Top 7 Reasons for Outsourcing Your Supply Chain

Supply chains are today a key priority for businesses of all sizes, with recent unforeseen events serving as a stark reminder of their criticality.

Of late, several industries have seen multiple disruptions that first began with the pandemic and later became prolonged because of geopolitical conflicts and the resulting inflation and energy crisis.

Not surprisingly, businesses are exploring ways to effectively deal with supply chain disruptions in the future.

While some of them are determined to build in-house capabilities and infrastructure, a majority of others are likely to rely on (and partner with) third parties and specialized service providers to help them in this endeavor.

Whether they outsource their supply chain operations or prefer to do it themselves, the objective is clear. Build an agile and resilient supply chain that can withstand disruption and respond effectively.

At the same time, keeping costs in check continues to be a priority amid growing economic uncertainty.

Why Consider Supply Chain Outsourcing

Here are 7 reasons for businesses to outsource their supply chains.

1. Improved Strategy and Planning:

Specialized service providers can simplify supply chain planning and, more importantly, help businesses implement these plans. With a precise strategy in place and digital tools at their disposal, they can execute their plans with ease and scale operations as needed to meet fluctuating market conditions.

2. Risk Monitoring and Mitigation:

Supply chain service providers do not wait for an unforeseen event to build the necessary capabilities. Instead, they adopt a proactive approach and engage in supply chain risk monitoring on an ongoing basis. This gives them room to anticipate potential disruptions and prepare for them beforehand.

3. Streamlined Operations:

With outsourcing, businesses can leverage advanced supply chain technologies and tools and accelerate digital transformation. They can streamline supply chain operations by automating several routine tasks and free up resources for strategic tasks. For example, they can automate inventory and warehouse management, contract management, supplier performance management, invoice processing and accounts payable.

Additionally, AI-powered technology can quickly analyze the vast amount of data generated in supply chains and generate actionable insights. Businesses can use these insights to make well-informed decisions, adjust strategy as well as improve processes.

4. Accurate Demand Forecasting:

Of late, demand fluctuations have hurt many businesses, with customer buying preferences changing quickly. Sudden surges in demand have caught businesses unprepared. With supply chain outsourcing, businesses can use advanced analytics and tools to sense any changes in demand and prepare accordingly. These tools can look at historical data, current market trends and several other parameters to accurately predict demand.

5. Better Collaboration:

Supply chain outsourcing fosters better ties and collaboration between various stakeholders. Advanced supply chain collaboration software enables stakeholders to access and share data in real time and make necessary adjustments to align supply with demand. Also, as suppliers and internal stakeholders access the same data, there is a single source of truth across different operations.

6. Improved Sustainability:

Supply chain service providers understand the significance and increased focus on sustainability. They can help businesses improve their sustainability performance in several ways. For example, they can map supply chain emissions and identify hotspots as well as suppliers that are causing the maximum damage. Likewise, they can lead sustainability initiatives by incorporating emissions data in sourcing and supplier contracts.

7. Strategic Advantage:

Partnering with a supply chain service provider makes a lot of business sense in the current economic environment. Businesses can gain valuable insights and advice from experts who specialize in supply chains and know the industry inside out. They can stay on top of trends, proactively adjust strategy and gain an edge over competition.

Conclusion

By outsourcing their supply chain operations, businesses can digitalize several processes and leverage advanced technologies and tools. They can improve supply chain processes on an ongoing basis and utilize data and insights in this endeavor.

At the same time, they can focus on core competencies and strategic objectives instead of spending time on activities they may not be best equipped to handle in-house.

Learn how GEP can help with supply chain outsourcing.