Outsourcing logistics: these are the pros and cons

Do you have goods in storage and are you considering outsourcing their logistics? This can have a positive impact on various aspects of your business! In this blog, you can read more about the benefits that (partially) outsourcing your logistics can have.

Focus

First and foremost, outsourcing your logistics provides you with the opportunity to focus.  As an entrepreneur, it’s common to juggle multiple tasks simultaneously, such as sales, marketing, customer service, and administration. Not to mention the need for future planning and growth strategies.

The logistics process is often something that is done ‘on the side.’ While it may not be a problem with a few orders, as volumes grow, logistics becomes a time-consuming task. If you don’t have enough staff to handle this workload, it can affect both the quality of logistics and customer service. By outsourcing logistics, you ensure that the right focus is placed on both aspects.

Specialty

Logistics is a specialized field that requires a lot of specific knowledge to guide all things in the right direction. This includes various laws and regulations, as well as knowing how to prepare a pallet for transportation. A logistics partner is aware of the critical points and the requirements that need to be met. Additionally, a logistics partner possesses the necessary technology and software to execute logistics correctly and efficiently, such as a warehouse management system and IT integrations for data exchange. If your orders require extra handling or if you want to apply your branding, many logistics partners can accommodate these requests without any issues!

Cost savings

Yes, outsourcing logistics comes with a cost. However, outsourcing your logistics can also lead to cost savings. Logistics service providers, due to their large volumes, can often negotiate favorable agreements with shipping partners and suppliers of packaging materials. When you entrust your logistics to them, you can also benefit from these competitive rates.

If you currently manage the logistics of your orders in-house, you are likely tied to fixed expenses such as warehouse rent and the salaries of warehouse staff, regardless of the amount of stored products or placed orders. With a logistics partner, you only pay for the space you actually use and the orders that are placed. No fixed overhead costs, therefore.

Flexibility

It would be a relief if a warehouse could adjust to the space you need, but unfortunately, that’s not the case. However, a logistics partner can provide you with the flexibility to scale up and down more easily. This is especially handy when you work with seasonal products or during busy times like the holiday season. If you store goods in your own warehouse but can’t accommodate the pallets during a peak period, you can choose to store the extra goods with a logistics partner during these times. If it works well, you can even decide to entrust all your logistics to an external partner, allowing you to serve your customers from a single inventory during peak periods

Efficiency

Thanks to their knowledge and experience, your logistics partner can provide advice and assistance in optimizing and streamlining your logistics process. If you have outsourced transportation to a partner who can also handle the logistics, the synergy between the two can be quite powerful. The entire logistics handling of your orders, from storage to delivery to the customer, can be seamlessly coordinated. This results in a fast and efficient process

Cons

One drawback of outsourcing logistics can be the feeling of losing visibility over your inventory. When you’re no longer physically present in the warehouse on a daily basis, you have less direct oversight of the products on the shelves, and you can’t handle urgent orders on the spot. Therefore, you must trust your logistics partner. Fortunately, this can be addressed with good warehouse software and a flexible service provider. Additionally, implementing your logistics processes with a logistics service provider requires time and effort to ensure that all processes are well set up and systems are integrated.

To avoid these drawbacks, it’s crucial to find a partner that aligns with your vision and processes.

In summary, outsourcing your logistics provides you with the opportunity to offer better service and cost savings.

If you’re looking for a reliable partner for outsourcing your logistics, at CTS GROUP, we handle the complete logistics process, from storage and inventory management to the final delivery to the customer. Please contact us for more information. We’re here to assist you!