running your own supply chain is that you require real estate. Lease terms for this type of property tend to be long-running, and buying warehouse space ties you to the buildings you use to store your goods for even longer. This means that even if your business experiences seasonal fluctuations, you will be paying for your warehouse space all year round, regardless of how much of it you’re actually using.
Using a third party solves this problem. Logistics companies are often flexible in terms of their leases, and will allow you to pay for more space as and when you need it, rather than expecting you to cover the cost of empty shelves when you don’t.
Outsourcing Allows You to Share Costs
Another major benefit of outsourcing your supply chain is tied to its cost-effectiveness. Part of the reason that prices are so much lower than when you cover them yourself is because the company will have business contacts who offer them better rates than you could hope to find. However, the main reason that the cost of running and maintaining warehouses and transport fleets is so much lower is because you’re sharing these with other businesses. This spreads the costs of the company you outsource to across multiple clients, which makes them cheaper, without these enterprises having to compromise on quality or efficiency.
Outsourcing Lightens the Burden on Your HR Team
Your HR team must spread themselves across your employee body as a whole, so the fewer departments and staff members that includes, the more efficient they will be. The management of internal warehouse staff can be a major burden, particularly if your warehouses and transport fleet operate around the clock. This might mean that as well as paying and managing more staff overall, you also have to hire more people to join your HR team. Choosing a third party to take care of this for you lightens the burden on your existing staff members, lowers your overheads and increases employee efficiency.
Could outsourcing your supply chain be the right decision for your company?