There are many areas like production management, human resource management, marketing and sales, accounting and supply chain management etc. that are essential for the success of a business. While most of these functions can be performed in-house, certain functions like warehousing and logistics can be outsourced to third party companies.
Logistics is an important aspect of the supply chain management. It involves a lot of functions like transportation of goods, storing them in proper warehouse and delivering the goods to the end customers. While big companies can have in-house logistics departments that take care of the logistics needs, small and medium businesses can outsource the function to firms providing specialist logistics services, in order to get better return on investment.
Some of the advantages of outsourcing logistics are
- The third party specialist logistics services companies have the expertise and personnel to take care of different aspects of supply chain management. They have the necessary systems and trained personnel to take care of all the logistics needs like transportation, warehousing, installation and deliveries. They can come with customized solutions to reduce the warehousing and distribution costs of the businesses and help them to supply products at cheaper prices to the customers.
- Outsourcing improves the scalability of businesses. Most of the businesses have peak and dull seasons which cause fluctuations in the level of inventories. Logistics companies can help businesses to handle these down times efficiently.
- Most of the third party specialist logistics services invest in latest technology to provide efficient service to their clients. Businesses can benefit from the technologies like modern tracking systems and inventory maintenance systems offered by the logistics firms.
- Constructing and maintaining a warehouse involves huge capital expenditure, Outsourcing warehousing and other logistics services to third party providers helps companies to reduce their capital expenditure.
- Outsourcing logistics helps to have an ideal distribution and improved customer satisfaction. Since the specialist logistics companies provide various value added services like reverse logistics and white glove services, businesses can benefit from the improved customer satisfaction because of them.
- Most of the companies providing specialist logistics services also provide other services like high tech installations, specialist transportation and specialist freight services etc. businesses can offer these value added services to their customers.