Reasons for Outsourcing Logistics

Jan 28 2022

Reasons for outsourcing your logisitics

There are many reasons for outsourcing your logistics. Our team at Accion builds custom strategies that help your teams realize the benefits of outsourcing your logistics. Click to talk to our team today!

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Businesses in today's fast-moving consumer products market are dealing with ever-changing situations. For this reason, companies have to ensure their supply chain systems are efficient. As organizations attempt to distinguish their product and service offerings in order to achieve a competitive edge in the industry, effective supply chain management has become a top priority. Businesses must reconsider the synergy of their internal and external processes, and they must strive for continual process improvements. Some businesses have resulted to outsourcing their supply chain management processes as a way to improve their supply chain processes. Outsourcing in supply chain management refers to the practice of having third parties manage a company's supply chain operations. According to an Armstrong & Associates survey, 90% of Fortune 500 firms now use third-party supply chain and logistics services. Customer retention, loyalty, and revenues are all affected by how quickly and effectively you respond to customer requests, whether you're a B2C or B2B organization. Companies are investing extensively to generate competitive advantages via advances in their storage, fulfillment, and logistics processes, and supply chains have become strategic imperatives. There are many reasons for outsourcing logistics in supply chain management today with the main one being that outsourcing helps businesses concentrate on their core functions, grow as well as and build their operations. For more information on this topic check out outsourcing in supply chain management pdf (https://ibimapublishing.com/articles/JOOIM/2016/937323/937323.pdf) and outsourcing in supply chain management ppt (http://www.csun.edu/~hcmgt005/ppt/heizer_ch11S.ppt).

Outsource logistics Valdosta GA

Outsource Logistics is a 3PL supplier in the Southeast, providing customized solutions for transportation, warehousing and Savannah Port Services. We can guarantee you that with over 100 years of combined logistics expertise by staff in sectors such as warehouse, shipping, and customer support, we can solve your logistical difficulties. Outsource Logistics can help your firm realize the importance of outsourcing. Our organization offers all of the advantages of 3PL warehousing, as well as total flexibility in terms of space, manpower, and infrastructure. Outsource Logistics Savannah offers port services at the port of Savannah. Outsource Logistics is your single-source solution for warehousing, trans-loading, and drayage whether your items are traveling in or out of the port of Savannah. Outsource Logistics Savannah is located just 6 miles away from Garden City terminal and is C-TPAT compliant and FDA and AIB certified. We get the task done right when it comes to removing merchandise from an ocean container and loading it into an over-the-road trailer. Our modern tractor fleet and company-owned chassis can serve as your overland link from and to the port of Savannah. We also offer single points of contact for entire processes.

Types of logistics companies

Most businesses outsource their supply chain management to logistic companies. The comprehensive planning and execution of complex operations is what is the basic definition of logistics. When you consider the several stages involved in moving a product from its place of origin to the consumer destination, a process that may involve multiple phases taking place in multiple countries, one can see that this is a complicated operation that necessitates expertise and a methodical approach. Thus before choosing a logistic company, the business seeking to outsource their supply chain operations needs to consider; the different types of logistic activities, types of logistics outsourcing and types of logistic services.

Logistic activities include; order processing, material handling, warehousing, inventory control, transportation and packaging.

  1. Order processing is usually the first logistic activity and is typically handled by the company outsourcing logistic services in their commercial department. Here it is ensured that payments requirements are satisfied before processing the order inside the organization. Essentially, the commercial department approves the customer's order and sends it to the warehousing facility.
  2. Order handling- the movement of goods within a warehouse is referred to as material handling. It entails managing the goods in a manner that allows the warehouse to handle orders in a fast and efficient way.
  3. The third type of logistic activities, warehousing, plays a big role in logistics. Most companies that have customers in different countries cannot have warehouses in all these countries thus outsource their warehousing functions to other companies. Having warehouses that are close to the point of distribution helps facilitate easy delivery.
  4. Also known as stock control, inventory control is the process of managing and optimizing the warehouse inventory of your company. Proper stocking of goods helps minimize shortages, overstocking, and other problems that may prove costly. Transportation involves the movement of goods between different places as they move towards the final destination while package handling helps prevents loss and damage of products.

