Is Outsourcing Supply Chain Your Answer to Regaining Control?

Is Outsourcing Supply Chain Your Answer to Regain Control?

We started our companies to escape the rat race, yet many of us rise earlier and go to bed later… Exhausted. This can lead us to question why we traded our cubicles for the startup hustle.

There’s a dark underbelly of being a founder: the precious time it takes to turn an idea into dollars. A Harvard University Study recently shed some light on this seldom discussed topic, uncovering that entrepreneurs are 30 percent more likely to experience depression than their non-entrepreneurial counterparts.

But, enough with the doldrums. What if there were simple actions we could take to free up our time? Actions that could change our life by enabling us to focus on the things we love to do, whether that be spending time with our friends and family or creating the next hit product. I used to work 14-hour days managing all the many operational tasks, checking in with suppliers, etc. that need be completed in order to ship products, apparel and longboards for my startup lifestyle brand. Today, I wouldn’t. I’ve experienced the benefits of outsourcing supply chain.

Sure, you must do a lot yourself early on to shape your big idea into first, a product and eventually, a company. However, today you can outsource any task to a supply chain managed services firm that can not only execute the things you don’t want to do, but also do so more cheaply than you could yourself.

Unpacking Supply Chain Tasks

The common approach startups take in bringing a product to market is to hire a contract manufacturer to make and deliver their product. This outsourcing strategy can work well, but the product launch complexities required to navigate from new idea to production can prove daunting.

The late operations guru Peter Drucker said it best, “management is doing things right; leadership is doing the right things.” As entrepreneurs we need to decide whether we want to work for our startup, as we did our corporate jobs, by managing the day-to-day tasks, or, would we rather free up our time to lead, by outsourcing daily repeatable tasks to others so we can focus on growing our business?

The elephant in the room is that even though a contract manufacturer can make and ship your product, in some cases directly to customers, there’s still a lot of work that entrepreneurs must do to manage ongoing operations that can prove tiresome. Below is a short list:

Ongoing supply chain tasks for managing a contract manufacturer
  • Negotiating ongoing changes (anything new)
  • Product technical / manufacturing specifications
  • Receiving & submitting customer orders
  • Quality control / continuous improvement
  • Verifying & submitting supplier payments
  • Determining processes (orders / returns)
  • Answering business / technical questions
  • Balancing inventory (SKUs / costs)
  • Forecasting & reordering product
  • Maintaining supplier(s) relationship(s)

Contrary to what is celebrated in many how-to books, there are many hidden time-consuming tasks that need to be completed to not only launch your product, but also to fulfill ongoing customer orders and keep operations humming. The promise of massive time savings gained by outsourcing to a contract manufacturer can be quickly diluted by countless management hours, and long nights.

The Value of Specialist Cost & Time Arbitrage

We all default to the same answer when presented the basic question of whom we should hire to do our taxes: an accounting firm or a law firm? The accounting firm is less expensive because they have economies of scale in the form of specialists that solely process tax information. We should follow this logic for our supply chain by outsourcing the day-to-day management to a managed services firm to lower our costs.

Saving money is great, but freeing up our time is arguably the most value add for any entrepreneur. What might take the most productive entrepreneur among us 10 hours to manage the weekly supply chain tasks will, on average, take a supply chain managed services firm 5 hours. This is the power of specialist time arbitrage. Plus, our time is far too precious. With this freed-up time we can focus on more productive strategic, business-expanding activities.

What to Look for in an Outsourced Partner

You need a supply chain managed services partner that has entrepreneurial DNA; this will prove invaluable as things inevitably change. Industry experience is critical. A team with deep technical knowledge will help you avoid common issues. Further, view a potential partner as an extension of your team, and ensure that there’s strong cultural alignment with your company’s mission to capture even more productivity gains. Lastly, their software capabilities are critical to understand as increased automation will lower costs, awarding you an advantage over the competition.

Take the Plunge to Unleash the New You

At some point, the math doesn’t work; we simply cannot work more hours to scale our business. Trust me, I have been trying to create a 25th hour for years. Thus, in order to take your startup to the next stage of growth you need to do things differently than what got you here. Entrusting a partner to complete the supply chain tasks you used to do can be hard, but any inconvenience you face will be worth the free time you unleash for yourself; more sleep is a good thing too.

Best of luck on your exciting new supply chain outsourcing journey.

-William