Today’s business models demand a much leaner, flexible and scalable approach that is very much akin to the concept of outsourcing ALL non-core activities. Every business needs partners and 2016 will see a real shift towards outsourcing becoming best practice and the new norm.
So how do you decide if you’re ready to outsource?
With over 25 years in the sphere of third party logistics and currently providing warehousing and logistics support for many aspiring businesses Ian Walker shares his thoughts:
In-house Operations vs. Outsourced Operations?
The good news – there is no right or wrong answer here as only a set of pre-determined circumstances can determine the appropriate outcome. Such circumstances are governed by a wide range of factors including people, timing, finances etc.
When asked to quote for our services we start by understanding the key drivers for change and what are the perceived benefits to be realised from outsourcing. Adopting such an impartial and consultative approach at this early stage ensures that the right guidance is offered regardless. In the main outsourcing should be seen as a long term commitment and long term partnerships can only be realised when both parties fully understand and are able to satisfy each other’s needs.
It’s the same in marriage – so why should business life be any different?
A decision to outsource can be determined by many factors and a subsequent weighting is normally applied. A number of common elements that act as the proverbial tipping point for outsourcing include:
– A dilution of the core activities due to a lack of time
– The existing building lease is up for renewal
– A desire to convert assets such as buildings and equipment to hard cash.
– A growing business with insufficient capacity and experience
– A decision to expand into International markets
– A need to reduce operating costs by Leveraging the collective buying power of a 3PL
– An Inferior service level compared to the competition.
All of the above and many more are valid reasons to consider forming a long term alliance with a relevant industry expert.
Gain a Competitive Edge
There is logistics and then there is value added logistics. Do not be fooled into thinking the two are the same as they offer a very different proposition and can often prove to be your competitive edge in a “me too” marketplace. Value added logistics providers not only provide the basic warehousing and distribution services you would normally expect but will also provide on demand access to a comprehensive “sweet shop” of support services including:
– Re-work / Co-packing
– Product refurbishment
– Call centre operations i.e. Inbound telesales
– Customer services
– Web photography
– Digital studio i.e. Listing support & store design
– Demand planning etc.
– Freight forwarding and customs support
Traditionally such services would be spread across 4 or 5 business types but not anymore. Logistics pioneers of this variety remain in short supply and finding a partner that can offer such versatility provides a real competitive edge and greater efficiency.
Focus on Your Core Activities
If you’re a manufacturer, wholesaler or retailer then warehousing and transportation is not your core business nor is it your core area of expertise. Every day spent in this field may well detract both directly and indirectly from the main areas of focus and negatively impact the bottom line.
If you aren’t in pursuit of growth and you wish to touch and feel every aspect of your business then outsourcing probably isn’t for you. On other hand if you are seeking significant growth and your perceived constraints centre around physical infrastructure and industry expertise then forming an alliance with a reputable logistics service provider could well unblock the blockages.
Outsource to Gain Control
There is a common misgiving that outsourcing various services relinquishes control. In today’s modern world of web based applications and management reporting this couldn’t be further from the truth.
The time gained through outsourcing some of the more physical aspects of your business combined with info on demand puts you bang in control. Instead of being the oarsman operating below deck you instantly become the captain above deck and the management information supplied acts as your instant to dashboard for key metrics associated with the your business.
If you’re serious about scaling a business then a carefully selected partners are key to achieving this aim.
The last few years has seen a growing trend of businesses opting to downsize and relinquish physical operations in exchange for an out of town head office that also houses the sales function with showroom feature where applicable. More often than not it is the warehouse that governs the location of the head office and without the warehouse the choice becomes a whole lot more attractive.
Amongst our many clients across the retail, wholesale and manufacturing sectors there are many examples of a head office and a third party warehouse working in tandem and to great effect.
As a value added logistics provider 3P Logistics work in partnership with Splashabout International a leading manufacturer and retailer of baby swimming products worldwide. Our client conducts its central functions from its head office in Grimsby and from our purpose built order fulfilment centre in Wigan we provide an extensive range of support services including freight management, warehouse storage, b2b trade order fulfilment, b2c ecommerce fulfilment and client services.