Supply chain management refers to the delivery of products from the supplier to the customer. Handling a supply chain can be very complicated and sometimes lead to loss not only for the customer but also for those involved in the chain. E-commerce logistics refers to storekeeping the products of an e-commerce company and delivering them safely to the end customer.

However, the motive of supply chain management is not only delivering supplies to the doorstep of the customers but also to increase profits. In-house supply chain management may not always be effective. This is mostly because there are very few workers involved in the work. And, there are just as few resources and time available for a proper management of the supply chain.

On the other hand, when a company hires a BPO company or outsources the supply chain management and e-commerce logistics function, then there are many positive changes. Not only this, the profit and efficiency in work of the company increases while decreasing the costs of the process.

What is the purpose of e-commerce logistics and supply chain management?

E-commerce logistics and supply chain management are crucial parts of the modern supply of goods from the suppliers to the customers. Both e-commerce logistics and supply chain management have the aim to keep goods intact and safe, facilitate delivery on time and at the said location, as well as to increase revenue through the process.

Supply chain management and e-commerce logistics make a big difference when it comes to customer experience, inventory management with efficiency, order fulfillment, as well as extending reach of the supplier throughout the country, and sometimes even globally.

What does outsourcing e-commerce logistics and supply chain management mean?

Outsourcing e-commerce logistics and supply chain management means hiring a third-party agency or a company to carry out the supply chain management and logistics functions of a business or an organization. Many businesses opt for outsourcing or BPO services because they want to save time, manpower, as well as resources of the company in the long run.

Likewise, outsourcing supply chain management and e-commerce logistics also mean that a business owner will be saving a great deal of energy and stress for himself. When a company owner or employees in the company are asked to carry out the supply chain management along with all the other functions, it becomes difficult for them to do so.

Outsourcing e-commerce logistics and supply chain management allows the business or an organization to analyze all the processes without directly involving them, while also getting the results as per the set goals.

Companies also prefer to outsource services like supply chain management and logistics because it is much cheaper than hiring employees to do the job. Hiring an employee often comes with the issue of paying for the work benefits and taking responsibility for them in general. But so is not the case with outsourcing. While you also avoid paying for a lot of employees, you merely have to only be responsible for the payment of the work of that BPO company.

How does outsourcing enhance the efficiency of e-commerce logistics and supply chain management?

Outsourcing e-commerce logistics and supply chain management will enhance the efficiency of the companies in the following ways:

Professional work and advanced technology

Outsourcing e-commerce logistics and supply chain management means that you are getting professionals to complete the job for you. BPOs or outsourcing service providers for supply chain management always use advanced technology that specializes in the sector. This is not quite the case when you get an in-house employee or worker to carry out the job. Moreover, companies should be liable for the purchase of advanced technologies for in-house processing.

But, outsourcing the service does not only ensure work with the help of advanced technology without having to make a purchase of such factors, it also helps companies get the best out of experienced and skilled manpower.

Cost-cutting and cost-efficiency

Cutting costs is possibly one of the major motives of almost every company or business in existence. Going for a budget friendly tactic that not only increases revenue but also decreases expenditure can take an organization a long way in the long term.

Cost-efficiency means that your organization is not only cutting costs, but the price you are paying also results in efficiency. Outsourcing services guarantees that you get the best results out of your expenses.

Supply chain operations flexibility

Supply chain operations in an organization become flexible when you outsource services for the same. An in-house supply chain management is not slightly as flexible as when you outsource the same function because there is a rigidity in working patterns and expertise of the limited in-house employees.

Likewise, while it is not quite possible to scale your business up and down with changing peak seasons, outsourcing makes it simple. If you are looking to terminate the contract with your outsourcing service provider during the off-season for your business, you can also do that once your operations for a single season are completed.

Advanced inventory management

Managing the inventory is not an easy job. You have to have advanced knowledge of supply chain management and inventories to have an overall optimized system in the organization. With a lot of activities going on in your company, it is not quite possible to keep your inventory optimized at all times. This calls for a service provider who will fulfill that gap all the time for your organization.

In inventory management, you can also be guaranteed a JIT management along with efficient monitoring. Likewise, your outsourcing service provider, given they specialize in supply chain management, will also give you a forecast of the possible rise in demand.

Better Logistics Management

Using transportations and logistics from a third party agency who has an expertise in logistics management allows you to improve the workflow of your company. You, as a supplier, will be able to deliver your products as per the convenience and time given by the customer at their doorstep.

Having in-house employees do the same work for your company means that you have to hire a lot of employees. But you don’t really hire employees when you are collaborating with a supply chain management service provider. Instead, you are simply giving the agency, as a whole, a task and are required to compensate them for only what’s done.

Smoothness in Procurement and Supplier Management

BPO or outsourcing service providers always have a good connection with reliable and trustworthy suppliers who will be contacted during the supply management chain for your company. Likewise, ensuring that the company has all the necessary raw materials and resources is made seamless by the service provider.

Finding the right and the most suitable supplier means that your organization will run smoothly in the long run while the suppliers and procurement partners that you deal with also become dependable.

Focus on core competencies

Companies can enhance their competitiveness by relying on outsourcing service providers who will give them the results as per the strategies set by them. Since the outsourcing agency is only carrying out a single work (i.e., supply chain management and e-commerce logistics), concentrating on the core competencies of a client organization becomes seamless.

What supply chain management functions can a company outsource?

The following are the supply chain management functions that a company can outsource:

Logistics and transportation: Logistics and transportation are some of the most important aspects of supply chain management. Transporting goods from one place to another is not an easy chore. Hence, outsourcing service providers ensure reliable logistics and transportation functions.

Supply chain information technology: Outsourcing service providers will give the company’s supply chain management functions a boost with advanced softwares like warehouse management systems (WMS) and enterprise resource planning (ERP).

Procurement: Procurement functions of outsourcing service providers include tracking orders, connecting with the suppliers, and managing the orders. The BPO companies use necessary strategies and guarantee better purchase order management.

Production and manufacturing: Since the purpose of supply chain management is to cut costs, outsourcing service providers will contact external manufacturing parties located in low-cost regions for production and packaging purposes.

Inventory management: There is a great carrying cost involved in the process of supply chain management. In order to cut off unnecessary costs and stock-outs, companies can take the help of third party softwares and service providers for inventory management. The suppliers will be able to manage inventory for client companies with the help of vendor managed inventory.

Conclusion

Any organization that is looking to outsource e-commerce logistics and supply chain management should have a clear line of tasks and goals prepared. Furthermore, looking for an outsourcing partner that fits your organization’s needs the best is just as important. Building a strong outsourcing partnership for supply chain management allows companies to relax and enjoy revenue inflows as and when necessary while maintaining a fixed budget.

Pareshor Kharel is a customer service enthusiast and the managing director at Kantipur Management Private Limited