5 Reasons Manufacturing & CPG Supply Chain Leaders Choose to Outsource
The market for consumer packaged goods (CPG) is rapidly changing with the advent of substantial economic uncertainties like the global pandemic, climate changes, and the growth of technology. These factors are encouraging a growing number of supply chain leaders at global enterprises to lean towards outsourcing their processes. There are many benefits to outsourcing processes like Freight Audit and Payment (FAP), as it saves resources and relieves some pressure on the company.
Many companies have chosen to insource, which has become increasingly expensive since it requires expansion of their own resources and departments. Outsourcing processes like FAP provides optimized infrastructure, ultimately resulting in a decreased production turnover time and improved visibility. When companies outsource, they save money on employment costs, equipment, and technology, and these savings allow companies to focus on other priorities such as customer experience and brand reputation.
Outsourcing allows companies to increase their efficiency and save money. Many companies insource and build their own expanded departments, but insourcing is becoming increasingly expensive. Companies would otherwise spend these costs employing more workers and paying for new equipment or technology.
Outsourcing is a strategic way for your company to save costs. Your company can choose specific departments to outsource and keep independence wherever your company prioritizes it. It's only a matter of time before more companies decide how to outsource to save money. Many companies choose to outsource to improve their technology systems, increase their customer numbers and efficiency, and improve visibility.
Outsourcing FAP keeps companies independent in the overall transportation process while streamlining payments and maintaining efficiency. We will discuss these reasons and more to show why companies are outsourcing certain services.
1. Ethical and Social Practices
Outsourcing allows your company to be more conscious and active on ethical and social practices. Practicing sustainability and environmental safety is a new priority for global supply chains. Recyclable products and processes that are environmentally conscious sets companies apart from their competitors, while also improving their social image.
Your company can choose what partners will help it improve its environmental practices. Your company may outsource its Freight Audit and Payment processes to a partner that has an electronic streamlining system. These practices may be more ethically sound and contribute to waste reduction. Your company can also select partners that have ethical and sustainable working practices. This practice will improve customer trust, strengthen partner relationships, and improve your brand image.
2. Streamlined Cost Allocations
Your company can save money with outsourcing by paying offshore workers less and avoiding the programs that cost your company money. Social Security and Medicare do not exist in other countries from which you may outsource. This cost difference allows your company to have the same workforce and employee productivity while saving capital.
If your company outsources their FAP systems, they do not have to focus on hiring expert staff or providing benefits, as this is the partner’s responsibility. A Freight Audit and Payment partner will also have proper IT and technology to perform the processes smoothly at no extra cost to your company. A Freight Audit and Payment partner will positively impact your company's budget. Your company can use this saved money and reallocate it to aspects of the supply chain that you consider a higher priority.
3. Outsourcing FAP Can Eliminate Complications with Payment Processes
If your company uses a non-updated Freight Audit and Payment system, there is a higher possibility for errors or complications. Your company can outsource partners with technology and resources that streamline your payment processes and eliminate human error.
Your partners may have the technology to digitize your payment processing with card payments. This technology may also help your company digitize your invoice receipts, catalog your transactions for accessible data collection, and increase your efficiency with same-day payments. These tactics strengthen your company's reliability and save time for your accounts payable team.
A Freight Audit and Payment provider maintains accurate company costs, catches mistakes before they cause an issue, and makes the payment process more efficient. This resource reduces the risk of unnecessary expenses or payment delays and reduces payment process oversights.
Outsourcing your payment process with TraxPays can fully streamline your payments to your carriers. Using TraxPays facilitates more accurate financing and forecasts and strengthens your relationship with your carriers. TraxPays collects your company's financial information and condenses it into a single payment request that Trax sends to your company. When your company pays this request, TraxPays will pay your carriers accurately and efficiently on your behalf.
4. Core Competency
Your company may also choose to insource your processes so that it can maintain control and visibility throughout your supply chain. There are many benefits to this practice, but if your company does not have the resources and capability to insource efficiently, it may create additional disruptions.
Your company must spend weeks or months recruiting employees who will execute the processes for the insourced department. This implementation requires extensive training and preparation for these employees. These employees will also need competitive pay, and the department may have more expenses than it did before insourcing.
Outsourcing Freight Audit and Payment saves your company money, time, and energy by eliminating the need to build the perfect team independently. Your partners already have the technology and processes to execute these tasks efficiently, and they also possess more visibility in the chain, letting your company focus on what it does best.
5. Simplicity Where There Are Complexities
The supply chain industry is beginning its transition to digitalization and outsourcing sets your company on the path to digital transformation. Many complexities come with the territory when it comes to supply chain management. These complexities are magnified by the number of employees you have, your training practices, the ever-changing technology landscape, supply and demand, and your communication methods.
IT performance and HR functions are the most common services that companies outsource for Freight Audit and Payment. Your company's IT partners will have extensive field experience and can bring simplicity to these complexities. These companies will already have trained employees to eliminate the complexities and disruptions that insourcing and training may cause.
Outsourcing your IT services brings extra visibility to your data management and can streamline communications within your company. These companies are dedicated to maintaining up-to-date technology that your company may not have implemented yet. This eliminates the pressure of seeking out the latest and greatest technology, because partner companies bear that burden, while their clients gain the benefits of better efficiency and transparency.
Your company can choose the right partners to outsource, allowing it to streamline operations. Outsourcing provides extra confidence in your company’s capacity, especially when partners offer solutions for external complexities, which allows your company to focus on what it does best.
Trax Can Help
Your company doesn't have to depend on insourcing departments or spend its resources on processes that detract from its priorities. Outsourcing with a Freight Audit and Payment provider like TraxPays minimizes internal complexities and human error, and we can streamline your payments to all of your partners and carriers. Trax can bring any company a step further than Freight Audit and Payment with our Transportation Spend Management services.
Transportation Spend Management provides the visibility you need when outsourcing. Trax will be there every step of the way, from mastering Freight Audit and Payment to becoming more proactive using our data management. Trax is dedicated to optimizing your company's complex processes and bringing it ever-closer to digital transformation.
Schedule a consultation with us to see how your company can lead the way in Transportation Spend Management with higher visibility, more efficient money allocation, and better preparation.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.