"Many see outsourcing of logistics services as a means of cutting costs but, really, it is more than that. It is a strategic tool that gives the manufacturer an edge over its competitors."
Traditionally, organizations would manage both their core and non-core business processes on their own. With the increasingly competitive business-operating environment, many organizations now need to streamline and re-evaluate their systems and processes to be more efficient and cost-effective. One trend that has emerged is the outsourcing of non-core business activities – namely the outsourcing of functions such as logistics and warehouse management.
Berco Warehousing was formed to meet the growing needs of customers who require additional services throughout the supply chain. We aim to add value to a customer through the economies of scale we produce and thereby aim to reduce costs and increase productivity. These services primarily emphasize product flow rather than storage and they cover the following:
In addition, we offer important value-added services such as on-site logistics needs analysis to establish customer's unique needs. Typical customer needs revolve around speed and cost saving, we consider all the alternatives before we present them with a plan that represents the best way forward. We will explain each of these processes above but first it is important to explain what we mean by providing a complete end-to-end solution.
The overall business strategy in outsourcing transportation and stock management activities is to reduce the cost and complexity associated with these logistics processes, while simultaneously adding value and competitive differentiation. If you choose to outsource some or all of your logistics activities, it is important to have realistic expectations. Those firms that do outsource generally are satisfied that they have met the following business objectives:
The value in outsourcing warehousing activities results from reduction of fixed assets associated with the physical warehouses, increased capacity for executing transactional and tactical warehouse processes and overall operating cost reduction.
In addition to capital and cost related benefits, there are other reasons to consider outsourcing of warehousing activities, including access to leading practices, access to "best of breed" warehouse management systems and incentive or performance-based contracts that drive continuous improvement. Cost reductions and efficiency gains can be expected to result from scale and knowledge of site and/or market specific conditions.
Companies today know that competition is increasing and buyers have more power than ever so they recognize the need to achieve a greater advantage in the market. The only way to accomplish this is by adding additional value to their product or service.
The ideal situation is being able to smoothly meet all of their customer's expectations by introducing improved service products, better customer service, and faster delivery. Simply maintaining the status quo won't work. Most of today's companies have already made at least one change in order to meet the demands of their customers and what we have to do is get them to understand how important it is to consider making this change and what value we can offer and costs we can save them.
Improvements in delivery time, price, and product line-ups can add significant value to a business's offering and can help them find a true niche in even the most crowded markets. Understanding this fact is the key to success. Outsourcing logistics operations to a 3PL such as ourselves adds to the bottom line for both the retailer and manufacturer through accurate, well-managed inventory and supply chain solutions.
What we offer is expertise that manufacturers, distributors and shippers can tap into, allowing users to achieve supply chain solutions with their customers that minimize total delivered costs. The link between a customers supply chain and customer satisfaction cannot be taken lightly. Supply chain management has a broader scope and importance today than it ever has in the past. Attaining predictability, repeatability, and velocity through strategy will give our customers a competitive advantage by streamlining their processes, cutting costs, and providing added value to them.
With continuous improvement of technology, systems and processes, we are better able to constantly evaluate and implement best practices in a specific field. As it is our core business, we can concentrate our resources on developing value-added services such as bulk-breaking, packaging or labeling. All of these are likely to incur additional costs to an organization if done internally. In this way an organization can allocate all of its resources to core business activities.
Most manufacturers cannot justify the investment costs in setting up a warehouse or the operational costs involved in the distribution process. Such high capital expenditure is a burden for most organizations. With the growth in demand for their services, third-party logistics providers such as us are keeping abreast with IT developments to capitalize on the e-business solutions available.
In efforts to satisfy customers' needs and manage costs, the outsourcing of logistics services should be part of an organization's overall business strategy and looked at from a macro perspective as a means to achieve an edge over competitors. This would ensure the creation of business and customer value in the longer term.
At the same time, as third-party logistics providers such as ourselves reach deeper into their customers' core business, our role will evolve from that of a support service to that of a strategic partner. And all of this is with one objective in mind – to work towards a seamless, cost-effective method for the movement of goods.