Thursday, August 17, 2006

Outsourcing for profit

You can tap an outside firm to manage your inventory, buy your raw materials, track your outlets, and train your staff so you can concentrate on marketing and product development.

By Millet M. Enriquez

When you can't build your own warehouse and managing inventory isn't up your alley, outsourcing may be for you. "Entrepreneurs can use our software and expertise to grow their business," says Margarita Delgado, vice-president of Delbros, a supply chain solutions company offering warehouse inventory management, distribution, transportation, and other services like employee training, auditing, and raw material procurement.

Delbros was among the first companies to offer customer-oriented services in the Philippines. (In the 1940s, its Caltex Floating Station delivered fuel and water to ships docked in Manila Bay.) It started with P3, 000 in seed capital that the brothers Antonio, Jose, and Francisco Delgado borrowed from their mother, and soon it evolved into a diversified company with interests in freight forwarding, cargo handling, and logistics. Now a partner of US-based courier company United Parcel Service, Delbros delivers products to any address in the Philippines. It boasts 77 logistics offices, 400 employees, and modern technology to serve clients such as Jollibee, Bench, and Anonymous Shops.

Margarita says a supply-chain solutions provider can give accurate and updated information on inventory levels, track slow- and fast-moving items, and schedule re-orders using a warehouse and an inventory-management software. "Without having to invest so many millions in a warehouse and software, you gain better productivity while your costs remain variable," she says. The software may also be connected to a retail software and point-of-sale system that records purchases in the store, so owners can monitor transactions in all their stores. Customized solution is the way to go. "We look at a company's supply chain from start to finish, and then customize a solution," explains Michael Concepcion, vice-president for operation at Delbros.

Depending on how complicated your problem is, it takes at least three months to gather enough data for a solution. "If you like the solution, we create pricing bearing in mind the long-term partnership that we could establish. But the price varies according to the simplicity or complexity of the solution," says Concepcion. Delbros also offers solutions in phases, so clients won't find the price too steep. For clients like Jollibee, Delbros works closely with the marketing department, which handles promotions. It manages Jollibee's toy inventory and its delivery to over 400 outlets nationwide. "They give us the allocations and we deliver them to every store correctly and on time," explains Margarita.

Supply chain solutions eliminate inefficiency and profit loss due to a lack of appropriate tracking systems, says Margarita. Small entrepreneurs can avoid pitfalls if they have a good control anchor in the backroom. "It eliminates the trial and error so they can focus on their core business," she says.

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