Need for Supply Chain Outsourcing

Many organizations begin with small-scale warehousing and transportation activities and naturally handle their own supply chain. However, there comes a time when partnering with an outsourced supply chain provider makes sense. It could be a result of increased complexity, quick expansion in revenue, planning for future growth, or the introduction of additional distribution channels.

Working with a 3PL expert can increase performance and help respond to market changes. In terms of efficiency the partnership provides, the benefits include lower costs, reduced inventory, shorter lead times, and greater resource utilization Longer-term efficacy improves customer service, market share, and revenue. Capital investment is frequently considered to be a barrier in developing an internal supply chain and its infrastructure. Perhaps it is more prudent to manage a greater portion of this function as a variable cost. According to a Deloitte survey, 79% of organizations with efficient supply chains outperform their competitors. Businesses with optimal supply chains also have 3x faster cash-to-cash cycles and 15% cheaper supply chain costs while storing 50% less inventory than those with sub-optimal supply chains.

Supplementing the statistics here are a few key benefits that food brands can reap by outsourcing their supply chain to experts.


Defined Processes

Supply chain outsourcing organizations provide a variety of solutions for food brands to efficiently service their end customer. This includes inventory management and operational optimization of the entire supply chain. Supply chain experts can manage stock, invoices, deliveries, and refunds through well-defined processes. Organizations handling supply chain outsourcing are experts at measuring performance, determining which areas to prioritize and how to implement improvements most effectively while planning to grow the business. Clear controls will increase operational efficiency and help businesses prevent unanticipated expenses.


Strategic Alliances

A supply chain partner’s network is a crucial resource for moving finished products. Finding the right equipment, insurance, and other credentials might be difficult. However, supply chain partners filter their network to ensure only qualified service providers are included. They can also use their relationships to achieve total cost reduction and improve service. A 3PL provider’s network of partners enables businesses to expand their geographical presence by being able to manage inventory in a potential market without having to invest in vehicles, equipment, or staff. Along with a well-outlined route to market strategy investing in the services of a supply chain provider can save both time and money.


Focus on core business activities

With an outsourced supply chain taking care of the end-to-end fulfillment, businesses can concentrate on their core competencies to innovate, produce new ideas, products, and business offerings. Outsourcing the SCM to a reputable partner with extensive knowledge and experience can result in significant time and resource savings. This would make food brands more productive and assist their long-term success. Consequently, processes like marketing, customer relationships, and support are enhanced. As the business scales across the country, supply chain outsourcing experts can offer insight into how to expand their fulfilment strategy and optimize inventory, whether it can be executed through the addition of new fulfilment centres, or the expansion into new markets and sales channels.


Advantage of knowledge and expertise

It is difficult to predict and accommodate internal expertise in all the capacities and geographies required in today’s complex market environment. A 3PL partner will have expertise and experience in a variety of areas, including transportation and its paperwork, sourcing, compliances, and economic rules, to name a few. The supply chain expertise and know-how that a partner can provide to a business wanting to grow across the country can reduce costly delays, shorten the cycle time, and smooth the introduction into a new territory.


Access to state-of-the-art infrastructure

A significant benefit of partnering with a firm providing supply chain outsourcing is the ability to leverage its existing infrastructure. A 3PL provider will have a broad network of interconnected routes that enables them to maximize efficiency when transporting various clients’ things around the country. Additionally, they will have access to warehouses and distribution centers in strategic locations to facilitate fulfilment and delivery. When a supply chain provider is hired, they can harness this network to determine the most cost-effective methods of transporting your products or materials around the supply chain. If any obstacles or issues develop, they already have a good grasp on alternate routes and solutions that will meet the complex needs of a food brand. Meanwhile, without pre-existing infrastructure, the in-house supply chain would have to address these difficulties on the fly.


Enable futuristic technology

According to the 2018 Annual Third-Party Logistics (3PL) Study, businesses desire increased analysis to enable them to make more informed supply chain decisions. A technologically driven outsourced partner delivers expanded visibility, offering users more insight into relative data that impacts their operations. Businesses are able to aggregate data and improve their organization’s decision-making process. Futuristic technology like artificial intelligence, machine learning, and automation play a large role in increasing the processing and output capacities of the workforce along the supply chain. Regardless of the scale or industry, integrating automation into supply chain management can be extremely advantageous for operations such as order tracking, data analysis, transportation, and warehouse management. Automation enables businesses to make more informed decisions by lowering costs and eliminating errors along the value chain. Organizations can better allocate critical products and supplies while saving money, time, and resources with a technology-enabled supply chain.


With numerous benefits associated with outsourcing to a 3PL provider, including cost savings, increased flexibility, access to a robust supply chain, and ultimately more time and energy to focus on business, it is a strategic investment food brands should consider if they intend to scale their business across the country.


Planning to outsource your supply chain? Talk to us.