In house or Outsource?
Many companies hesitate to use Third party logistics providers for fear of losing control or bacuase they might think it will cost more.
Understanding the Dilemma
Companies often make the wrong decision because they don’t fully understand the situation. It’s not as simple as looking at the budget and determining which method will save you the most money. Quality and control are also things that should be taken into consideration. When deciding whether to outsource a particular task, always ask yourself these three questions:
- Will the overall quality of work suffer? Tasks that can be handled by individuals outside your organization, without negatively affecting quality, make good candidates for outsourcing. Even better is finding a task that will actually improve in quality with outsourcing.
- Will I lose control over how the work is managed or completed? You should also consider how much control you’ll have once the task is outsourced. Do you need to oversee the task and will you be able to once it’s delegated to an external source?
How will the decision to outsource affect my bottom line? After answering the first two questions, you can begin to focus on the financial aspect. Will you save money by outsourcing or are the added benefits worth the extra cost?
Here are some of the advantages of using a 3PL Company
To Save Time: Outsourcing the Logistics function to a third party logistics provider will free up resources to focus on core competencies.
Because Someone Else Can do it Better: Even if you have resources available, another organization within the supply chain may be able to do it better, simply because its relative position in the supply chain, supply chain expertise and economies of scale.
To Share Responsibility: 3PL companies can share responsibility for managing global supply chains, keeping customers and stores properly stocked, and delivering the perfect order every time.
To Re-Engineer Distribution Networks: Logistics outsourcing to a third party logistics provider can be a quick way to re-engineer distribution networks to meet global market demands and gain a competitive edge.