View all Posts Outsourcing inventory management

Outsourcing Your Inventory Management? Here's What You Need to Know

If your high-value inventory is bulky or difficult to ship, outsourcing inventory management can keep it off your balance sheet and deliver it right to you exactly when you need it.

For logistic managers, aged inventory is something you work to avoid at all costs. It's just not an option to have static inventory reflected on balance sheets. One way to reduce this is to wait until the last minute to buy your materials in order to save on shelf space and cost. Simple, right?

Perhaps not. If COVID-19 has shown us anything, it's that you should always prepare for supply chain disruptions. One trend we have seen is that materials are becoming unavailable or prohibitively expensive to those who wait until the last minute to purchase them. That leads to a backlog of orders and unhappy customers.

If your products are of high value and difficult to ship/piece together, outsourcing inventory management is a viable solution that can solve this problem. By allowing a third-party company to lend a hand in your inventory process, you're not only giving yourself the freedom of less cluttered shelves and better transportation decisions, but also alleviating the stress of your warehouse managers. With a little help from outside experts, you'll be able to grab your inventory the moment you need it.

However, there is a caveat to this process. Outsourcing inventory management isn't always necessary, and it's important to understand when it's useful and when it isn't before you take the plunge.

When It Works, and When it Doesn't

If outsourcing inventory was that simple, every company would be using it in their warehouse. There are often cases where outsourced inventory isn't actually needed. For example:

  • If your products are low-value commodities, there is no reason why you can't stock up and keep them safely on a shelf for when you need them.
  • If your goods have a continuous supply, you wouldn't need to outsource simply because the product would be readily available when you need it.

Outsourcing your inventory works best if you have a high-value product that you predict will fly off the shelves. You need to be ready to respond to consumer demand, but keeping a backlog of a high-value product on your shelves can be dangerous if the response isn't what you're expecting.

Common instances include technical products that are high in value, heavy products that are difficult to ship, products that are variable in demand, and of course, anything that takes up a massive slot on your warehouse's shelves. Passing ownership of these products off to a third party can help your numbers go down on your budget sheets while improving the efficiency of your transportation.

The Intersection of Availability and Convenience

Let's take a look at an example of outsourcing inventory management in action. Let's say you are a high-tech company with high-value instruments that are not only large and expensive but also are manufactured overseas. Thanks to outsourcing inventory, you can buy those larger parts in bulk (to receive a lower overall cost) and have them ready exactly when you get the order form in.

Now, you won't have to deal with airfreight's costs and environmental impact. By partnering with a global third-party manager like Morgan, you can take ownership of your goods exactly when you need them.

Improving Efficiency Through Analysis

If you're unsure of what your products can be outsourced, don't worry. Morgan's analysis can help you identify which products can benefit from you outsourcing to a third party. By combing through your transportation and goods profile, we pinpoint what products can best be used for outsourcing.

Through our proprietary Inventory on Demand® process, we can improve your shipping organization through:

  • Reducing inventory on your balance sheet
  • Assisting you to strategize and make smarter transportation decisions from a cost and sustainability perspective
  • Delivering your products to your customers on time, every time
  • Helping you buy in bulk for a better price

To learn more about our Inventory on Demand® process, reach out to our team to see how we can help your company optimize your shipping solution.

Talk to the team!


Inventory Management Whitepaper


On Demand Supply Chain Blog

Continued Reading

Stay up-to-date with supply chain news and articles by reading more posts written by our team at D.W. Morgan.