Should you outsource your outbound logistics to your EMS partner?

Shipping your products to their end destination is the final stage in your manufacturing process and one which is crucial to the ongoing success of your entire manufacturing operation. After all, getting your product delivered on time, in the correct quantities, to the right people and in pristine condition all contributes to your customer’s first impression. But is shipping really just as straight-forward as moving things from A to B? Sure, in its simplest form, outbound logistics relates to the storage, transportation and distribution of your products. However within that, there are a surprisingly broad range of processes - from order processing, picking, configure-to-order, packing, marshalling and transportation, and the shipping of spare parts - all of which can demand considerable time and pull you away from other core activities within your business. So, if you’re already outsourcing other aspects of your manufacturing process to an Electronics Manufacturing Services (EMS) partner, is there value in handing over the responsibility for your outbound logistics as well? In this blog post we explore how outsourcing your delivery could enable you to improve your shipping practices, help you explore new markets and increase your company’s scalability and efficiency. Why outsource your outbound logistics? In deciding whether to outsource your shipping there are some key considerations that you’ll want to keep in mind as you consider the future direction of your company. Where is your market currently? Where would you like it to be in another five years? Are there any specific geographical or time considerations that you need to keep in mind if you’re shipping to a variety of locations? And what logistical arrangements are you likely to need to meet changing customer demands? If you’re a growing business, and are looking for new opportunities, then you may have more specific challenges. Maybe you simply don’t have the physical space to hold stock prior to shipment? Or perhaps you’re going to need to be able to ship products from a variety of locations at different times? Managing your systems and processes The capacity to be able to fulfil your customers’ varying requirements relies on a set of complex processes - from understanding your customer’s order cycle (or how long they’re prepared to wait for delivery of their product), having the ability to configure-to-order, operating a flexible manufacturing system that offers individual product customisation, to running an agile manufacturing environment that ensures you can respond quickly to your customer’s changing needs while maintaining control of quality and costs. Supply chain pipelining - or planning where your inventory needs to be along the supply chain in order to support a specific product - is also going to be crucial to the success of your outbound logistics strategy. Of course one of the advantages of having your EMS provider deliver product to you instead of direct to the end user is that you get to see what you have ordered and can then send it out, safe in the knowledge that it left you in perfect working order. While this level of control is reassuring - and especially if there have been previous issues with late deliveries or product quality - it’s an approach that can can prove more expensive in the long run, as you maintain responsibility for the overheads associated with receiving, storing, picking, packing and then dispatching the goods to the end customer. And if you are carrying out other processes – such as configuration or testing – then you’re also potentially increasing your customer's wait-time. While many low volume, high complexity (LVHC) products require some degree of configuration, this can be achieved more quickly when carried out by your EMS partner as part of the manufacturing process. Packaging and damage-proofing While packaging may seem like a fairly minor issue when compared with your other processes, ensuring that your items arrive in pristine condition can play a vital role in providing that crucial first impression. Perhaps you’re intending to take care of the packaging of your products yourself? While this can offer some level of reassurance, it can also be time-consuming and requires management of numerous elements. There’s the cost and storage of the base materials, recycling and environmental waste issues to consider, and the potential for double-handling if you’re repackaging products that have been delivered to you by your EMS partner. Handing over responsibility for your packaging to your EMS provider could well offer advantages as they’ll work closely with you to design specialist and bespoke packaging that protects your products, prevents double-handling, strengthens your brand and minimises your costs. Product repair and reworking While rejects, returns or faulty items are an unavoidable by-product of manufacturing, it’s how you handle the process that matters. So the service level agreements (SLAs) that you have in place with your customers are another key area to consider if you’re thinking of outsourcing your outbound logistics. What’s your company’s stance on rejects or returns management? Do you offer your customers replacement products on a next-day basis or is there a longer wait time involved? And how competitive are you compared to the rest of the market and with the increasing expectation of super-fast delivery times? Handing over responsibility for rejects or returns to your EMS partner, means no longer needing to worry about customers failing to get a repaired or replaced unit from you on time and removes the need to hold a large stock of finished products or spare parts 'just in case'. Ultimately of course, not all returns or reworks will be the responsibility of your EMS partner. Faults with design, warranty claims etc will still be down to you so there’s value in remaining the primary point of contact for your customer to ensure you provide first class customer service. As this blog post highlights, when we think about shipping, we are not just talking about putting goods into a box and moving them from A to B - but about delivering highly configured, complex products, on a fast-turnaround, that reach the end-user in pristine condition. Choosing to hand over the responsibility for outbound logistics to your EMS partner requires a large degree of trust. But the benefits it offers in enabling you to focus on your core capabilities can have a hugely positive impact on your business.

For more information on Should you outsource your outbound logistics to your EMS partner? talk to ESCATEC Mechatronics Ltd