All You Need To Know About Logistics Outsourcing
Logistics outsourcing has its advantages and disadvantages that it is essential to weigh before making a decision. So you can choose the logistics provider that best suits your business needs.
As we could see in the article on the types of logistics and service providers: 1PL, 2PL, 3PL, 4PL, 5PL, each of them has its advantages and disadvantages that it is preferable to deal directly with the provider. In this article we will do a general analysis of what logistics outsourcing implies.
What Is Outsourcing / Logistics Outsourcing?
The Larousse dictionary defines subcontracting as the “Operation for which a contractor entrusts, under his responsibility and under his control, to another person (subcontractor) all or part of the execution of the tasks for which he is responsible”.
Many companies are increasingly turning to experts, subcontractors, in this case here. logistics providers, to manage all or part of their operations , which for the vast majority are transport and storage services.
In principle, the logistics provider you decide to hire should be a specialist in the service it offers you. since the latter is an integral part of its main activity. Although many providers tend to specialize in increasingly varied services, most deal with the activities of other companies like yours on a daily basis.
- Knowledge and experience
A logistics provider has the knowledge and experience that you may be missing. Working with companies in the sector, the latter had to face situations and solve problems that for a person who is just starting out, would be impossible to face.
Since you are paying for the services that are being offered to you , you can end your services whenever you want. Using a logistics provider like 3PL can be a good solution for companies that do not yet have the option of having their own warehouse.
- Transformation of fixed costs into variable costs
Let’s take the example of a company that handles the storage and transportation of its goods. It does not matter if your volume of goods is low or high, the latter will have to bear a certain amount of fixed costs that will not vary. On the contrary, by outsourcing your logistics, these fixed costs will turn into variable costs that will only depend on the amount of goods you store / sell. This solution would save you money if your volume of goods is not very high.
By outsourcing your logistics, you leave it in the hands of professionals with years of experience behind them and you will have the opportunity to dedicate yourself completely to your core business and what you can do. Your logistical work comes down to managing the subcontract and shipping your customers’ orders to your service provider.
Collaborating with logistics experts can only be beneficial to you, especially if you are just starting out. You will learn the basics of logistics and supply chain, warehousing and distribution.
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Outsourcing your logistics comes at a cost. It’s a priority. Assess your needs in advance to see if this system is the right option for you.
- Loss of control and mistrust
For many companies it can be difficult to leave all their stock in the hands of a subcontractor and not have direct control over the latter, over delivery services, etc.
- Reputation in jeopardy
Your reputation is one of the main pillars of your business that you must take care of. By using a logistics provider, you lose control of most of the operations that are in direct contact with your customer.
To avoid unpleasant surprises, educate yourself and choose a trusted logistics provider. that have been recommended or for which the client companies do not hide their satisfaction
Outsourcing your logistics is an option that can be very interesting, especially for companies that are just starting out and do not have the ability to assume the fixed costs that such activity may entail. like hiring staff or renting a warehouse.
That is also a solution that is interesting if you do not have the necessary experience to secure certain parts of your logistics operations.
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