Out-sourcing, Part 2

In Part 1 of our ‘Out-sourcing’ blog , we outlined the economic background to out-sourcing, and how Zupplychain might complement a strategy to out-source warehousing and logistics. Here, in Part 2 we give some specific advantages of out-sourcing logistics.

The reasons businesses gain from out-outsourcing fall into three areas: Better execution; more flexibility and lower costs.

Better Execution:

  1. Out-sourcing to a dedicated logistics business should lead to an improved performance, better systems more accurate metrics and greater accountability.
  2. A 3PL will often be a ‘one stop shop’ for a business’s logistics needs.
  3. More complex operational challenges can be tackled without building the skills, systems and infrastructure in-house, such as single item pick and home delivery or recycling and reverse logistics challenges.
  4. The headaches of H&S, staff turnover, HR regulatory change and systems maintenance and development can be reduced.
  5. With logistics out-sourced, a business can focus its best resource on its core skills and product and service development.

More flexibility:

  1. The overflow space for peak or seasonal requirements can be tapped into more flexibly when needed, with shorter commitments.
  2. Out-sourcing can remove the fixed cost barrier of operating a sub-scale warehouse and logistics function.
  3. Storing products more strategically – near a customer or near a port - can be achieved without onerous long leases and the complexities of managing remote sites.
  4. A more adaptive long term logistics strategy can be developed to flex with the growth and changing circumstances or customer base of a business.

Lower cost:

  1. Out-sourcing should reduce costs or provide better service for similar costs.
  2. Up-front capital investment will be reduced - an out-sourced logistics function piggy-backs on the existing resources and systems of the provider.
  3. The capital released by out-sourcing warehousing can form a coherent business growth strategy: your warehouse may be the factory extension that’s been needed; the opportunity to extend product or manufacturing reach. Or could be the funds for a strategic acquisition.

Why not start out-sourcing logistics by having a look at how Zupplychain could help you find low cost, well positioned additional warehousing space.