The supply chain has undergone much disruption since March 2020. Sourcing, procurement, warehousing, and shipping, in general, continue to challenge logistics. Customer expectations are high, costs are through the roof, regulations are in a constant state of flux, and the war raging along European borders heralds new complications yet to be fully realized.
Logistics outsourcing represents a solution for many organizations. By partnering with a third-party logistics company (3PL), companies reduce risk and gain access to dedicated expertise in shipping, supply chain, customs, and import-export processes.
However, many businesses have concerns about outsourcing, so it’s essential to understand the pros and cons as they apply to your business case.
Pros and Cons of Logistics Outsourcing
If you plan to outsource your logistics, it’s critical to align yourself with an experienced, trusted team that will work with you to ensure success. Let’s look at some typical logistics outsourcing pros and cons.
Logistics Outsourcing Pros
Pro: Expert documentation handling.
Accurate export documentation is essential to ensure your goods arrive at their destination without unnecessary delays. Non-compliance could result in delays, regulatory fines, and even jail time. Working with an experienced 3PL ensures your documentation is correctly completed and compliant, thus reducing undue risk.
Pro: Economies of scale and cost reduction.
Outsourcing logistics enables cost reduction at scale. 3PLs leverage an established global network, removing the risks, costs, and complexities typically associated with business growth.
7 Essential Skills That Improve Logistics Decision-Making
Pro: Access to transportation technology.
Transportation technology enables logistics transparency, so you’ll gain 24/7 visibility of your inventory and shipments.
3PLs have well-established partnerships and fleets that allow them to go anywhere, making it simpler for companies to enter new markets or pivot quickly to meet changing demands.
Logistics Outsourcing Cons
Con: Disconnection between clients and agents
A 3PL adds another layer between a company and its end customer. Clear lines of communication must be in place to avoid potential disconnects.
Con: Loss of Control
Providing a branded experience to your customers is critical, but adding a new outsourced partner can challenge that relationship. You must ensure your 3PL understands how you do business and can meet those expectations. Ideally, the association should be invisible to your customers. Service level agreements, contracts, and training will help you avoid these issues.
Con: Strategic Misalignment
Cost reduction is only one reason to work with a 3PL. Your outsourced logistics partner should also have a firm understanding of your value proposition and be capable of meeting your KPIs. Again, communication is vital. When you and your 3PL share the same goals, you can expect long-term success.
How DTS Helps
Despite all the crazy, unpredictable events unfolding in the world right now, there is good news where logistics outsourcing is concerned. Risks are significantly reduced by hiring an experienced logistics partner that has a portfolio of satisfied clients, keeps you informed about each step, and offers ways to optimize strategic processes according to your company’s needs.