To compete in an increasingly globalized market and meet consumer demands, outsourcing processes can be a solution to improve management efficiency. This strategy can be key to your business's profitability, so it is important to decide which processes should be outsourced to optimize your supply chain.
What is logistics process outsourcing
Logistics process outsourcing involves delegating to a third party functions that were originally managed internally within your company.
This is also known as third-party logistics (3PL) or contracted logistics and can be done partially or across all tasks related to supply chain management.
Which logistics processes can be outsourced
When opting for logistics process outsourcing, the external partner handling your business tasks is specialized in functions such as:
- Transportation of goods
- Storage and inventory management
- Order preparation and packaging
- Customs management
- Distribution
- Reverse logistics
Your company can delegate one or several of these tasks depending on your needs.
When it makes sense to outsource a company's logistics
When might outsourcing logistics processes be worthwhile? This decision requires a detailed analysis of advantages and disadvantages and which processes are suitable for outsourcing.
The first step is to identify your company’s core activities and those that are not. Non-core activities are candidates for outsourcing.
Outsourcing makes sense when:
- Logistics complexity is high, and you lack the necessary technology, infrastructure, or expertise.
- Your order volume is growing rapidly, you need to adapt your logistics resources quickly, or you are opening new sales channels such as e-commerce.
- You lack capital to expand your logistics infrastructure or want to optimize your use of capital.
- You do not have a specialized logistics team and frequently encounter inventory, delivery, or return errors.
- You need to improve customer satisfaction: faster deliveries, better order traceability, enhanced after-sales service, or reduced logistics errors.
Professional logistics operators, such as GLS, have advanced technological tools, specialized personnel, and optimized processes that improve customer experience, save costs, and increase productivity and profitability.
Advantages of outsourcing logistics processes
Outsourcing logistics processes can be a highly effective solution for your business. Benefits include:
- Reduction of operational costs
- Increased business efficiency
- Access to advanced technology
- Specialized expertise
- Scalability and flexibility
- Higher customer satisfaction
All these benefits directly impact your business’s profitability, highlighting the importance of considering this option.
Current trends
- Automation: faster and more accurate warehouse and transportation management systems.
- Digitalization: real-time order tracking and traceability.
- Sustainability: logistics operators optimizing routes and packaging to reduce carbon footprint.
Risks and disadvantages of logistics outsourcing
Outsourcing is not always advisable or beneficial. Certain activities should not be outsourced, such as those that are core to your business, those in which your company is specialized, or those for which you already have the appropriate technology.
Main risks include:
- Loss of operational control: reduced visibility over orders and difficulty resolving issues.
- Dependence on the provider: delays or failures could affect your business’s reputation.
- Security and confidentiality: improper handling of sensitive customer data.
All these risks can be mitigated by choosing the right logistics provider: with experience, advanced technology, adequate infrastructure, and regulatory compliance.
Checklist for selecting a logistics provider
- Experience in your sector and with your types of products
- Technology for inventory tracking and management
- Ability to adapt to growth and demand peaks
- Certifications and compliance with local and international regulations
- References and reputation in the market
- Sustainability and energy efficiency policies
Additionally, a specialized logistics provider can offer fulfillment services , managing the entire order process: from receiving and storing inventory to preparing, packaging, and shipping to the end customer. This optimizes time and improves the customer experience.
Outsourcing logistics processes can be a key strategy to optimize your business, reduce costs, and improve customer experience.
If you want to optimize your logistics and focus on your core business, GLS can help with customized solutions, including comprehensive fulfillment services that streamline your shipments and ensure satisfaction with every delivery.