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Outsourcing in Supply Chain Management: Why you Should be Doing it


Outsourcing in supply chain management is increasing in intensity. This reflects changes in costs and new demands for global performance as well as a need for greater sustainability and tougher monitoring regulations. You may decide to outsource processes along your supply chain to reduce excess inventory and waste, to respond to changing demands more accurately and to concentrate on the areas of supply chain management you know your team does best.

Outsourcing in Supply Chain Management Pinpoints Your Specific Need

From contract management to materials requirement planning and production scheduling, outsourcing in supply chain management can pinpoint your exact areas of need. Some organizations are using outsourcing to handle demand planning, warehouse management or their stock analysis. Others rely on an outsourcing partner for order allocation, claims and payments or their customer support service. According to Gartner reports, your benefit depends on factors like making sure you’re matching up the needs of your organization with a flexible outsourcing partner who can manage those needs, even if they change.

Reduce Production Costs, Gain Efficiency With Outsourcing in Supply Chain Management

If your industry includes equipment manufacturing, you may decide to use outsourcing in supply chain management to achieve more efficiency among your parts production lines. You may, for example, choose to outsource some phases of part manufacturing, or assembly. Outsourcing in a supply chain can also reduce costs associated with production. You can utilize a third-party to handle your entire truck repair and maintenance or all of your data processing. Leverage outsourcing in supply chain management to help your organization achieve volume-based discounts on purchasing materials. Outsourcing in supply chain management can mean allowing another company to handle your transportation fleet management and activity, saving you costs on needing to replace an outdated fleet.

Manage Labor Surges with Outsourcing in Supply Chain Management

If you’re an organization that has seen a period of sharp growth, outsourcing in supply chain management may help you manage the needs of additional labor or staff while you focus on other core areas. You can also tap into the resources of outsourcing to handle expected high-volume periods of production needs, such as seasonal demand, without investing too heavily in labor force or resources you won’t need at other times of the year. Similarly, if your labor force is costing your organization too much in resolving challenges or intensive need for infrastructure, you can rely on outsourcing in supply chain management to “rent” another supplier’s infrastructure resources, labor force or production facilities – allowing you to handle tasks like lowering your overall production costs.

Global Leaders Using Outsourcing in Supply Chain Management

Kimberly-Clark, a global leader in packaged consumer goods, is outsourcing some key logistics functions related to its supply chain management by utilizing a 3PL vendor, Pennsylvania-based Kane is Able. Specifically, Kimberly-Clark is using outsourcing in supply chain management to reduce their need to extend efforts on warehousing, allowing more time to cultivate their own internal strengths. Every element of Kimberly-Clark’s warehousing is managed by their outsourcing partner, and only one Kimberly-Clark employee is needed to act as a middle connector between the two. Because the warehousing expertise is supplied by their outsourcing partner, the company has dramatically reduced the number of persons they employ to handle day-to-day management. They are also considering new outsourcing strategies for production planning, which would allow for more accurate long-term scheduling.

Outsourcing in Supply Chain Management Across Product Chains

Weber Distribution, a national award-winning provider of outsourcing in supply chain management, is capturing attention and business from major clients like California Innovations, who is praising the relationship because it allows outsourced distribution solutions that are flexible enough to adapt to customer needs, without sacrificing service. Franklin International is using outsourcing in supply chain management to handle their freight management, with results including a stronger ability to concentrate on core business management without freight concerns, even in a very detail-oriented environment. Outsourcing options continue to increase, but successful organizations consider outsourcing as an element of their overall strategic plan for growth, and strive not to outsource activities that are already part of their core strengths.