Insource or Outsource Your Warehousing? What’s your Choice?
Surely this is the age of third-party logistics! Some of the world’s largest and fastest growing companies are major third party logistics firms (3PL). Many started as transport or shipping companies, but have diversified into offering a full range of contract warehousing services. Indeed, they have been exponents at selling their services to would be customers who decide to outsource. But what are the reasons for outsourcing, and for that matter, why has outsourcing been so popular, while insourcing has slipped behind?
Although outsourcing is still strongly supported by many firms, a new trend is evident. A growing number of firms are emphatically keeping operations in house and/or terminating or pulling back from outsourcing, preferring to revert to running their own in-house warehousing logistics. Reasons for this can vary across a range of cost, service, relationship and strategic imperatives.
The chart below lists some of the perspectives that may sway a decision either way. There will be more issues than I have listed here, but you may want to check your own circumstances against these as a starting point. If at the end of the table you can count more reasons to insource or outsource, there’s your answer.
How did you go? Is your firm leaning to insourcing or outsourcing your warehousing?
Drop me a line if you wish to challenge the trend, debate or debunk the mystique of choosing either strategy.
This article is published in the September-October 2017 issue of MHD Magazine.