Types of logistics outsourcing include tactical outsourcing or the choice to outsource the implementation of conventional logistical tasks like warehousing or transportation to various third-party logistics providers and strategic outsourcing, which involves the contracting of the whole logistics process (or a significant part of it) to a single third party logistics supplier. Types of logistic services can be grouped into five; freight forwarding and transportation services, customs clearance services, warehouse logistics services, supply logistic services and integrated logistics services.

  1. Freight forwarding and transportation are the most popular services and involve transport services for cargo while customs clearance services deal with freight processing under customs control.
  2. In warehouse logistic services, a logistics supplier invests in a warehouse and well-trained employees, while the consumer just pays for the services they requires.
  3. Supply logistic services involve the provision of supply processes coordination, stock level maintenance and searching for supplier services by a logistics provider.
  4. Integrated logistics services encompass most supply chain processes as listed above.

When a business is choosing the type of Logistics Company they would want to work with, they should consider the above listed factors and assess what services and activities they seek to outsource and the type of outsourcing they need. It is also important to have a basic understanding of the different type of logistic companies in the market. Types of logistic companies include freight companies, freight forwarders, carriers and third party logistics companies.

  1. Freight companies offer transport from one area to another and some are specialized in one mode of transport while others offer different modes of transport.
  2. Freight forwarders facilitate transport solutions for companies but do not have their own means of transportation.
  3. Carriers handle shipments directly on a regular route.
  4. Lastly, third party logistic companies commonly known as 3PL, are organizations that focus on providing all or part of the logistics for your company's supply chain. The customer's requirements determine how much of that chain they serve. Depending on the customer requirements, they may only provide storage and transportation or they may form a bigger part of a company's business model and provide more services.

Advantages and disadvantages of outsourcing pdf

You may be looking up this section because of your advantages and disadvantages of outsourcing essay or outsourcing advantages and disadvantages essay or you may simply want to learn the advantages and disadvantages of outsourcing transportation.

Advantages of outsourcing include;

  1. Risk-sharing
    One of the most important parts of every project is risk analysis and evaluation. By outsourcing certain campaigns or procedures to industry experts, you will benefit from logistic businesses' increased capacity to anticipate and avoid potential risks.
  2. Access to technology
    Logistic providers produce cutting-edge logistics technology that helps companies improve supply chain efficiency and save on costs.
  3. Acquisition of customized solutions
    Most logistics providers have access to a broad range of transportation services that may be integrated to build tailored supply chain solutions for any company.
  4. Customs assistance
    Most logistic providers have global networks of facilities and offer customs consultancy assistance which helps make custom clearance processes easier.
  5. Cost reductions
    Delegating some operations to a third-party provider will reduce warehousing, inventory, shipping, and staff expenses significantly.
  6. Integration
    Outsourcing entails a level of integration that allows for the acquisition of new connections, opportunities, experiences, and viewpoints.
  7. Efficiency
    Logistic providers use their knowledge, technologies, size, and operational practice guidelines to assist organizations improve transportation management efficiency and save money.
  8. Reaching new markets
    Using logistic providers makes it easier for businesses to expand to new markets since they are assured their goods will get to these locations.

Disadvantages of outsourcing

  1. Reduction of quality control
    Profit, rather than a job well done, may drive outsourcing corporations. This means the goods you send out may arrive promptly, but they might be damaged or even lost.
  2. Disconnect between agent and customer
    When it comes to supply chain efficiency, there are no magic bullets. In a 3PL partnership, it's vital for both sides to have a mutual view of the strategy being used. If there are any communication discrepancies, delayed deliveries may arise causing customer dissatisfaction. It is critical that you and your logistics agent have a clear understanding and similar perspectives.
  3. Loss of infrastructure and skills
    Outsourcing logistics may result in the loss of infrastructure and skills a company may have developed. The greater the degree of reliance on the outsourced service provider, the more the organization concentrates on internal synchronization and decreasing its structures. The organization might end up losing particular competence that it has built up over time.