Outsourcing Inventory Management can produce 10-30% savings

Optimising sourcing and procurement, globally and/or regionally, is essential in financial supply chain efficiency. Over the last 12 months companies have been focusing on how to reduce complexity, costs and working capital.

One way to do this is to use the integrated supply chain solutions from the global logistic service suppliers. For example, the Inventory Management Solutions (IMS) provided by a major logistics company, offers a complete inbound supply chain service to deliver competitive advantage in their clients' supply chains. This includes all the planning, supplier management, delivery, financing, replenishment and repair of inventory. The inventory is owned and managed by the IMS provider. Clients pay a fee each month for the inventory consumed.

These IMS services, were initially developed for the micro-electronics industry, now cover many industry sectors world-wide. At the start of each IMS programme the client agrees the suppliers to be used and the inventory levels, then the IMS provider manages the whole process. The IMS providers claim 10-30% savings in the total inventory costs due to the reduced complexity, and savings in working capital and in transaction processing.

The IMS providers also offer suppliers early payment terms in return for a price discount, as they have found that this is much simpler and more cost-effective than bank supply chain finance programmes.