According to a Harvard Business School report, outsourcing important parts of business operations has grown exponentially in recent years. In that survey, nearly half of the participants stated they preferred outsourcing to recruiting fresh, full-time workers. Only one in four people thought that recruiting new workers was better than outsourcing.
Why Are Businesses Relying on Outsourcing Nowadays?
1. Business Continuity
Businesses that suddenly see a rise in turnover can temporarily outsource crucial functions. The business can outsource marketing operations while looking for suitable successors, for instance, if the chief marketing officer quits suddenly and takes several of his assistants with him.This allows companies to focus on their core business operations, without the workload having an impact on operations.
2. Cost Savings and Reduced Overhead
Costs related to paying for healthcare and retirement contributions for full-time employees can be decreased through outsourcing. Additionally, it can reduce overhead costs. For instance, a growing company might not have enough office space in its existing location; outsourcing tasks like warehousing and customer assistance addresses this issue. While maintaining your staff level, you can increase or decrease your logistics as needed, therefore allowing you to handle the supply chain more efficiently. FMi Logistics work with you to provide solutions that work for you, for your company size and industry.
3. Focus on Core Competencies
More businesses are outsourcing expensive, labour-intensive tasks that fall outside of their core strengths. Customer service, logistics, data entry, and research and development are some of the most often outsourced tasks. Investing in transportation, warehousing and logistic personnel can be costly, so working with a third party, or a partner in logistics, can help manage your inventory with less cost and with an increase of cash flow.
4. Seasonal Flexibility
Companies that encounter cyclical demand should outsource. For instance, a retail company will experience a higher demand for third-party logistics during the holiday season, as it experiences an increase throughout their distribution centers for Christmas. Outsourcing your logistics will help you to provide delivery across the market, while still allowing you to focus on your core competencies.
Learning about Logistics Management Outsourcing
Shippers and manufacturers have embraced outsourcing more and more recently. Their primary areas of expertise include product development, purchasing, and manufacturing efficiency. Outsourcing through third-party logistics (3PL) providers enables these businesses to complete orders more effectively.
The rate of increase in outsourced logistics management was emphasized in a recent Armstrong & Associates research. For instance, it was discovered that third-party logistics increased by roughly 5% between 2010 and 2013. Industrial, healthcare, technical, and food and grocery industries accounted for the lion’s share of that expansion. Nearly 25% of total 3PL demand was dominated by domestic transportation management in terms of outsourcing demand. Nearly 20% of the demand was for warehouse management.
Some of the Main Benefits of Outsourcing Logistics Management
a) Enhanced Productivity
Working with several vendors, clients, suppliers, carriers, and administrators is a must in the labour-intensive and highly complex field of transportation management. Shippers can concentrate more intently on key, revenue-generating activities like procurement or forging closer working relationships with suppliers by outsourcing transportation management. As a result, productivity is increased, and the bottom line is strengthened.
b) Improved Outcomes
They are professionals at what they do and have access to the most cutting-edge and efficient transportation technology. They are skilled at spotting issues with your transportation footprint and offering practical fixes for things like freight claims and transportation accounting. Or, to put it another way, you get professional outcomes when you hire pros.
c) Continual Improvement
While developing, accessing, and analyzing sophisticated business intelligence data is essential for ongoing improvement, many shippers lack the time or inclination to do so. Key reports and personalized analysis will be given to you when you outsource logistics management to a 3PL in order to improve operations. You’ll have an advantage over your rivals if you have a greater understanding of which areas are operating effectively and which require improvement.
d) State-Of-The-Art Technology
The use of a transportation management system (TMS), which streamlines supply chain operations and lowers costs, is advocated by many shippers. This is particularly true when more businesses use a variety of sales channels and distribution strategies. Utilizing this technology is essential for maintaining competitiveness; this issue can be solved by outsourcing to a 3PL that has access to transportation management system technologies.
Indeed, outsourcing logistics management can provide your business with many notable benefits. These can include reducing operational costs, increasing efficiency and productivity, and improving customer satisfaction. That said when choosing to outsource your logistics management, be sure to partner with a reputable and experienced provider.
If you are looking for a well-trusted logistics provider in Canada, look no further than our services here at FMi Logistics. We are committed to creating and delivering customized solutions for our clients in the areas of Warehousing, Distribution and Transportation Management. Call us today, and let us provide your company with the exemplary logistical services that it needs.