Outsourcing in Supply Chain: What Does It Mean and How Does It Work?

Running a supply chain means managing suppliers, stock, storage, transport, and delivery at the same time. 

For many Nigerian businesses, handling all of it in-house takes time and money that could go into selling.

Outsourcing in the supply chain is one way to lighten that load. 

Instead of building every function yourself, you hand off selected tasks to a specialist partner. 

This guide explains what it means, which functions you can outsource, the benefits and risks, and the steps to follow.

What Does Outsourcing in Supply Chain Mean?

Outsourcing in supply chain means paying an external company to run one or more supply chain activities on your behalf. 

These can include transport, warehousing, order fulfilment, or last-mile delivery.

You stay responsible for your customers and your brand. 

The partner takes on the day-to-day work of the outsourced function.

It does not have to be all or nothing. 

Some businesses outsource a single function, such as delivery. 

Others hand over most of their logistics and keep only planning and customer service.

Which Supply Chain Functions Can Be Outsourced?

(a) Transportation and last-mile delivery: Moving goods from your pickup point to your customer.

(b) Warehousing and storage: Holding stock in a third-party facility.

(c) Order fulfilment: Picking, packing, and dispatching orders.

(d) Inventory management: Tracking stock levels and reordering.

(e) Procurement: Sourcing and buying materials or products.

(f) Returns handling: Collecting and processing returned items.

(g) Freight and customs support: Moving goods across borders, including imports and exports.

Functions that define your product, such as product design or your customer relationships, are usually better kept in-house.

What Are the Benefits of Outsourcing the Supply Chain?

1. You pay for a service instead of buying vehicles, renting space, or hiring a full logistics team.

2. A partner can handle rising order volumes without you rebuilding your process.

3. Experienced logistics teams already know routes, handling, and delivery challenges.

4. Good partners provide tracking and status updates, so you spend less time chasing riders or answering "where is my order?" messages.

5. Your team concentrates on sales, marketing, and product.

What Are the Risks of Outsourcing the Supply Chain?

Outsourcing moves work to someone else. It does not remove your responsibility for the result. Watch for these risks:

(i) You rely on another company to meet your standards.

(ii) A late or damaged delivery reflects on your brand, not the partner's.

(iii) If they have a problem, your orders are affected.

(iv) Unclear pricing, extra fees, or poor terms can erode your savings.

(v) If your systems do not share information with the partner, you lose visibility.

How Do You Outsource Your Supply Chain Step by Step?

1. List every step from supplier to customer and note where delays and manual work happen.

2. Start with the process causing the most delays, often delivery or fulfilment.

3. Note your order volumes, pickup locations, delivery areas, and the level of tracking you need.

4. Compare coverage, experience with businesses like yours, reporting, and support.

5. Confirm pricing, responsibilities, handling of damaged or lost goods, and how issues are resolved.

6. Test the partnership before moving all your orders.

7. Track delivery success, complaints, and costs, then adjust.

Read also: Logistics automation software

What Are the Best Practices for Supply Chain Outsourcing?

1. Agree on measures such as delivery success rate, response time, and damage rate.

2. Name a contact person on both sides and agree how updates are shared.

3. Your customers judge you on every delivery, so check how the partner communicates with them.

4. Do not depend on one function or one partner without a backup plan. Know what you will do if service is disrupted.

5. Make sure systems can connect. Tracking and order data should flow to you without manual copying.

6. Confirm that your partner meets the rules that apply to your goods and routes.

7. Review, do not assume. Regular reviews catch small problems before customers do.

How Can Kwikpik Support Your Supply Chain Outsourcing?

Kwikpik covers the delivery and fulfilment side of the supply chain. 

It is not a replacement for procurement or warehouse management, so it works best when delivery is the function slowing you down.

Businesses can work with Kwikpik in two ways:

(a) You send orders through our app and our team coordinates the delivery.

(b) Our logistics API connects your website or system, so delivery requests and status updates flow automatically.

We support last-mile, on-demand, and scheduled delivery, along with order and delivery tracking. 

Pickups are currently handled, and delivery is available nationwide. 

Read also: How warehouse distribution works

Frequently Asked Questions

What is an example of outsourcing in supply chain?

An online store that hands its order delivery to a logistics company is a common example. The store handles marketing and sales, while the partner collects and delivers the orders.

Is supply chain outsourcing the same as using a 3PL?

Not exactly. A third-party logistics provider (3PL) is one type of outsourcing partner, usually for transport, warehousing, and fulfilment. Outsourcing can also include procurement or customs support.

Can small businesses outsource their supply chain?

Yes. Many small businesses start by outsourcing only delivery, which lets them handle more orders without hiring riders or buying vehicles.

How do I choose a supply chain outsourcing partner?

Compare coverage of your pickup and delivery areas, tracking, reporting, support, and contract terms. Test with a small batch of orders before committing fully.

Should I outsource my entire supply chain?

Most businesses do better by outsourcing in stages. Start with the function that costs you the most time, then expand once the partnership is working.