It's true that the decision to outsource certain aspects of your supply chain services is a big one. But, in reality, misinformation is often the reason why some business owners shy away from outsourcing. The main misconception about outsourcing is that it will cost you money, either through general inefficiency, lowered customer service, or being overcharged by your 3PLs. However, a recent study by Supply Chain 24/7 found, in fact, that most companies stand to gain from outsourcing. On average, surveyed businesses reported 11 percent reductions in logistics costs as a result of outsourcing, while inventory costs decreased by 6 percent and logistic fixed assets by 23 percent.
Beyond cutting costs in supply chain management, outsourcing facilitates your company's ability to meet customer demand, since your resources will not be spread so thin. Consequently, you're also able to streamline your business model more effectively by focusing on the core aspects of your business. As you know, SCM can be very time-consuming if you're low on resources. Outsourcing supply chain services allows for an increased focus on your company's growth, whether you're improving customer relations, working on marketing campaigns or developing new technology. In turn, this flexibility improves your productivity levels, thereby increasing your chances of long-term success.
Still not convinced? Here are three supply chain services that savvy bosses are outsourcing across America and around the world.
Did you know that warehouses and distribution costs eat up 25 percent to 35 percent of companies' logistics budgets? It costs a pretty penny to rent warehouses, hire warehouse staff, maintain equipment, and invest in the newest technologies. It's time to take a look around: Do other warehouses have more enhanced technology than you for managing their stock and shipments? Why not enlist their help as 3PLs? Instead of having to shell out money to improve your own system, you can simply take advantage of their upgraded technology by outsourcing warehouse services to them. It's another win-win for you!
Also, if possible, it's beneficial to outsource your warehouse efforts to a company with greater proximity to your main client base. Let's say, for instance, that you have a company in Texas that is transporting hundreds of shipments to California. Why not move your warehouse headquarters closer to your clients?
Outsourcing transportation services truly comes with myriad benefits. Dealing with a third party that specializes in transportation can reduce the overall cost, as well as relieve you of the logistical complications involved in moving shipments across the country. Often, these transportation companies offer performance-based rewards to their drivers, so you'll be employing the cream of the crop — a team of people who are fully committed to their work.
Much like specialized warehouses, these companies often have the upper hand on the technology front too. After all, their entire business model is devoted to transportation, so they are motivated to invest in these specific tools.
When it comes to SCM, avoid trying to reinvent the wheel. If your supply chain is lagging on the technological side of things, 3PLs can be instrumental in improving the technology used by your business. Hire a company with solid supply chain tech in place and task them with improving your company's integration of information. Beyond the potential for creating greater visibility across your supply chain, your clientele can easily benefit as well, because your operating procedures will be enhanced on all levels.
Remember, when it comes to outsourcing supply chain services, you still need to provide proper supervision to all areas of your company — both under your roof and outsourced. If any area is neglected, you'll be left with quite a mess. The logistics of your SCM depend on you being at the helm, confidently steering your company toward success. When utilized to their full potential, 3PLs are an excellent tactic for improving your organization's efficiency while reducing costs and streamlining logistics.
About Michael Wilson
Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.