Gone are the days when inventory management simply meant keeping track of physical goods in a warehouse. Today, the landscape is more intricate, driven by factors such as fluctuating consumer demands, supply chain disruptions, sustainability and rapid technological advancements. These complexities have intensified the challenges associated with managing finished product and spare parts inventory effectively, leaving many companies exploring solutions to mitigate its impact. One strategy gaining momentum among companies is refurbishing finished products to optimize inventory management and streamline operations. This proactive approach enhances working capital utilization and bolsters cash flow. By aligning inventory levels with market demand through timely refurbishment cycles, companies can minimize holding costs, working capital, reduce obsolescence risks and ensure a consistent product flow to meet customer needs.
In this article, we explore three reasons why companies should consider outsourcing non-core functions, like sustaining services, to extend product life, improve finished product inventory management and secure a competitive advantage in the marketplace.
1. Protect your bottom line: Outsource for cost efficiency.
Whether you have excess finished product inventory due to shifts in demand or using levels of capital to manage your current business, finding innovative ways to repurpose finished products can provide a real advantage to help maintain your market share and protect your bottom line.
Utilizing the specialized expertise of an external service provider enables companies to notably cut down on operational expenses linked to managing in-house repair facilities and skilled labor. Moreover, companies can benefit from higher asset turns, thus improving their balance sheet. Centralizing these operations through a trusted partner enhances financial efficiency within your service network as products will be processed through one system and travel less.
Embracing outsourcing services early not only optimizes costs but also mitigates risks in the long term, freeing up fixed capital and potentially opening up new revenue streams. A proactive approach positions the company for sustained success in an ever-evolving marketplace.
"Optimize for cost and reduce risk in the long term. Free up fixed capital. Even generate new service-related revenue streams. The earlier you think service, the better."
2. Protect our planet: Outsource for environmental sustainability.
Looking beyond the immediate financial and operational benefits, outsourcing refurbishment services presents an opportunity for companies to champion environmental sustainability. By diverting items from landfills and reducing the need for significant resource consumption associated with new production, companies can significantly diminish their environmental footprint. Refurbishment breathes new life into aging or obsolete inventory, extending its lifespan and maximizing its value. Embracing refurbishment services as part of a sustainable business strategy underscores the company's dedication to mitigating environmental impact while enhancing efficiency and cost-effectiveness.
When products do reach the end of their useful lives, the opportunity to recycle all or part of the materials can unlock hidden value and minimize waste. A service provider can carefully evaluate a Repair Bill of Materials (rBOM) at the beginning of a services contract, through a prescribed material disposition system, to uncover potential solutions that support intentional parts recycling or spare part deployment programs.
By salvaging functional components and sub-assemblies from products that are no longer viable for their initial purpose, companies can unlock hidden value and minimize waste. These recovered parts can then be repurposed or integrated into new products, thereby reducing the need for fresh manufacturing and lowering overall inventory levels. This approach not only optimizes resource utilization, but also promotes sustainability by extending the lifecycle of components and minimizing environmental impact. As companies embrace component and sub-assembly recovery as a proactive inventory management tactic, they not only streamline operations but also contribute to a more efficient and sustainable supply chain.
"Proactively support your sustainability milestones, reduce waste to landfill and protect the natural environment—with a strategy for every stage of your product’s lifecycle."
3. Protect your brand: Outsource for quality assurance and compliance.
When considering outsourcing repair and refurbishment services, it's essential to acknowledge the expertise and certifications that dedicated product service providers offer. These professionals ensure that equipment is serviced to meet or exceed industry standards, maintaining quality and compliance throughout the process.
The refurbishment of complex products involves rigorous testing and quality assurance processes during initial production stages, a practice that continues unchanged during refurbishment. Through thorough inspection, repair and testing, refurbishment guarantees that products meet stringent standards before re-entering the market. By prioritizing excellence in refurbishment, companies not only protect their brand reputation but also foster trust and loyalty among customers and stakeholders for the long haul.
"Ensure long-term quality and performance—to enhance your customer experience, strengthen your reputation and defend your market share."
Outsource to elevate your inventory management strategy.
The complexities of modern inventory management demand innovative solutions and outsourcing sustaining services emerges as a strategic priority for companies across all industries. By partnering with a dedicated service partner, companies can protect their brand reputation through quality assurance and compliance, champion environmental sustainability and enhance cost efficiency by reallocating resources effectively. Embracing sustaining services early not only ensures operational excellence, but also positions companies as industry leaders committed to driving innovation and shaping a sustainable future.
Is it time to rethink your approach to finished product inventory management? At Plexus, we understand that each company's outsourcing needs are unique. We stand ready to collaborate with you in developing a proactive sustaining services strategy that enhances your customer experience, strengthens your reputation and fortifies your market share. Contact us today to unlock new opportunities for efficient and sustainable growth.
"We specialize in providing tailored global sustaining services for complex products regardless of their manufacturer. And because engineering is in our DNA, we can help redesign and upgrade the product to solve problems for the future."