NAVIGATING OUTSOURCED LOGISTICS: A TWO-SIDED COIN

If you are considering outsourcing your warehousing, weighing the advantages and disadvantages is essential. On the one hand, outsourcing can enhance your business efficiency and organisational processes. On the other hand, certain factors may influence your decision to outsource your company’s logistics. Keep reading to discover the key benefits and drawbacks of outsourced warehousing.

OUTSOURCED LOGISTICS CONS

It is common for companies to have apprehensions when it comes to outsourcing their warehousing. Some of the most frequent concerns include:

CONTROL

Many businesses choose to handle their warehousing needs instead of outsourcing them, as they believe it gives them greater control over their processes. However, entering into a successful contract warehousing agreement requires a lot of trust. While it’s understandable that businesses may feel more comfortable managing their warehouse, trusting a third-party logistics (3PL) company often leads to better results.

NEEDS

Some businesses have specific warehousing requirements that a 3PL partner may not easily meet. Searching and evaluating potential warehouses can be time-consuming, especially if the company is unfamiliar with the industry or unsure about its exact warehousing needs. This can make it seem like a legitimate concern for businesses.

OUTSOURCED LOGISTICS PROS

While you may be concerned about outsourced logistic operations, the pros often outweigh the cons of partnering with a 3PL company. 

EASE OF SCALING

Your inventory levels and transportation requirements will naturally fluctuate as your company expands into new markets, launches new products, or experiences seasonal changes. It may take time to accurately predict the amount of warehouse space or level of distribution services that you will require. However, you can easily adjust your distribution model by outsourcing to meet your changing needs. Outsourcing distribution enables you to reduce costs and better manage inventory levels.

AMALGAMATION OF SHIPMENTS

When you work with a third-party logistics (3PL) provider, you can combine all your inventory warehousing and transportation requirements under one roof. This option can help you save time and streamline your shipping process by consolidating multiple shipments to different locations. Some 3PL providers can offer economic benefits by negotiating deep discounts with several transportation providers.

EXPERIENCE AND EXPERTISE

Supply chain management can be daunting for many business owners and managers who may not have expertise in this area. However, a third-party logistics (3PL) provider has specialised industry knowledge and a proven process for managing supply chains. Leveraging the experience and expertise of a 3PL can be the key to delivering excellent customer service and retaining customers.

ACCESS TO SOLUTIONS

Small businesses often find it challenging to invest in technological solutions due to a lack of funding, creating a significant entry barrier. However, partnering with a third-party logistics (3PL) provider that offers warehouse and transportation management systems can help companies meet customer demands without making significant investments. By incorporating advanced inventory tracking methods such as radio frequency identification, businesses can gain a competitive edge in any marketplace. This level of access can prove invaluable for companies looking to stay ahead of the competition while keeping their costs under control.

LOW CAPITAL EXPENDITURES

Acquiring space for warehousing and distribution infrastructure requires a significant capital investment. Companies that choose this route face the risk of tying up their cash flows, which can lead to financial instability. Further investments are always necessary to grow and expand. However, if facilities and transportation are owned and operated by a third party, these risks are eliminated, allowing for expansion without laying out capital upfront.

STRATEGIC STORAGE 

Storage spaces offer a cost-effective solution to manufacturers who need to stock and store surplus goods. This eliminates the risk of running out of goods when customers need them, improving customer satisfaction. Moreover, such spaces allow you to store goods for an extended period to maximise profits, even during fluctuating supply and demand. This means you can hold inventory until your company’s prices become more favourable. We make storage work for you, so contact us if you need assistance in this area.

GOOD FOR BUSINESS GROWTH

If you have recently started a business, want to expand it, or are planning to venture into new geographical regions, partnering with a 3PL service provider can be a great way to achieve your business objectives. Doing so can save money that would otherwise be spent on hiring additional staff, purchasing insurance to cover liability issues, and trying to estimate how much storage space you will need.

In conclusion, outsourcing warehousing operations is complex, requiring a careful evaluation of both the pros and cons. For businesses in the UK that aim to expand and enhance efficiency, adopting the benefits of outsourced logistics can be a tactical decision that drives them forward in a constantly changing market. If you have any questions or need further assistance, get in touch.

For more information on NAVIGATING OUTSOURCED LOGISTICS: A TWO-SIDED COIN talk to IKON Solutions ltd