Is logistics outsourcing right for your business? The answer, of course, depends on you and your business — every case is different.
If you’re reading up on logistics outsourcing, I’m guessing you’ve run into some problems with your own supply chain. Maybe you’ve found it difficult (or expensive) to maintain a warehouse and warehousing staff year after year — this is especially true of seasonally based businesses.
Or maybe you’ve found that increases in demand are outpacing your fulfillment abilities given your current infrastructure, while the investment required to catch up to demand is more than you can afford at the moment.
Maybe you’ve simply caught a big break and are just now getting to the point where that demand exists in the first place — and you’re wondering how to ensure that demand is met.
Or maybe you’re moving heavy, costly equipment, or hazardous and sensitive chemicals or pharmaceuticals, or high-value electronics, a big contract just came your way, and you don’t have the time or the money to build out your supply chain to accommodate the load.
Maybe you’re just tired of doing it all yourself and handling everything in-house — maybe you just want to focus on those core services and products that your company really does well while letting someone else handle the technicalities.
We understand — we built this company with the understanding that all of these issues and more are regular problems for many mid-market companies, and even some small businesses that are seeing impressive growth. We know that it can be frightening to consider logistics outsourcing, and there are a lot of misconceptions out there about the pros and cons of logistics outsourcing — even the word ‘outsourcing’ is a loaded term, fraught with political and social connotations that have little-or-nothing to do with logistics outsourcing in practice.
So let’s briefly discuss some of the pros and cons of logistics outsourcing and discuss how the savvy business owner can leverage outsourcing as a way of building additional value into their business.
The Pros and Cons of Logistics Outsourcing
Hiring a 3PL (third party logistics provider) can provide some very real benefits, including the following:
Of course, for every pro, there is a con. Here are some of the reasons you might want to avoid outsourcing your logistics or hiring a 3PL:
While of course these are valid concerns, it’s important realize that, like anything else, there are exceptions to every rule — but what’s more important is to spend the time, money, and energy evaluating, as accurately as possible, your actual operational costs, your actual customer satisfaction levels, your actual performance gaps, and then ask yourself whether outsourcing to a 3PL will affect these metrics positively or negatively.
The truth is, companies have been outsourcing their logistics operations for decades because they see how much money they can save in the long run by working with a 3PL while increasing customer satisfaction and efficiency.
However, you may not be able to see the truth of this without accurately evaluating your own operations, and you may even need to bring in an outside consultant to help you identify performance gaps and true operational costs — you simply might not be able to see everything accurately from an internal standpoint.
Learn More About the Value of Logistics Outsourcing
If you’re considering the services of a 3PL, we’d love to talk to you about how we can help you make your business more efficient while keeping your customers happy.
Whether you're a company looking to improve one facet of your supply chain, your entire supply chain, or simply looking for a transportation and logistics consultation, we can help.