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Question answered in Quora - What are the advantages and disadvantages of outsourcing supply chain s

Assumptions

1-Supply Chain does not impact the customer satisfaction level so much for your business, as long as the product gets delivered as per the agreement on certain metrics it is good. Your business is not dependent on wowing the customer on how the product gets delivered. For example Bed Bath and Beyond, Polo Ralph Lauren, Williams Sonoma all these retailers are primarily successful because they focus so much on wowing their customers, there is a saying "you will never forget how some one made you feel" , as a gift receiver once you taste that feeling you want to give that same feeling to your friends and family, so that is why bridal registry business is such a huge business for Bed Bath & Beyond.

2-The portion that is being outsourced is primarily the Outbound Distribution & Delivery, not so much the sourcing & building the product - if you are making a product then I would not outsource sourcing because it is very important that the quality of your components or raw materials are of outstanding quality, if they are not you are digging your own grave by outsourcing

Advantages

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1-You can focus on your product, don't need to waste your time on worrying about Distribution & Delivery because you have a solid partner that can execute that portion of the business really well

2- Less capital intensive and hence less upfront cost to your business

3-You don't need to learn Supply Chain, make sure you have a clear metric that you are going to measure and pay by, to the partner that is delivering these Supply Chain services

4-You don't need to manage the people in this area of your business, that is a major relief, all that energy is well spent in making the best product possible

Disadvantages

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1-You kinda lose control over the processes, so assuming how your product gets delivered doesn't make a big difference in the customer satisfaction measure then it is okay, but if customer satisfaction is significantly impacted by Supply Chain then need to think twice about outsourcing it

2-Integration with your Supply Chain services provider could become painful, especially if your business's picks up and you are scaling up big time,

3-You probably need to have some kind of audit processes to ensure the Supply Chain services provider is delivering well some kind of a customer satisfaction survey for your customers and also is financially stable and is going to be a partner that is delivering in the long run, because this business is tough and these guys go out of business so fast, especially in Distributing food, the margins are so thin, so you really need a solid partner that has slick and lean operations

At a high level these are something I would think about.

Also check out my book Puga Sankara's Supply Chain Blog - that is a must read before spending Hundreds & Thousands of $$$ on your MBA or Masters Degree to get the best ROI or before starting your Entrepreneurial journey.


ABOUT THE AUTHOR 

Puga Sankara is the CEO and Founder of Smart Gladiator. Smart Gladiator is an ATDC Georgia Tech company, Smart Gladiator's award-winning product LoadProof (https://feature.loadproof.com/loadproof) is an Enterprise Photo Documentation System that is enjoying tremendous traction in the Supply Chain Community. LoadProof (https://feature.loadproof.com/loadproof) is a patent pending Centralized Cloud based Enterprise Photo Documentation System for Supply Chain. It is built on the premise that photos and videos are vital documentation serving as compelling proof of important operations performed in the supply chain within and across organizations. These operations may be related to fulfilling customer orders, meeting contractual obligations, or transferring merchandise across different parties taking part in the Supply Chain operations. LoadProof is as important for your organization as an ERP (Enterprise Resource Planning) which is an enterprise system of record for critical documents such as Purchase Orders, Sales Orders, Contracts between parties etc. that have tremendous legal ramifications, or a WMS (Warehouse Management System), that holds indispensable information related to orders shipment/fulfilment data. Just like Instagram, Facebook or Snapchat have evolved into platforms that enable individuals to showcase how pretty they or their clothes are, LoadProof is a similar Enterprise system of record that holds photos, not so much for show off, but to serve as compelling, unequivocal, thoroughly documented proof, even in the court of law when there is a dispute between organizations while they perform many facets of their functions/operations, as well as for increased visibility and transparency within the Supply Chain. The capabilities of LoadProof are discussed in detail in the next sections of the document below. LoadProof is live in 460+ Sites, 250+ corporates, 13 Countries.There are more testimonials in this link here also https://www.g2.com/products/loadproof/reviews. Learn more here on our YouTube channel,  https://youtube.com/@smartgladiatorloadproof  & also here in LinkedIn - https://www.linkedin.com/company/smartgladiator/

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