12 November 2022 Outsourcing can help solve your company’s pain points and make it more efficient Managing a business is not always easy. Attention must be paid to the production process, current legislation, storage, transportation and distribution, customer relations, among other crucial points. However, globalization and technology have made it possible to delegate these tasks outside the warehouse. This is where the concept of outsourcing comes in, which is essentially outsourcing. Nowadays, from beginners to more experienced companies looking for new opportunities, outsourcing is an excellent survival strategy. In fact, in 2019, according to a report by Armstrong & Associates, 90% of Fortune 500 companies, an annual list published by Fortune magazine that includes the 500 largest US companies by total revenue, worked with outsourcing providers. To get an idea of what this means in terms of investments, in 2019 alone, these companies spent $212.8 billion on outsourcing. To help you understand the topic, in this text we will explain what outsourcing is and show the benefits derived from its implementation and which points need attention. What is outsourcing? Outsourcing is the use of an external provider (also known as a third party) to manage various functions of the supply chain. It is used for services that a company cannot provide on its own or efficiently. In the past, many industries manufactured and stored their own products, had their own transport fleet, and tried to distribute these goods, all under their own management. Today this is no longer necessary. It is possible to resort to outsourcing for logistics services, including transportation, storage, cross-docking, inventory management, packaging, etc. Many companies are even outsourcing other secondary functions, such as accounting, IT, and human resources. It is possible to outsource different segments or even the entire supply chain. Therefore, the appointed company makes the daily operational decisions, while the internal team focuses on managing larger projects. The manager usually considers logistics outsourcing when there is a change in the company’s structure or strategy, or simply when costs increase and service levels decrease. Are you thinking of geographically entering new markets or a new customer segment? Outsourcing may be able to provide your company with the flexibility needed to grow with less capital investment risk during this transition. Benefits of outsourcing The big difference in outsourcing is having specialists in an area where the company does not have much knowledge or specialized labor. Discover the benefits of using the concept in your business: Cost reduction: It is possible to reduce expenses for transportation, storage, customer service, among other things. Outsourcing has the ability to provide a variety of services in a single point of contact. This will eliminate internal and multi-vendor costs. Ability to focus on your business’s core competencies: Managing a business can be challenging. What if you could assign a task to a partner who would do an outstanding job, charging a fair price that allows you to achieve your financial goals? Or simply give you more time to think about broader elements like strategy, making processes more efficient, or expanding your operations? With outsourcing, this is possible. In this way, your energy will be directed towards growing your company. Specialized and updated technology: One of the main advantages of using outsourcing is access to the latest technologies. Every day there are innovations on the market. With outsourcing, you have a range of options and can choose the one that will be most efficient for you. Competent workforce: Thanks to its vast experience, outsourcing will include people, processes, and technology at a higher level than a single company can develop independently. In this way, you will have a more qualified team at a lower cost. Greater customer satisfaction: From the moment you offer the best to your customers, both in terms of delivery and service, they will not only praise your business but also recommend your products and services. In other words, everyone wins. Points of attention It is important to pay attention to some points before implementing outsourcing in your company. They are: Inefficient communication: Focus on the relationship between your company and your consumer. It is important to establish a unique language between you and your outsourcer. Lack of consensus and communication can lead to inefficiencies or delivery delays. Therefore, communicate with your outsourcer and ensure that everyone is aligned with the same goals and prepared to engage the customer and offer the best. How will technology be integrated?: Integration with technology can be the biggest challenge. Data must flow between systems, and all parties must have deep visibility to manage. Lack of integration leads to failed relationships and frustration for the end consumer. Particular attention to the outsourced company: It is important to pay attention and know the company that will be outsourced. Seek references, find out about their past projects, ethics, and business culture. If you choose a logistics outsourcing provider, make sure to visit the facility and fully understand how the operation works. Factors to consider when choosing an outsourcing Before contacting outsourcing companies, it is important to define your expectations and outline what you want to achieve. After all, asking the right questions is the way to build a successful relationship. Look for companies that best align with your company’s goals. Evaluate the service and solution offerings of each, as well as the level of automation. It is important to analyze the strengths and weaknesses of each before choosing the best one for your business. Other important factors to consider: Companies that third parties serve or have served Specializations and certifications Reviews from current and previous customers Continuous improvement initiatives and participation Focus on quality and performance When should you resort to outsourcing? It is important to understand when to invest in dedicated outsourcing and when it is more feasible to develop resources for better internal services. This decision can be difficult, and there is no right answer. It all depends on your plans for the future and how much you are willing to spend. But if you decide to outsource, here are some telltale signs: Your company’s overall structure or strategy is changing Logistics costs are increasing while service levels are decreasing You are experiencing rapid growth and need to scale quickly You are entering a new market geographically You are having difficulty recruiting and retaining the best logistics talent An area of your supply chain needs more flexibility IT Outsourcing Today technology is the backbone of any company, and in the supply chain, WMS software plays an extremely important role. The system is an essential component of a company’s distribution strategy, especially in an increasingly complex integrator chain. With outsourcing, it is not necessary to produce your own technology. Instead of developing your own software, which can have integration issues and other bottlenecks, you can rely on a good provider, who must always be close, offer scalable and adherent solutions, and always focus on customer satisfaction. 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