What is Logistics Outsourcing?

Logistics outsourcing can be defined as the strategic usage of outside parties to perform business activities that are traditionally being performed by internal staff and management. Companies that perform logistics outsourcing works as an extension for their client’s company, bring new strategies, and put initiatives to grow your business.

The main objective of customer support outsourcing in the logistics business is to lead your business functions with best logistic practices, provide logistics expertise solutions and consultancy support and optimize the supply chain processes. Logistics outsourcing is growing every day and almost 62% of shippers who are currently outsourcing their business say that they have actually stepped up into the competition by using Third-Party Logistics Providers (3PLs).

According to a survey, 80% of professionals have planned to significantly increase their budgets beyond fulfillment and warehousing in logistics outsourcing. The reason behind the increase in budget is to keep an update on operational support and technologies during complex logistics operations.

Importance of Outsourcing Logistics Business

Are you wondering if outsourcing is right for your company? Here’s a list of the importance of outsourcing logistics business.

1. Transform fixed costs into variable costs

It has constantly become hard to maintain the adjustment between internal space and labor to align with the distribution volumes. 3PLs can easily ramp labor and space up and down based on the client’s needs. In this way, the cost of your logistics will be parallel to your revenue stream.

2. Accessibility into new markets

Outsourcing increases your distribution capabilities into new markets. The right 3PL company interfaces with your inventory and systems and makes goods ready for shipping within 30-60 days.

3. Scale infrastructure and labor

Many logistic service providers have a connection with the national and global distribution network. This helps you to quickly expand your network and scale up your business. 3PLs also reduces your permanent cost burden on laborers by hiring a skilled and temporary virtual workforce so that clients can generate more profit during the busy season time.

4. Improve your business performance

3PL helps to increase the supply of your limited resources to meet the deadlines and demands of your customers. It also helps inform the end customer by integrating a tracker into the shipping IT system and also provides integration to WMS and ERP systems.

5. Gain perspective and control

3PL works with challenges across different industries and customers. Thus, they always come up with the best business practices for your organization.

Shippers now report that they have gained more control with the help of logistics outsourcing. This is due to the fact that the customer service outsourcing team works with enhanced systems that provide real-time business visibility and reporting.

6. Focus on core business functions

Supply chain management is a highly sophisticated and broader business discipline. It requires experts to perform their core business activities. For this, you need to partner with the right 3PL so that they focus on your internal resources and save your time, energy, and money and generate better results.

7. Access to additional skills

Your in-house managers may have only worked under national supply chains. 3PLs can help to grow your company internationally by providing additional skilled staff that will help you in the supply chain process. Further, the outsourcing team also uses modern tools and technologies in operational logistics for the smooth functioning of your business.

8. Reduction of additional costs

Expensive errors can be made when investing your capital in warehousing, technology, or vehicles. But an expert team of 3PLs can avoid this risk and give your company an opportunity to expand its logistics business into international channels without investing any additional costs. Outsourcing logistic activities can reduce your daily running costs, transportation, operation cost, and reduction in staffing level and its costs.

9. Enhance your customer service

Outsourcing gives you the opportunity to develop yourself in the evolving markets. It helps to enhance your customer service so that you can focus on your core business activities. 3PL brings flexibility to your business so that you can launch your products into new geographical areas.

10. Reduction of risk

Technology, legislation, and other business activities are significantly affected in the fast-changing business environment. A 3PL or a customer service outsourcing provider reduces the risk of your investment by providing you with exceptional service.

Conclusion

Overall, the success of your logistic business is totally dependent on choosing the right customer service outsourcing provider. Octopus Tech is the best 3PL service provider and works to reduce your cost savings by providing knowledge, expertise, and technology to transform your business.