Time AND Money – How Vendor Managed Services Saves You Both
To remain competitive in today’s fast-paced business landscape, companies are constantly seeking ways to optimize their operations, reduce costs, and maximize efficiency. One effective strategy that accomplishes these goals is using talent-on-demand via a Vendor Managed Services (VMS) model. VMS is a collaborative approach where a company outsources certain processes or functions to a third-party vendor, who then takes over the responsibility of managing and optimizing those processes. This strategic partnership not only saves companies time and money but also enhances their overall performance.
In this blog, we’ll delve into how talent-on-demand Vendor Managed Services can help organizations achieve the dual benefits of time and cost savings.
One of the primary ways Vendor Managed Services saves companies time and money is by streamlining their operations, as discussed in a recent article by STL Tech. Vendors bring expertise and specialized tools to the table, allowing them to manage the outsourced processes more efficiently than if the company were to handle them in-house.
1) Process Optimization:
VMS providers are typically focused on optimizing the processes they manage. By leveraging best practices and industry standards, they can help manufacturing companies streamline operations, reduce waste, and enhance overall efficiency in areas such as procurement, inventory management, and distribution. This leads to reduced operational complexities, faster execution, and smoother workflows.
2) Demand Forecasting and Planning:
VMS providers can assist in demand forecasting and planning, ensuring that inventory levels are optimized to meet customer demand without excessive holding costs. This contributes to smoother operations by avoiding stockouts or excess inventory situations.
3) Reduced Lead Times:
Through efficient supply chain and logistics management, VMS providers can contribute to reducing lead times. This is critical for manufacturing companies, especially in industries with fast-changing market demands, as it allows for quicker response times and more agile operations.
4) Continuous Improvement:
VMS providers often have a commitment to continuous improvement as part of their service. By continuously optimizing processes and adopting improvements, they contribute to the ongoing streamlining of operations for manufacturing companies.
Reduced Administrative Burden:
Vendor Managed Services shift the administrative burden from the company to the vendor. Tasks such as procurement, inventory management, and logistics are handled by the vendor, freeing up the company’s resources to focus on core competencies. In a blog posted by HCM Works, a VMS program can drive administrative efficiencies and cut down on labor costs and data errors. This reduction in administrative overhead directly translates into time saved and increased operational efficiency. In addition, VMS providers can assume certain risks associated with non-core functions, such as fluctuations in demand, market volatility, or regulatory changes. This enables manufacturing companies to focus on strategic risks related to their core business, while the VMS provider manages operational risks in the outsourced areas.
Contrary to the misconception that outsourcing is expensive, Vendor Managed Services can result in substantial cost savings. As noted by Booth and Partners, when hiring someone with advanced engineering skill levels, outsourcing to an offshore location can save money when compared to US labor market rates. Vendors often have established relationships with suppliers and economies of scale, allowing them to negotiate better deals on procurement. Additionally, by optimizing processes, reducing waste, and improving efficiency, vendors help companies cut down on operational costs in the long run.
Access to Expertise:
Vendor Managed Services provide access to specialized expertise that might not be readily available within the company. This expertise can lead to improved decision-making, better strategies, and quicker problem-solving. Instead of investing time and resources in training internal teams, companies can leverage the vendor’s knowledge and experience. Manufacturing companies can then concentrate on their core strengths, such as product design, development, and production, while relying on vendors with specialized expertise to manage peripheral functions. This can enhance overall efficiency and quality in the core business areas. By leveraging VMS, manufacturing companies can optimize their internal resources, including human capital and infrastructure, to better align with strategic goals. This often leads to a more efficient use of resources and a higher degree of specialization in core business areas.
Focus on Core Competencies:
Vendor Managed Services (VMS) can significantly benefit manufacturing companies by allowing them to focus on their core competencies. Manufacturing companies often must manage a wide range of activities, including procurement, inventory management, and logistics. VMS allows these companies to outsource non-core functions to specialized vendors who can handle these tasks more efficiently. This enables the manufacturing company to concentrate on its core competencies, such as product design, production, and quality control. By offloading non-core functions to vendors, companies can concentrate on what they do best – their core competencies. This targeted focus enhances overall performance and competitive advantage. With more time and resources at their disposal, companies can innovate and grow more effectively.
Scalability and Flexibility:
Vendor Managed Services are designed to be flexible and scalable according to the company’s needs. Outsourcing through VMS allows manufacturing companies to be more flexible in adapting to changing market conditions, demand fluctuations, or other business dynamics without being burdened by the fixed costs and complexities of managing non-core services internally. This scalability ensures that the company can adapt to market changes without significant disruptions. Whether the company needs to scale up during peak seasons or downsize during slower periods, the vendor can adjust their services accordingly. Furthermore, managing non-core functions internally can be time-consuming and distracting. By outsourcing these tasks, manufacturing companies free up time and attention to concentrate on critical aspects of their business, fostering better decision-making and strategic planning.
In the dynamic business environment of today, time and money are invaluable resources. Vendor Managed Services offer a comprehensive solution that allows companies to capitalize on both fronts. By outsourcing non-core processes to experts, organizations can streamline operations, reduce administrative burdens, cut costs, access specialized knowledge, and focus on their core strengths. This strategic collaboration between companies and vendors not only optimizes efficiency but also positions businesses for sustainable growth and success. If you’re looking to save time and money while boosting your overall performance, exploring Vendor Managed Services could be a game-changing decision.
Author: Julian Searle, CCO With over 18 years of business development, sales, marketing, and general management experience, Julian’s skills center around creative customer focused, results oriented requirements. In his current role at SCRG Julian collaborates with product and hardware teams at large big-tech companies as well as with startup companies helping to co-create solutions that put the customers’ needs at the center of the table.
Published: December 4, 2023
Supply Chain Resource Group (SCRG) is a global market leader offering Strategic Workforce Solutions to some of the world’s most exciting brands. SCRG’s sweet spot is bringing highly skilled engineering talent to solve complex offshore manufacturing challenges. Our clients are OEM’s producing intricate technology-led products that use our vendor managed solutions to increase speed to market and manage costs. Whether you need to audit your existing suppliers, find new ones, manage logistics, understand Cost Downs, DfX or FMEA, we can help. Connect with the company that has been reinventing supply chains for household name brands since 2008.