Global Fulfillment: Supply Chain Management for Global Business
After companies have secured a steady foothold in the domestic market, it’s time to consider the next strategic growth step: which, for many, is expanding the company’s reach globally.
With so much to gain, companies must make sure their business infrastructure is ready to scale—especially the supply chain.
Outsourcing supply chain management is a vital way for companies to ensure their business translates seamlessly on a global scale.
Historically, companies have been motivated to outsource some business processes to cut costs—and while outsourcing can help in that arena, it can also be a valuable way to drive innovation.
Meanwhile, a third party can handle the more tactical components of their business, such as determining market demand or what materials are needed to feed the supply chain.
A partner can also take over supply chain management to optimize the process overall, leading to greater efficiency, dramatic cost savings and scalability.
By outsourcing supply chain management, organizations can focus on what will take their business to the next level: research and development and building new products.
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Beyond Cost Cutting: it’s about focus.
As a business moves into a new geographic market, new challenges arise—and while company leaders may understand how to fulfill orders domestically, the same methods may not work internationally.
Supply chain partners can optimize your domestic supply chain and make sure that it stays optimized when it’s time to expand.
Additionally, organizations can benefit from a supply chain partner’s existing relationships and worldwide network of resources.
Below are three important reasons why company leaders should consider outsourcing their business processes to help their bottom line and get their product in the hands of more customers.
1. Supply chain isn’t the company’s expertise
Business leaders must consider whether their involvement in fulfillment is holding the business back.
When a company is able to gain interest for their product outside of their domestic market, it is because of the business leaders’ industry expertise.
Managing departments outside that area of expertise will only take time away from innovating and driving go-to-market strategy.
Bringing in a supply chain partner with existing global know-how will relieve employees of learning the ins and outs of international fulfillment management in each different market—and allow them to focus on what they do best.
Companies might be tempted to dedicate an internal employee to the supply chain or shift fulfillment responsibilities to the COO.
However, even if that system worked domestically, taking a company international poses an entirely new set of challenges, which a domestic supply chain is not inherently built for.
Not only do employees not have time to educate themselves on these new processes, but it will slow the company’s overall growth.
Organizations need experts where fulfillment is their core competency.
2. Resources need to be scalable
To enable growth, businesses need resources that are responsive and scalable, but it can be difficult to establish an infrastructure that will grow alongside the business at the same pace and in the same markets.
Yet if a company’s first move outside its domestic market is a success, it will want to continue to expand into new markets as soon as possible.
A quality supply chain partner has existing resources in different locations and of different sizes, which a company can ideally outgrow and seamlessly scale their supply chain.
The supply chain must be set up to encourage success—not get in the way of it.
When companies manage their own supply chain, it is a strenuous use of time and resources to build out a new infrastructure in a second or third new country.
It is more efficient to rely on the existing warehouse space and long-standing partnerships, such as with postal services, that supply chain partners have already established around the world.
Fumbling to establish those resources would facilitate a supply chain’s ability to grow at the same pace as sales.
3. Upfront costs carry risk
If business leaders insist on retaining control over their international supply chain, they must realize they will be taking a financial gamble.
Business growth requires up-front investment, which is necessary but also introduces a lot of risk.
As a company expands out of their domestic market, it may seem like a wise long-term investment to purchase space in warehouses around the world, but spending large sums of money upfront can prove damaging if the new market doesn’t pan out as planned.
Making a move into an unfamiliar market is risky enough when today’s consumers expect near immediate fulfillment—with 78 percent of consumers expecting purchases to arrive in three to five days or less—and have minimal tolerance for late or incorrect deliveries.
As a business scales internationally and becomes a global brand, consumers are going to have even higher expectations for more complex fulfillment that only an experienced supply chain partner can meet.
What does it all mean?
A company does not want to be stuck with debt for real estate that no longer fits their needs—whether it’s because business skyrockets or declines.
Outsourcing fulfillment to a partner means getting to use their existing network of warehouses and expanding or shrinking those resources depending on how their product performs in new markets.
Taking a company global poses major challenges, including having resources that can scale at the same pace as product demand, without having to absorb an enormous amount of financial risk.
By partnering with a trusted and knowledgeable third-party solutions provider, companies can rely on existing infrastructure and partnerships to streamline their now global supply chain, freeing up the time and capital required for innovative work that will resonate with customers around the world.
For more information about how ModusLink could help your organization streamline its supply chain operations and gain more time to innovate, please contact us.