Why outsource logistics?

Companies of all sizes and across a huge range of industries need to move materials and goods, whether over short distances or across the globe. Without the proper inventory management and transportation, raw materials wouldn’t make it to the factories and goods wouldn’t make it to warehouses, retail outlets and customers.

For companies that don’t specialise in handling logistics, the process of getting everything where it needs to go, on time and within budgetary constraints, can be resource-intensive, prone to error and unnecessarily expensive. Here we consider some of the main benefits companies can realise by outsourcing their logistics and transportation needs to a third-party logistics provider.

Five benefits of outsourcing logistics

Save cash

An experienced courier and logistics company has special relationships with a network of transportation providers. Because it uses these providers to move high volumes of items on a regular basis, it qualifies for bulk discounts. Often this makes it possible to offer customers significantly cheaper rates than they could secure on their own. It also means that using the company’s services is typically much cheaper than keeping logistics and transportation functions completely “in house”.

Focus on core competencies

Today it’s generally accepted that businesses can benefit by outsourcing functions that take up a lot of time and resources but that aren’t part of their core competencies. In many cases, logistics fits this description perfectly. Outsourcing logistics and transportation functions can free up resources so that a business can focus more energy on doing what it does best.

Benefit from special expertise

An experienced third-party logistics provider can work jointly with your company, analysing its logistics, inventory management and transportation needs and determining the best, most cost-effective ways to meet these needs. This can result in significant savings and greater efficiency, especially over the long term.

Access to advanced logistics technologies

To remain competitive, third-party logistics providers have to stay up to date with the latest advances in logistics, inventory and asset management technologies. Your company may tap this expertise, obtaining advice, support and cutting-edge logistics software that’s tailored for its own use. Alternatively, it may leave the provider to handle all its logistics needs, benefiting from the provider’s sophisticated IT system through better efficiency and access to real-time data.

Benefit from a wide network of providers

An experienced courier and logistics company uses a wide network of transportation providers, both locally and internationally. As a result, it can offer clients a range of choices to suit their needs, with flexibility in terms of delivery volumes, delivery times, modes of transportation and costs.

What to consider when choosing a logistics specialist

Although outsourcing your logistics needs can have significant benefits, it’s vital to choose the right provider.

Among the factors to consider when choosing a logistics specialist include:

  • average customer size – will you be just a “small fish” to the provider or will you be treated as an important client whose business matters?
  • references from existing and previous clients, who can vouch for the provider’s reliability and attention to detail
  • years of experience and financial stability – make sure you’re not dealing with a fly-by-night company or one that will fold soon after you’ve built up a working relationship with it
  • capacity – can the provider definitely handle the volume you anticipate?
  • flexibility – for example, can the company meet “on-demand” transportation needs at short notice, and does it provide a wide range of options in terms of transportation mode, timing of deliveries and costs?

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