Do’s and Don’ts of Supply Chain Outsourcing!

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Supply chain management is one of the most integral part of any organization that manufactures and delivers its products to consumers. Typically, in FMCG companies, having a supply chain is quite important for various reasons. Managing a supply chain effectively and efficiently can be demanding as well as time-consuming. This is the reason why some companies choose to outsource the whole process of the Supply chain. However, there are fair shares of advantages and disadvantages associated with it and you can make the most out of it if you know the do’s and don’ts of supply chain outsourcing.

Why Supply Chain Outsourcing?

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Just like any other departments, an even supply chain can be outsourced by third party companies. The major reasons for outsourcing can be:

• reducing costs
• more time to focus on vital business aspects
• having the specialized experts handle it

Usually, a department is outsourced when a company thinks that it can benefit by handing it over to a better company. If you feel that there is the lack of proper supply chain resources and personnel in your company, it makes absolute sense to outsource it to a professional service. You can then benefit from it in many ways but there are certain limitations too. Balancing both of them to make your company more efficient is what supply chain outsourcing must accomplish.

Do’s of Supply Chain Outsourcing

If you are trying to outsource your supply chain completely to a third party, you must keep some specific things in mind. Here are some of them.

Reduce unanticipated fees
This should be one of the major focus of a company who is trusting the third party to handle the supply chain. There can be many kinds of hidden fees along with the actual price which can be pricey. Since a supply chain depends upon various factors, there can be costs that are totally unanticipated and you must try to reduce it as much as you can.

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Minimize overall costs
This is a must ‘do’ thing not only in the outsourcing supply chain but in all the other aspects of a business as well. One of the major purposes of hiring a professional service to manage your supply chain is to reduce overall costs. Thus, you must ensure that every task is efficiently handled and there is no wastage of money at any end.

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Meet the demands of the customer
The end result of every product is to ensure proper customer satisfaction but to satisfy them their demands must be met. You must make sure all the demands of the customers are met without any hassles. Sometimes there can be the lack of resources or planning which can cause hurdles in meeting the demands of the customers. Thus, the outsourced company must address these problems and provide proper solutions.

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Don’ts of Supply Chain Outsourcing

There are various things which you must strictly avoid doing when you are planning to outsource the supply chain for your company. Here we have listed some of them.

Don’t outsource to multiple companies
Although it can be luring to outsource your supply chain to many companies at once to reduce costs but this is a bad decision. A single entity or a set of experts are well capable of handling everything rather than many different companies or individuals. Thus, you must never outsource your supply chain to multiple companies. You can benefit from a single company in many ways and if you have to shell out a little extra money, it would be a wise thing to do.

Don’t let quality suffer
Whenever a third party is involved, the quality suffers. However, you can try and minimize the effects of it to a good extent. There can be strict company guidelines for the outsourced company so that everything stays perfect. Quality checks and verification need to happen to ensure that proper quality is maintained. Quality shouldn’t suffer just because a separate company is handling it.

Don’t interfere much

The very reason why outsourcing is done because a company can focus on other things that it specializes in. Thus, you should try and avoid interfering in the tasks of the third party company. This will not only create misunderstandings but will result in mishaps that can be difficult to overcome. You must focus on other aspects of your business while your supply chain is taken care of by experts.

Final Say

Although outsourcing supply chain can be a boon to some companies, if not used properly it can create huge problems. Thus, at first, you need to decide whether or not you want to outsource your supply chain department. Once you do it, you then need to ensure that you follow these do’s and don’ts for the best results by outsourcing. Failing to comply with these can backfire and the main purpose of outsourcing shall be ruined.

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Shalini Bisht

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