Unleash the Full Potential of Your Supply Chain
Q: What are the compelling reasons a shipper seeks outsourced logistics support?
A: Companies are realizing the differentiated value their supply chains provide in the areas of customer retention, brand reputation and overall bottom-line performance. However, the focus and commitment to enhance supply chain programs are often viewed as a distraction from core functions. Shippers seek outsourced support to either complement or completely represent their logistics or supply chain department. By tapping this outside expertise, shippers arm themselves with the technology, talent and experience at a lower price than employed resources, which allow companies to invest and focus on their core competencies.
Q: Can you describe the typical customer that employs an outsourced logistics model?
A: Often times the shipper is struggling through a transformative challenge that has led them down the path of questioning their long-term strategy. Examples include:
- A merger, acquisition or divestiture in which a shipper requires assistance to understand and execute their new network
- An organization going through a period of rapid growth and needs help building scalability and resiliency within its supply chain
- Some organizations seek help after a significant loss of revenue to focus on network optimization and cost savings
- An organization evolving from a decentralized decision-making program to a more centralized program to improve procurement, supplier management and risk mitigation
- A shipper committed to maintaining its own supply chain department but desires assistance with technology or key value-added services
Regardless of the compelling reason, there are numerous models available to shippers. Technology advancements have allowed greater visibility, planning and optimization. It is important for shippers to outline long-term objectives and consult with experts within the profession.
Q: What value can an outsourced model provide interested shippers?
A: Aside from providing shippers the freedom to focus on their core competencies, an outsourced model such as a 4PL program or Lead Logistics Provider (LLP) will improve tactical execution processes, deliver network savings (measured as supply chain return on investment) and mitigate risk.
The right provider will leverage an industry leading transportation management system (TMS) and specialized technology to increase visibility of supplier performance and network costs. The business intelligence enables proactive planning and continuous improvement.
A key competency is carrier qualification, procurement and management. With capacity volatility and uncertainty of pending regulatory changes, it is critical that shippers leverage expertise in capacity generation, qualification with an eye on safety and financial viability, and a proven management program. This work strengthens routing guide options and improves performance while reducing costs and risks.
Aside from managing the supply chain operation, strategic programs deliver savings. Proven experts in this area will leverage the shippers' key stakeholders and the supplier community to enable change management, which can be difficult at times depending on the individual situation. Your outsource partner should be experienced with relevant examples of how they have helped other companies unleash the potential of supply chains.