Outsourcing of logistic services
Outsourcing of services means the commissioning of tasks related to logistics to an external organization, primarily to specialized entities. The outsourced activities are mainly the organization of transport, but in many cases, the management of the entire supply chain is delegated. Why is service logistics outsourced? Because the company, expanding its offer with new services, wants to match them to the market and customer needs as well as possible. Contract logistics, or outsourcing, is an excellent way to build a competitive advantage and use external resources, which will result in a significant reduction of costs also associated with hiring new teams of employees. Outsourcing in logistics plays a very important role in being able to focus all the attention of the company on the most important aspects of running the business, and warehousing or shipping of goods can be done by external entities. This is a possibility used by more and more companies in our country!
What is outsourcing?
It is the delegation of tasks and functions related to logistics to an external company. It should be remembered, however, that outsourcing is treated as cooperation. The partner, i.e. the external entity, is then responsible for quick and efficient delivery of materials for possible production of goods and their subsequent distribution. All this is aimed at relieving the company, and also, as we have already written, at reducing production and distribution costs.
What exactly can be included in outsourcing services in logistics?
Outsourcing of logistics services includes many activities not only related to production and distribution. A complete list of tasks that can be outsourced is provided below:
this includes the warehousing of products that are then distributed to other warehouses, companies, businesses, or retail stores. Examples include components of construction or industrial machinery or white and brown goods,
packaging and sorting of goods is another outsourcing service that works perfectly well when, for example, an online store is not able to pack and sort on its own and then send the shipment to the customer,
There is packing, there must be an order picking. This is a proposition that online stores and wholesalers will also benefit from. This, of course, involves the storage of products, which are then packed by a warehouse employee and sorted accordingly,
In the end, it is worth mentioning sending packages to the client, which can also be handled by logistics outsourcing companies. Thanks to this the whole process - from packing to shipping - is done almost automatically, you, as a store owner, do not have to worry about these activities,
By choosing outsourcing services you can also count on the replacement of damaged packaging, which will certainly affect the quality of services provided by the company to its customers, as damaged packaging will not be able to be shipped,
labeling is another service of outsourcing companies,
The companies described today will also take care of waste disposal,
Finally, we should also mention the possibility of handling returns and complaints by outsourcing companies, which allows you to fully automate all the processes!
Outsourcing in the e-commerce industry
As you might have noticed, the e-commerce industry is gaining and will certainly gain even more from outsourcing services. Most of the activities of companies operating in this field offer services related to packaging, sending, and shipping shipments, which is undoubtedly part of the described industry, especially in the case of stores and wholesalers offering goods rather than services. Logistics services of this kind are helpful for online stores in storing goods so that they do not have to rent a separate warehouse with specialized equipment and skilled staff.
Advantages and disadvantages of outsourcing logistics services
At the outset, we would like to note that outsourcing has many more advantages than disadvantages, but the latter are also present. First, we will describe the advantages of choosing this type of service, then we will present the disadvantages.
Advantages
Possibility to concentrate on the key activity of the business,
Technology and know-how at your fingertips,
optimization of post-sale processes,
No need for storage facilities,
Streamlined supply chain processes,
Increased competitiveness on the market,
improved customer quality, increased customer satisfaction,
automatic handling of returns and complaints,
outsourcing in logistics means optimization of expenses and lack of some basic costs (renting warehouse space, hiring staff, handling orders).
Disadvantages
partial dependence on an external company,
Risk of losing important information,
possibility of a loss of credibility of the company,
loss of control over ordering processes.
It is important to note, however, that the disadvantages presented here are primarily risk and not an actual negative aspect of logistics outsourcing. Moreover, many of the situations presented in the disadvantages will never happen, and losing control over ordering processes is not necessarily a disadvantage. It is an opportunity to create a professional service for customers with specialized staff, know-how, and modern equipment and technologies.
Outsourcing of services is a big challenge for many companies and certainly a chance that can turn into something bigger. Companies deciding on this type of service can meet an increasing number of customers or clients, reduce costs while increasing opportunities. However, you should remember to present all expectations to the company, which is to deal with outsourcing in your company. It is necessary to determine all, even the smallest and very detailed conditions of cooperation already at the implementation stage. Then you can be sure that from day one everything will work as it should.