Outsourcing Logistics and Supply Chain Functions Can Provide a Competitive Advantage
Speaking of the rise in the use of third party logistics. When you outsource logistics functions, like transportation management, you can gain quite the competitive advantage. As previously stated, margins and the lack of expertise are a big factor in this movement.
Today's highly competitive business dynamic means maintaining a supply chain that runs like a well-oiled machine isn't just a goal, it's a necessity. It becomes quickly apparent to most companies that it's impossible to do it all, and therefore it's critical to find the right outsourcing partners to supplement weaknesses in the supply chain, such as contracting out assembly or hiring a 3PL provider.
While it can be tempting to try to do it all in-house, outsourcing can alleviate internal burdens so your business can focus on strategic areas. Just a few of the top reasons to consider outsourcing include:
- Cost reduction – The right partners can help to reduce overall costs. For example, a manufacturing partner might be able to buy materials at a bulk rate or a 3PL provider could access reliable truckload freight contractors you cannot.
- Time savings – A company may have inadequate staff or management knowledge about a particular supply-chain step, and therefore outsourcing saves time while boosting expertise in the supply chain.
- Rapid growth – Every business desires growth, but at times it can be difficult to manage increased demand. This is the case particularly if that growth happens quickly. Outsourcing can alleviate the stress of growth while eliminating supply-chain hangups.
- Eliminate major investment – Certain aspects of the supply chain can be extremely costly to implement in-house, such as purchasing manufacturing equipment or a fleet of trucks for transportation. Outsourcing makes better financial sense.
- Boost strategic focus – By outsourcing certain functions of the supply chain, the management team can now focus on strategic analysis, product development and other important initiatives.
The right outsourcing partners can create a competitive advantage, but it's important to do your research first. Start by analyzing your business's core competencies so you can figure out what aspects of the supply chain would benefit from outsourcing. Some of the most common parts of the supply chain that can be improved by outsourcing include raw material processing, manufacturing, assembly, support operations, warehouse storage, distribution and transportation.
Outsourcing to a qualified 3PL provider is one of the best ways to reduce costs and save time while ensuring products are shipped promptly and safely.