Today, the original equipment manufacturing and contract manufacturing environment is tough. For all aspects of the supply chain, companies, regardless of the industry, are required to be more creative. By identifying a vendor that allows product to be stocked will certainly provide a distinct advantage. For example, if a customer has a large order forPrinted Circuit Boards (PCBs)orflex circuit boards, but has budget restrictions, it can be set up so that this customer only takes a certain number of units while the rest remain stored.
In reality,outsourced inventory managementcan and does work. However, much of the program is based on trust. The reason is that the customer will not use all of the product. In addition, billing is done on scheduled inventory. For this type of management system to work, there has to be integrity.
Running a Successful Business
To run a successful business, you have to consider many aspects. For many business owners and managers, one of the greatest challenges comes from finding a viable means of completing functions, whether internally or through a third-party firm. The fact is that certain processes are critical and therefore they need to remain in-house.
Typically, any activities that are part of a company’s core capabilities or anything that has major significance to managers who are not willing to risk outsourcing will be controlled by the company itself. However, there are a number of additional activities that can be outsourced. Among these, distribution and inventory storage ranks high on the list.
For outsourcing, inventory management is an excellent solution because it is not something that a company employee would handle. Companies that offer inventory management are also able to provide outstanding services at a reduced cost, and in some cases, they can even offer enhanced services because they specialize in handling certain daily functions.
If your company chooses to manage inventory internally, you will need to purchase or lease appropriate space. With renting, you may not always use all of the space while other times, you may need more than what is allotted to you. Fluctuations such as this are challenging when trying to manage leases for warehouse space.
Now, if you were to outsource, your warehousing company would handle all of the responsibilities for you. In addition, the outsourced company would make sure that your inventory is stored correctly based on what it is. In some situations, this would involve a climate-controlled space.
In handling shipping internally, companies often face a variety of problems. To be successful with this, you would be required to hire an adequate number of employees. Otherwise, the process would not run smoothly. You would also have to order boxes, shipping labels, and make sure that inventory systems are constantly updated, among other things.
Advantages of Using a Fulfillment Company
With a fulfillment company, your inventory is properly stored but in addition, this company would ship product to the customer on your behalf. Therefore, you never have to mess with equipment, boxes, labels, and other things. Instead, items are shipped carefully and quickly. Outsourcing also eliminates the hassle of managing employees. Overall, outsourced inventory management will keep track of your inventory, invoices, orders, returns, and more.
Most business owners fail to stay on top of the latest shipping and inventory software trends. By working with a fulfillment company, you never have to worry about upgrades. Instead, you can integrate with different systems so that key information about inventory and orders is shared among relevant people within the company. Because fulfillment companies have extensive experience with managing inventory for others, they have the ability to identify potential problems and risks, followed by making appropriate recommendations.
In reality, outsourced inventory management can save your company a significant amount of money, particularly if you consider the monetary value of time for negotiating terms and upper management spending precious time on producing activities. In addition, warehouse providers often get better discounts on freight rate, which ultimately saves you money.