Offshore vs. Outsource for Transportation & Logistics
Many transportation and logistics professionals hear outsourcing and think offshoring, but there is a big difference.
Q: Many transportation and logistics professionals based in the U.S. hear outsourcing and think offshoring. Is there a difference between the two? If so, what is it?
A: Yes, there is a big difference. When a company chooses to outsource, they are handing off a piece of their business to a specialist outside of the organization to manage. There are a number of reasons for this (e.g., cost savings, improved efficiency, faster turn-around time, higher accuracy, business continuity, etc.), but the main objective is to streamline business processes. Outsourcing can be across the globe or across the street. Offshoring, on the other hand, requires moving that piece of the business to another part of the world. You can outsource without having to offshore.
Q: If a logistics company wants to outsource without offshoring, will it suffer any loss in quality or cost? Why or why not?
A: Not necessarily. There are a number of solutions that leverage experienced onshore labor and/or innovative technology to reduce or eliminate costly man-hours, without sacrificing quality or cost. Dependable outsourcers who specialize in their individualized service offerings will utilize quality metrics and best practices to ensure the highest quality of output at very competitive prices.
Q: What are some examples of outsourcing projects that can be used to improve business in the supply chain without taking labor offshore?
A: The best examples are projects that integrate advanced technology wherever possible. The use of Optical Character Recognition (OCR) or Intelligent Capture (IC) is better now than it has ever been before in significantly reducing labor-intensive, manual data entry work. Large amounts of freight data can be captured, classified, extracted and transferred in any format, with a high degree of accuracy, without human intervention. This can be set up on-site or off-site, without moving work offshore. iCapture for Freight Billing is one example of our solutions that can be offered without moving labor offshore.
Q: Are there any outsourcing options for logistics companies that do not require eliminating staff at all? If so, what is an example?
A: Of course. For example, many transportation and logistics teams are trying to find ways to take raw data and turn it into useable information to make strategic business decisions. The problem is that many do not have the resources and time to do this. Partners like DDC make sense of client data by converting it into customized analytics reports and developing executive dashboards to equip decision makers with daily, weekly, or monthly snapshots of Key Performance Indicators (KPI’s).
Instead of eliminating its billing staff after the rollout with DDC FPO was completed, Clear Lane Freight Systems simply re-allocated the team members to focus on the company’s core competencies. When clients take this approach, we see that they benefit from much more than just reduced costs and higher quality data, but it strengthens their operations throughout, allowing them to work through a much healthier business model.