When you consider just how popular logistics outsourcing has become over the last few years, you could be forgiven for thinking that success is a foregone conclusion.
However, as some companies have found out the hard way, there are certain pitfalls to avoid in logistics outsourcing if your partnership with a 3PL provider is to be successful.
Avoiding Logistics Outsourcing Mistakes
By being aware of the logistics outsourcing pitfalls to avoid, your supply chain can certainly achieve cost, labour and efficiency benefits, but …
Pitfall number 1 is to expect too much. Rarely does an outsourcing initiative deliver 100% of the savings projected. Don’t be too dismayed by this revelation though. If you achieve 70% of what’s projected, that’s still a big plus for your organisation.
Some of the more serious pitfalls to avoid in logistics outsourcing include the following:
Pitfall #2: Assuming that anything should go without saying – Everything you expect from your outsourcing partner should be provided to them in the form of detailed written procedures.
Pitfall #3: Outsourcing too much, too soon – Make provision for a honeymoon period and start by outsourcing a share of your chosen process. Increase the scale if all goes well.
Pitfall #4: Going in without an exit plan – Ensure the contract with your provider includes a procedure for disengagement if the partnership doesn’t deliver on expectations.
Pitfall #5: Abdicating Responsibility – Remember that your outsourced processes are still your processes. While micromanagement is a bad idea, monitoring and measuring activities are essential.
Pitfall #6: Treating the process like a purchase: Remember that you’re entering into a long-term partnership when you outsource logistics processes. Chasing the best price is seldom the wisest way to choose your provider.
Pitfall #7: Absence of Internal Buy-in: Nothing can derail a partnership faster than finger pointing and negativity within your own operation. Every penny invested in change management and securing
stakeholder buy in, is money well spent.
Perhaps the points I’ve mentioned here sound like simple common sense and really, they are. However they are all real traps, which have been fallen into by real organisations, sometimes with serious consequences for customer service and revenue.
No Pain; No Gain? That’s Garbage…
Outsourcing is a proven strategy for saving cost and improving service in the supply chain. Try to avoid the seven pitfalls outlined above, select your 3PL partner wisely and you’ll be creating the best opportunity for your business to enjoy the gain, without the pain.
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