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Understanding Supply Chain Services Featured

Understanding Supply Chain Services person sitting on bench watching sea

Simply put, a supply chain is made up of the activities or processes needed by an organization to deliver goods or services to a consumer. For any business that manufactures or deals with a product or a service, a supply chain of a given size is needed to avail them to the consumer. It begins with sourcing raw materials, manufacturing, and finally delivering the finished product to the customer. Supply chain management (SCM) entails overseeing and regulating the supply chain and ensuring that every aspect works as required. 

As witnessed during the coronavirus pandemic, the value of the supply chain to businesses and life, in general, is immeasurable. If it works correctly, it enhances efficiency in different areas such as production and shipping. It can also lead to better cost savings and improved quality control. Similarly, it can improve the inflow of cash, not to mention that it can ensure that you keep up with the customer's demands. All these are a source of competitive advantage. If not done correctly, inadequate management of a supply chain can be a cause of many problems for any business. It can lead to difficulties in accessing raw materials, delivery of items, and in the end, customer retention.

Now to the supply chain service, the supply chain service providers are simply the third-party logistics firms that can be hired to offer logistics services to other businesses. These companies handle different services or segments of the supply chain, such as manufacturing, distribution transportation, or inventory management, among others. Companies that offer these services are categorized as 3PL, 4PL, and 5PL providers.

The 3PL providers are third-party logistics providers that allow you to outsource logistics management from warehousing to delivery, therefore enabling you to do other tasks that are critical for your business. Some of the services that the third-party logistics firms offer include warehouse management and network optimization, among others. The Fourth party logistics (4PL) takes 3PL a notch higher and handles almost the entire supply chain services from raw materials to delivering the final products to the consumer. On the other hand, 5PL service providers provide nearly the same services as 4PLs. However, they cut the cost of operations by managing them and ensuring that the supply chain is reliable, effective, and responds to the customers' needs promptly.

 Benefits of supply chain services

For anyone who wants to hire someone to handle supply chain planning and logistics management, you must know the advantages of services they are getting. For instance, businesses will get quality expertise from specialized people. Logistics service providers have the necessary knowledge, resources, and money to properly manage supply chains. They are managed by top individuals, and they have existing relationships with suppliers, the right technology and processes. They have almost everything that a company would need to develop and run a world-class strategy. Moreover, the service providers will dedicate themselves to ensuring that all services are streamlined, and everything is within the required global standards.

As we enter the crucial stage of this decade, outsourcing supply chain management will become a trend. However, this does not mean that companies will not look for ways to transform their supply chains. On the contrary, supply chain service providers can embrace technology for them to transform their operations digitally. Digitization allows a seamless flow of information and better decision-making. Before you decide whether to outsource services or not, you should first consider the type of business you are running and the size of your budget. If you have the right budget for this, you can outsource your supply chain management.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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