Any business that supplies a product or service to consumers requires a supply chain of a certain size. Supply chain activities start from sourcing raw materials, move on to manufacturing components or products from those raw materials, and finally deliver the finished product to the end customer. Supply chain management (SCM) is in charge of overseeing and regulating the supply chain and ensuring that every segment of it is running smoothly.
The value of an effective supply chain is immeasurable. If done right, it leads to higher efficiency in production, optimization in shipping, cost savings, improved quality control, supply chain risk management, and even improved cash flow! Not to mention that a well-oiled supply chain ensures that your business is continually keeping up with customer demand and is gaining a competitive advantage.
In the same vein, unsuccessful supply chain management can cause a lot of problems for a business. If you cannot acquire enough raw materials in time (or at the right price), you cannot maximize production, meaning that you cannot deliver orders to your customers. As a result, your customers become unhappy and don’t return to your business.
However, the truth is that not many businesses have the time or knowledge to optimize their supply chain design. This is where supply chain services and their providers come in.
Supply Chain Services: Definition
Put simply, supply chain service providers are third party logistics companies that you can hire to handle the supply chain for your business. These companies already have advantages in logistics and procurement that your business perhaps doesn’t have, and they are offering these advantages to other companies for a fee.
Supply chain service providers may handle only one or a couple of your supply chain design segments, such as manufacturing, distribution, transportation management, logistics management, inventory management, and others. They can also take over your entire end-to-end supply chain so that you don’t have to worry about the details of monitoring and optimizing it.
Companies that may offer supply chain services are referred to as 3PL, 4PL, and 5PL providers.
- 3PL: Third party logistics providers handle logistics management (transportation by road, air, ocean, or railroad) and may also offer additional supply chain services to accompany that. For example, Redbird Logistics offers services that include a wide range of supply chain functions, such as warehouse management, network optimization, reverse logistics, supply chain consulting services, etc.
- 4PL: Fourth party logistics providers handle the entirety of a supply chain, from sourcing raw materials (or procuring components) to the delivery of the final product to customers (including product returns if need be). 4PL providers are non-asset-based, meaning they don’t have trucks, ships, or airplanes of their own, but they often work together with 3PL providers to provide the best service.
- 5PL: Lastly, fifth party logistics providers offer a similar type of service to 4PLs, with one addition: they seek to cut costs through cost management and to ensure that your supply chain functions are not only reliable, prompt, and effective, but that they don’t burn through your business budget.
Benefits of Supply Chain Services
If you’re a business considering hiring someone to handle your supply chain planning and logistics management, you may be hesitant about it. Even though supply chain service providers have become more prevalent in recent years as companies turn to outsourcing, there is still a reluctance to hand over your whole supply chain (or parts of it) to someone else.
What you need to keep in mind is that these logistics providers have the type of expertise, resources, and funding that your business may not in regards to supply chain management. They operate a network of industry-leading supply managers, have high-level relationships with suppliers, high performing processes, advanced technology, and practically everything one would need to develop a superior supply chain strategy.
They will dedicate themselves to streamlining your process, making sure it fits well with global supply chains, and handle everything from supply chain planning to master data management, operations management, and even customer relationship management if you need it. Choose the right logistics company, and you won’t have to trouble yourself with supply chain activities ever again.
The Future of Supply Chains
While outsourcing supply chain management will continue being a trend in the future, more and more companies are also looking at the digital transformation of their supply chain. This means that they will no longer have to track all their shipments and orders through a combination of pen and paper and computer. Instead, everything will be fully digitized in a new era of seamless information flow.
Digital supply chains will require control towers, central platforms that oversee and manage all the little cogs and wheels in the supply chain machinery. This will make data collection more straightforward and will likely revolutionize the logistics industry top to bottom. It will also make it easier to have someone else develop and run a digital supply chain for you so that you can focus on expanding your business.
Is outsourcing the solution for your business?
Whether or not you decide to contact a supply chain service provider depends on the type of business you’re running and the size of your budget. If you can afford to outsource this part of the job, it makes sense to turn to someone who already has all the connections and experience required to deal with logistics. Browse through options available to you, contact different service providers, and see if you can make it work with any of them.
If you’re not a supply chain management expert, the best thing would be to hire those that are and free up time to devote yourself to the areas you excel in.
Aside from offering a wide range of logistics services, Redbird Logistics Services also specializes in taking over parts or the entirety of the supply chain. Our ultimate goal is to optimize your risk management, inventory management, and warehouse management, while lowering costs and maximizing your efficiency and production in accordance with customer demand. We put an emphasis on visibility, and with our real-time tracking technology and data management, you will have no problems knowing precisely what is going on in every part of your supply chain strategy. Contact us for more information about our services and gain a competitive advantage in no time!