Before everyone talked about being more agile. Today it’s a mandate for both buyers and suppliers. The theory is easy to understand. The implementation is where it gets tricky. For years the apparel supply chain has eschewed using 3rd party service providers preferring to do as much as possible in-house. That’s no longer possible. Even enterprises are feeling the pressure to not only reduce costs and be more flexible, but also for added expertise. That’s where smart companies are starting to see opportunities in working with specialists who can provide services on-demand. This is not about ‘outsourcing’. It’s about strategically partnering with individuals or companies who have deep expertise or access to resources that can enhance your overall operations. That they are not employees, it gives you the flexibility to scale up or down in line with your business requirements. <h3><b>5 Key Benefits of Working with 3P Providers </b></h3> <b>1. Save on making huge infrastructure investments. </b>From technology or warehousing, being able to run more of your operations on top of someone else’s infrastructure not only eliminates the cost of building it yourself, it also cuts the costs of ongoing maintenance and upgrading. Technology in particular is a beast to maintain. It requires bigger-than-you’d-think hierarchies of developers to keep existing systems running as well as continually upgrade to remain compatible with other technology (browsers, computers, smartphones). <b>2. Access expertise and experience.</b> Growing complexities of running an agile business make it difficult to anticipate and accommodate internal expertise in all the capacities and regions required. This is another area where forward-thinking companies are taking advantage of the ‘gig economy’. Where they are working with other companies who provide expertise ‘on-demand’ or with individuals, the ability to move into new categories or new geographic regions without having to onboard staff can be massively cost and time saving. <b>3. Focus on core competencies.</b> In a competitive and fast changing market, companies need to invest doing what they do best - and doing it even better. Working with non-staff individuals or companies who can handle the other non-core work, not only clears the way for you to sharpen your focus, but often they bring new ideas, expertise and contacts to the table. <b>4. Increase flexibility and scalability.</b> The ability to scale up - or down - as needed can often be hard to measure in real numbers. However it can mean being able to take advantage of new opportunities quickly or being able to cut costs fast. <b>5. Potential market expansion.</b> In some cases, 3rd party service providers can give you access to markets where you might not already have an established presence or where you might need additional contacts. <h3><b>3 Potential Problems of Working with 3P Providers </b></h3> <b>1. Ensure the integrity of the 3rd party. </b> While 3rd party service providers who fail to perform can be dreadful, by properly vetting potential service providers you can avoid major mishaps. A system of regularly checking to see that, for example, all necessary certifications are up to date. They might not need as much day-to-day supervision as your employees might, but that doesn’t mean you work with 3rd party service providers on auto pilot. <b>2. Understand their supply chain.</b> While most 3rd party service providers are doing the work in-house, there are always those who are themselves working with other contractors, according to <a href="https://www2.deloitte.com/ng/en/pages/governance-risk-and-compliance/articles/third-party-risk.html">Deloitte</a>. That’s not always a bad thing, but you need to understand the entire chain to ensure that both the quality and security of your product remains intact. In general, be wary of those 4th and 5th party ‘relationships’. They are further removed from you and thus less visible and could feel less vulnerable. <b>3. Data security audit.</b> Most likely your key data is remaining in-house. But in those cases where you need to give an outside service provider access, be sure that you have security measures in place, advises <a href="https://www.berdonllp.com/third-party-service-providers-may-be-putting-your-business-at-risk/">Berdon Accounts & Advisors</a>. This can present a huge vulnerability, however enough companies across many industries are working with 3rd party services providers so there are established protocols for protecting your data, said <a href="https://www.logicgate.com/blog/grc-101-what-is-third-party-risk/">LogicGate</a>, a cloud-based technology provider. For many companies, it’s not a matter not having protocols. It’s a matter of not seeing that they are being enforced.