Are logistical problems overwhelming you on a daily basis? Do you find it hard to put your head down and concentrate on developing your business? Ensuring warehouse security, managing a fleet of vehicles, setting up efficient customer service or tracking disputes can be real headaches. Outsourcing your logistics is a solution that's right for a variety of businesses, including e-shops and SMEs. In this article, discover the best practices forsuccessful logistics outsourcing. But first, here's what's involved in outsourcing your transport, warehousing and order tracking operations, as well as the advantages and disadvantages.

What is logistics outsourcing?

Logistics outsourcing is the total or partial delegation of logistics activities to specialized service providers. This includes procurement, planning, inventory management, preparation and dispatch of customer orders, and supplier collection rounds.

Also known as outsourcing, this management strategy is often adopted to overcome a lack of flexibility or internal resources within a company. It is a form of subcontracting that can be used to meet a variety of organizational needs and issues:

• logistics fleet management ;
• equipment maintenance ;
• lack of storage space;
• difficulty in concentrating on core business and offering quality customer service, due to time- and resource-consuming logistical tasks ;
• workforce management ;
• operational performance problems (excessively long cycle times, picking or order preparation errors, stock-outs, etc.).

Why outsource logistics?

Outsourcing your logistics operations frees you from the day-to-day constraints of transport and storage, and boosts productivity (provided it's set up properly!). In concrete terms, here are 5 advantages to logistics outsourcing.

1. Dedicate yourself to your core business

The main characteristic of logistics problems is urgency. Managing them requires a high level of responsiveness and agility. By outsourcing these tasks, the company can focus on its core business, improve the quality of its products or services, and free up more time to develop its sales capabilities and marketing strategy.

2. Limit costs and logistical anomalies

By transforming fixed costs into variable costs, logistics outsourcing reduces expenditure on warehouse maintenance, storage, order picking, handling and delivery. The company only pays for the quantity of flow processed. What's more, outsourcing the supply chain minimizes risk. You transfer all constraints to the logistics provider, reducing the margin for error. This includes, among other things, flow processing equipment, software tools and machines, accounting, labor, insurance and transportation. 

3. Improving human resources management

Recruitment, training, scheduling, team management, payroll... personnel administration is complex. It requires even more concentration when it comes to logistics personnel. This discipline demands specific skills and a certain mastery.Outsourcing saves you time and energy. It also saves you the expense of adjusting staffing levels during peaks in activity.

4. Guaranteeing better flow control

A specialized logistics company masters the management of goods flows perfectly. It guarantees a better service rate, less breakage and delivery delays, and maximum customer satisfaction. As experts in their field, logistics service providers help you gain in flexibility, reliability and productivity.

5. Reduce your carbon footprint

Specialized transporters and logisticians optimize their routes and pool storage space to gain in efficiency. They optimize their routes and fill their vehicles as full as possible to limit unnecessary journeys and thus CO2 emissions. In addition, the pooling of storage space reduces the number of warehouses needed, which in turn reduces land use, land cover and the environmental impact of construction and operation.

What are the disadvantages ofoutsourcing?

Logistics outsourcing involves risks that are crucial to consider before embarking on the project. Here are 3 to consider.

1. Loss of control and confidentiality

Entrusting part of the services to a third party means giving them access to the company's information system. A well-formulated outsourcing contract with data protection clauses is essential.

2. Impact on brand reputation

Outsourcing puts your reputation on the line. The service provider becomes the company's direct face to customers for part of its operations. Choosing a reliable logistics provider is therefore extremely important. This ensures that you maintain a positive brand image.

3. Logistics costs

The financial cost of outsourcing can sometimes be high. A thorough needs analysis is required to assess the feasibility of this approach. Properly managed, this project can save you money...

How to avoid the pitfalls of outsourcing logistics?

Does it make sense to outsource your logistics? Answering this question requires a strategic approach and a well-defined roadmap. Here are 3 steps to help you make a clear decision and carry out this operation efficiently.

1. Define your goals and needs

First, identify your needs and the objectives of this potential outsourcing. Ask yourself the right questions:

• What is your current logistics organization? What are the volumes and characteristics of your products? What are your logistics costs?
• What problems are hampering your supply chain? What internal processes do you put in place to solve them, and how much does it cost?
• What logistics skills do you have in-house?
• Are your customers satisfied with your delivery services? What is your current service level?

From there, you need to define the type of logistics provider you need. Do you need stock management, cross-docking, city-center deliveries, international transport or refrigerated transport? Also list, in order of priority, your criteria for choosing a service provider (price, seniority and expertise, values, logistics eco-responsibility, etc.).

2. Benchmark logistics service providers

A benchmark of logistics companies will help you to get a clearer picture of what's on the market, and to compare your list of criteria with it. Then compare the quotes you receive with each other and with your internal logistics costs. If you opt for logistics outsourcing, you'll also need to take into account any transitional costs.

3. Establish a relationship of trust with your logistics provider

Much more than a service provider, a logistics specialist is a partner. He's there for you every day, and takes part in your projects. A long-term relationship based on trust is essential to the success of your logistics outsourcing. Together, you'll need to define and regularly evaluate logistics performance indicators in line with your objectives. This is the key to successful collaboration.

When should you outsource logistics?

Some companies prefer to retain control over their logistics. If their resources allow them to manage their operations in-house, they make sure : 

• better control of the supply chain;
• control of logistics costs for each post;
• control over service quality, brand image and competitive differentiation;
• alignment of logistics services and business activities on the same values.

It is in a company's interest to internalize its logistics if this discipline is at the heart of its business, and if it has the resources and skills needed to manage its flows in the best possible way. However, outsourcing logistics can be a lifesaver if you lack the flexibility to deal with logistical problems that are preventing you from developing your business.

What you need to know to outsource your logistics

Well-planned logistics outsourcing offers an opportunity to focus on business development while alleviating many constraints. However, the choice of service provider and the adaptation to the company's specific needs are crucial to the success of this strategy. A coherent roadmap is essential for making informed decisions.

Our customer service team will help you outsource your logistics, step by step. A single point of contact studies your needs and designs a service tailored to your constraints.

Sources : 

• www.clog.fr ;
• www.blog.raja.fr ;
• www.leroylogistique.com/blog.