Offshoring business logistics has been a standard process for decades, and organizations will do well to include it in their operations. With business adjustments being more crucial today, it is time to look at what offshoring offers.
Logistics refers to the vital process of managing resources, from acquisition and storage, to packaging and transportation. It’s where your products get delivered from manufacturing floors and warehouses to your retail stores and customers. Most businesses, from small home-based online retail stores to multinational giants, rely on logistics for specific sections of their operational processes.
Business logistics feels like a straightforward process, with local suppliers as partners and catering only to local customers. Unfortunately, the rapid rise of global expansion, e-commerce, and technological advancements make for a complex logistics network filling up the seas, skies, and roads. The current developments of global supply chain bottlenecks, sanctions, and regulations companies are also changing fast. Today, starting an in-house logistics division becomes even more challenging and, most of all, unfathomably expensive.
Outsourcing logistics to third-party logistics (3PL) providers is the best approach because of the many benefits. Still, most of it is due to reducing costs significantly to what is otherwise a costly in-house investment. However, shipping costs are rapidly rising, even up to a whopping 600% last year. This scenario leads to many companies rethinking their approach to handling logistics, opening their operations to a quick and inevitable change.
In-House Logistics vs. Offshoring Logistics
Although offshoring business logistics is possible, most companies don’t. Logistics remain an essential and irreplaceable part of business operations, especially when physical goods are involved. Besides reducing recruitment and labor costs, many organizations outsource divisions and responsibilities they can perform digitally. This strategy saves them the need to build infrastructure and procure equipment to accommodate new hires. With digital advancements able to turn divisions like digital marketing, accounting, payroll, and IT support achievable to a fully remote setup, using third-party services makes more sense. Unfortunately, logistics does not belong in that category.
The case for in-house logistics, of course, is undeniable. Control of the warehousing, inventory management, transportation, and fulfillment duties will give any business owner peace of mind. However, overseeing every step comes with plenty of costs. It starts with an entrepreneur’s effort to attend to every potential delay or issue involved in business logistics. It takes away attention from core business matters, requiring business owners to hire managers, experts, and workers. However, those professionals will also need the equipment, software, and tools like investments in fleets and couriers. The problem gets magnified when your business caters to a global audience. Even from this, you can see that creating logistics in-house will be an expensive matter.
Large and established corporations might be able to allocate funds and resources to build it, especially when they have a solid profit stream, but even they know how much money gets wasted. The need to reduce costs will always be prevalent, urging them to use offshoring for essential divisions like manufacturing, construction, and most importantly, IT.
IT offshoring is one of the best examples of this, with equipment and personnel being expensive to perform in-house. Fortunately, it can be done cheaper remotely, giving businesses even more reason to use IT-managed services over building one from scratch.
If you are a small business owner with limited funding, thinking of in-house logistics might even be a waste of time. Today, 3PLs are necessary to make investing in logistics a profitable venture.
The Case for 3PL Before Offshoring Logistics
When companies use 3PL, they outsource parts of the logistics processes that cost a lot of time and money. Many people mistake logistics for just the shipping process when in fact, it covers nearly one-third of the entire service. Here are just some of the logistics components you can outsource to 3PL services:
Shipping
Of course, shipping takes top precedence when it comes to logistics services. It involves partnering with carriers who can deliver your products to your desired destinations, whether it is local or international. 3PL providers often utilize integrated technology to provide clients with a way to track their cargo, all the way up to online stores.
Inventory Management
Inventory management involves storing, tracking, and order fulfilling parts of the operations. This service is popular because it covers the initial stages of logistics, particularly warehousing, and all its associated costs. This service allows businesses to make warehousing efficient because 3PL providers invest heavily in software and equipment, including barcoding and carrying systems.
Distribution
Businesses must move products to different destinations, whether to warehouses, retail stores, and fulfillment centers. The transport costs can be expensive, especially since they still are internal operational efforts that do not directly bring in profits.
Fulfillment
Fulfillment comes in many forms, including fulfilling website subscription orders, securing materials for manufacturing, or shipping products to major retailers. 3PL providers can handle multichannel logistics processes and save companies time and money.
Returns Management
It’s essential for companies to maximize the value of returned or refunded products, making returns management from 3PL providers critical to getting them back. Organizations can refurbish, restock, or reuse product parts instead of throwing them away, saving them lots of money.
Logistics Data Analytics
While outsourcing to 3PL providers already helps save on costs, companies can find more ways to be cost-efficient with the division. Outsourcing data analytics for logistics can help identify mismanaged processes, such as tracking route mileage and performing preventive fleet and ship maintenance, so companies can optimize their spending further.
Fleet Management
Vehicles are among the most expensive assets in logistics, but they are the most valuable. Through fleet management services, 3PL providers can remove companies’ worries about upkeep, gas, and repairs.
Packaging
Packaging seems like an in-house task because of its ties to branding, but 3PL providers can still take it out of the company’s hands. They can ensure that products get securely packed for shipping using the materials and designs approved by their clients.
As you can see, there are many ways to utilize 3PL services to save your company money, time, and effort. However, you will still need to supervise these operations, especially if you have different 3PL providers for each logistics component. Likewise, if you have both in-house and outsourced logistics, you will need to oversee their coordination. Hiring in-house personnel like Logistics Operations Specialists, Supply Chain Analysts, Logistics Operations Managers, Freight Specialists, Export Consultants, Customs Supervisors, Materials Supervisors, Warehouse Supervisors, and more costs a lot.
This is where Offshoring business logistics can help.
iSupport Worldwide for your Offshoring Logistics Needs
Interested in offshoring business logistics to handle the complicated network attached to in-house teams or 3PLs? You will need to partner with an offshoring firm with experience in the logistics industry.
iSupport Worldwide, one of the premier offshoring firms in the Philippines, can help your company set up the foundation for your logistics processes. The two-time Inc. 5000 honoree makes it a goal to help small to medium-sized businesses in all industries innovate, expand, and grow. Whether you have logistics needs to achieve or are a logistics provider yourself, iSupport Worldwide can provide customizable offshoring solutions tailor-fit for your business.
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