For businesses that rely completely on inventory, assembly, and shipping to keep things going, recognizing and acting on whats known as the pain point is vital. This is when the costs and hassles of in-house inventory management outweigh the benefits of a self-sustained operation. While the ability to function independently is attractive, the fact of the matter is that when the pain point arrives, hiring a contract assembly service might mean the difference between market subsistence and industry domination.

Recognizing the Pain Point

Business magazine Supply andNumber 38; Demand Chain Executive makes some eye-opening statements with respect to understanding when the time for outsourcing an assembly service arrives. These benchmarks in the growth of the company, while positive in nature, can signal the need for sweeping strategic changes:

• Rising Delivery Costs: Profits become thin when shipping nationwide or globally. As the economy weakens, shipping may become increasingly expensive
• Rising Labor Costs: The product of an economy in flux, manpower becomes critical as sales grow
• Maintaining Inventory Control: In order to keep a proper balance between supply and demand, maintaining inventory is a crucial development factor
• Strategic Resource Management: Includes human and material resources; often difficult to manage as operations expand

The role of technology simply cannot be understated here. Contract assembly professionals have created a suite of solutions that feature Web-based, software-driven, and hybrid technologies, enabling businesses to move more products in a shorter time frame. Companies can choose the operations that best fit their business model without sacrificing the control that keeps them in the know.

Contract Assembly Services: By the Numbers

Clear Spider, Inc., a Canadian-based vendor management entity, recently published a piece that offers some convincing statistics with respect to third-party contract assembly services. The reasons why businesses should consider this model come down to simple percentages.

• Increased Sales: Companies that outsource their assembly service duties have seen an average of 25 percent to 35 percent increase in volume sales
• Optimized Customer Relations: Repeat customers spend up to 33 percent more than new customers, and help businesses avoid the rising costs of new customer acquisition
• Reduced Management Time: With fewer labor hours spent on basic management functions, more time is dedicated to strategic marketing and new product development
• Faster Delivery Time: Particularly in e-commerce settings, getting orders into the customers hands strengthens their impression of the operation as a whole, making them much more likely to buy again
• Minimized Shipping Expenses: A reduction in shipping costs is money saved directly at the bottom line. A contract assembly service can reduce this time significantly

The Bottom Line

When the business reaches the pain point, partnering with a contract assembly service just makes sense. Finding a company that addresses each of the operational points mentioned in a seamless integration can optimize operations and prepare businesses for new opportunities.

Sources

Clear Spider (PDF)

Supply andamp; Demand Chain