Full outsourcing solution

The model can alternatively be a partial outsourcing where only some activities are selectively transferred to ST2M.

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Collaboration with a professional inventory management partner will improve the efficiency of your production. That is why every company that tries to stay competitive and profitable needs to know the importance of inventory management. The experience of stopping the line indicates that there are not enough parts whereas too much stock indicates an increase in storage and administration costs and fewer funds.

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We have listed below the most important benefits of an outsourced inventory management, taken from Supply Chain Specialists:

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• Reduce logistics and sourcing costs while reducing shortage issues

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The primary reason for engaging in outsourcing is to go for cost reductions. These reductions can come from a competitive purchasing price from the supplier (direct costs) but can also can from a better efficiency to perform the activity (indirect costs).  The supplier is then able to sell the service at a lower cost than what could be reached internally by the client. At the same time, the supplier can guarantee a lower shortage rate because of his process knowledge.

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• Improving focus 

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Companies strive to focus their efforts on maximizing their benefits, achieved through key competencies in outsourcing of less strategically important functions. Outsourcing also facilitates the management and use of fewer resources of non-strategic activities, which increases the development of other key activities in the organization.

 

• Improving capabilities and competitive advantages

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Availability of expertise through suppliers can improve processes and product quality, as suppliers can have effective processes and abilities to manage a function more efficiently. This will result in a significant increase in product quality outcomes, a better cost structure, and therefore better return on investment.

 

• Gain access to resources  

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Suppliers can facilitate access to resources that were not accessible to the client, enabling gains which were not possible before.  

 

• Flexibility  

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An easier adjustment to the changes occurs when suppliers ensures flexibility in day to day activities. Therefore, it is easier for the customers to make changes, without having to manage the potential impact on parts management and people associated to it. 

 

• Risk sharing  

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The amount of capital invested in the event of major issue is reduced when some functions within the process are not owned by the customer. Therefore, the choice of buying a working function is more relevant when faced with an uncertain condition.

 

• Optimising available space

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In a manufacturing environment, it is better to use the available space for production lines than spare parts storage. Moving inventory storage to a service provider will bring the following benefits: improve the use of existing storage space and prevent the conversion of production space to inventory storage.This space optimisation reduces pressure to invest in additional facilities or buildings.