Outsourcing Distribution Management to Drive Value

Inventory sitting in warehouses is costing your business big money … from the bricks and mortar to house it; to the interest payments, insurance and taxes to own it; to the risk-related expenses of depreciation and obsolescence; to the opportunities missed due to cash flow limitations.

If your business revolves around the production or sale of products, you will have inventory. The challenge is to manage your supply chain and support your customers in a way that allows you to increase revenue and still remain cost effective.

Warehouse and distribution activities typically represent 25 – 35 percent of overall logistics costs for businesses. If this is not a core competency for your company, the question becomes, “Why build the capability when we can buy it?”

Contract logistics enables businesses to outsource distribution and warehousing solutions and drive value through superior return on your capital, sustained growth, and proactive risk management.

A dynamic marketplace
It’s a world of change for supply chain managers.

• With contraction in the economy, the need for liquidity has led many companies to keep inventory levels low as a way to free up working capital. This is a significant change from the inventory build up experienced prior to 2007.
• Near sourcing from Mexico, rather than relying on Asia, is a growing trend. By reducing time in transit, businesses find they can accelerate their cash-to-cash cycles.
• The expansion of the Panama Canal, scheduled for completion in 2014, will likely create a shift in port activity for trade with South American and Pacific Rim countries, moving some West Coast traffic to Gulf Coast and East Coast ports.