Outsourcing your supply chain management to a 3PL

supply chain management
Supply chain management for an ecommerce business takes up time and energy that could be better spent updating websites, customer satisfaction, building the brand and marketing their products. However, an unmanned supply chain can gave severe impacts to a business because your supply chain is the network between a company and its supplier to produce and distribute products to the end customer. Optimising the supply chain is a crucial aspect for online businesses, especially now where they need free shipping and next-day delivery to stay competitive. Your time should be spent building your brand and company presence online. Supply chain management can take up a massive chunk of that time especially without the technology, labour, and expertise. Hours spent on logistics can rack up quickly, leaving you little time for business growth - What would you like to spend more time on? Luckily for you, outsourcing supply chain management to a fulfilment warehouse is a brilliant option that several fast-growing ecommerce businesses choose, instead of investing their money into setting up their own operations. In this article we shall explore the benefits of outsourcing your supply chain and covering some of the risks, so you are well verse in the world of external supply chain management, enabling you to spend less time and money overseeing logistics.  

What is outsourced supply chain management?

Outsourced supply chain management refers to hiring a third-party logistics (3PL) company to manage, improve, and optimise your supply chain. This gives ecommerce businesses the ability to relieve themselves from storage and time-consuming fulfilment tasks. To now allocate more time to building the business while saving money and improving their supply chain.  

Which areas of the business can you outsource supply chain management?

Outsourcing can be done at every stage of the process found in supply chain management. While some logistics companies can help with a select few of the stages, a tech-enabled 3PL can help streamline the entire supply chain by managing all logistics operations on your behalf. This list contains all the supply chain processes you could outsource to a 3PL:
  • Warehouse receiving
  • Inventory storage
  • Order management
  • Inventory management
  • Order fulfilment
  • Automated shipping
  • Returns management
 

The benefits and risks you can expect from outsourcing supply chain management in ecommerce

There are several benefits when outsourcing supply chain management, some would say endless benefits. However, it is not magic and with reward always come some risks. The key is to do extensive research and planning to find the right 3PL partner that can provide your business with what you're looking for, to meet your unique needs. Fortunately, after your research and careful planning while choosing the perfect 3PL for you, the good should always outweigh the bad and your business will reap the rewards. Here we break down the individual benefits and risks of outsourcing supply chain management.  

Benefits of outsourcing supply chain management

1.Reduced overall costs

To run a smooth and lean supply chain requires a wide range of processes, technology integration, and labour. When not done properly, logistics costs can start to add up and put a strain on your business. When outsourcing your supply chain, the stress of managing the logistic processes yourself are significantly reduced, as well as, receiving lowered costs on order fulfilment while gaining the opportunities of warehousing and shipping fees. Running and entire supply chain incorrectly can be costly for your business. Unless you have hundreds of thousands of pounds lying about you will most likely be renting warehouse spaces. Consider this though, warehousing costs saw a 10% rate hike at the beginning of 2021. It is becoming increasingly difficult to find warehousing at a price you can afford, plus that money can be utilised in better areas of the business to help build the brand and the following. Other issues regarding warehousing can also eat up your time and money: warehouse upkeep, inefficient inventory storage, poor geographic footprint, unoptimized labour and operations. Outsourcing your supply chain management to a tech-enabled 3PL can solve many of the issues stated above, with benefits such as affordable warehousing, optimising fulfilment process using automated technology, and offering affordable shipping through negotiating discounts with their connections with major carriers.

2.Adds time to focus on scaling your business

Once you have outsourced your supply chain, the time you used to allocate to a supply chain management is given back to you. This time can now be utilised to focus on marketing, product development, and building better customer relationships and support. As your business grows a 3PL can offer their expertise into expanding your fulfilment strategy and optimise inventory. That could be storing inventory in more fulfilment centres, setting up subscription orders, or expanding into new markets and sales channels.

3.Speeds up shipping times

Outsourcing your supply chain can offer ecommerce businesses the ability to provide affordable, fast, and reliable shipping to expand your customer reach and satisfaction. When partnering with a 3PL that has extensive links with major carriers, the ability to provide affordable, fast shipping can give your business an edge over competition. Also, with the current climate of ecommerce orders, 2-day, next-day, and even same-day shipping is expected from customers and can make your business less desirable when this isn't guaranteed. The ability to expand your customer reach can also help you breach foreign markets that you may have previously been unable to do without a 3PL that has international reach.

4.Increase flexibility

When you outsource your supply chain to a 3PL, you will have access to their well-connected logistics network, technology, and expertise. This makes it easier for you to make important decisions in the future. OnLogistics can provide ecommerce businesses with the ability to explore locations around the whole of the UK as well as breach markets within several countries in Europe and America. We can provide flexibility through our technology to fully integrate you into the system where we would do the leg work. We can also offer flexibility by including no monthly order minimum requirements giving start-ups an opportunity to reap the rewards of a fulfilment partnership. The option to use standard or your own branded packaging and the ability to utilise our technology by monitoring and altering inventory or orders all from one dashboard.

5.Increase accuracy in order processing

Smaller ecommerce businesses sometimes process orders manually but when partnering with a 3PL, you will have access to software that integrates with your online store and other sales channels to simplify order processing. OnLogistics has achieved a fully integrated system with several of its ecommerce customers relieving them the headache of manual inputting. Some of the sites we currently integrate with are:
  • Shopify
  • WooCommerce
  • Magento
  • LightSpeed
  • PresstaShop

6.Boosts customer satisfaction

When you achieve an efficient and effective supply chain your customer can also benefit even though they have no insight into how an order is processes, fulfilled, and shipped. Outsourcing your supply chain gives the ability to leave logistics up to the experts who can find the appropriate ways to save on costs and provide a pleasant experience for your customers with faster and more accurate delivery.  

Risk of outsourcing supply chain management

1.Choosing the wrong 3PL company

It is a big step to outsource your supply chain management to an external business. It required a large amount of research and consideration to find a 3PL that can suitably manage your supply chain. When sourcing a 3PL, make sure to ask questions! Ask about their tech stack, their pricing model, where their fulfilment centre is located (and if they play to expand), and how hands on are their support team.

2.Unplanned costs

There is a common belief within start-up ecommerce businesses that outsourcing logistics and fulfilment will increase costs to an unmanageable amount, but this is not the case. When in fact going it alone  boasts hidden costs to self-fulfilment and leasing warehouse space. Outsourcing should not only save you time, but also provide cost-saving options previously unavailable to you. You can hold onto money that would have gone to rent, labour, and equipment if you decided to go it alone. Ask a 3PL's pricing model so you can get an idea of any other charges or fees.

3.Long onboarding processes

Every 3PL will have a different onboarding process, but you should expect the process to be smooth and easy to get started. It is essential to ask your 3PL questions regarding upfront information, if there is a direct integration with your online store, and how easy it is to set up and configure your account. These questions will give you the knowledge of how easy or tedious the process will be, you will want to choose a provider offering a simpler onboarding processes. This was you can ship your inventory as soon as possible and have them start fulfilling quickly.  

Conclusion

Outsourcing supply chain management can require a leap of faith; however, the benefits will be worth it. Revel in the benefits but always consider the risks through careful research and consideration. Don't be afraid to ask questions! OnLogistics offers a growing fulfilment network with links to national and international distribution. An integrated system into several websites and technology to automate orders and enable you an insight to the processes, offering flexibility to change inventory or orders at will. OnLogistics can provide expertise in the field of fulfilment and share that expertise to help grow your business. To learn more about OnLogistics fulfilment operations and to request a rate card, click here