Last week we went into the importance of distinguishing capacity, the choice of your core activities and the importance of digitizing these activities. This week we will focus more on the effective differences in costs when outsourcing your logistics as well as how to choose the right partner.
3. What is the cost of outsourcing your logistics?
If you already have an existing order volume, an external e-fulfillment player can easily calculate your cost price on the basis of these data. If you don’t have this, we can do this on the basis of the estimated volume provided by yourself. The question is which of your internal costs do you take into account in order to make a correct comparison?
In concrete terms, this means that an external logistics partner has a positive influence on your operational costs, especially as your order level increases, but your order flows also vary. After all, your costs are directly linked to your usage. An additional positive effect is that you no longer have to deal with costs as a result of over- or under-capacity in terms of people, space, etc. Costs that are often heavily underestimated and not taken into account when comparing the outsourcing of logistics operations.
Supporting consequential costs
In addition, there are also the “supporting consequential costs” of a logistics operation. Because you outsource your logistics operations to an expert and digitize the total operations together, this has an impact on the administrative support of your operations. Think about the follow-up of the logistics operations where you no longer have to spend time on recruiting and following up operational personnel or automating your invoicing, but also the speed with which you inform your customer.
These “supporting follow-up costs” can usually not be measured exactly one-on-one. Nevertheless, we notice a change in the way our customers spend their time, from supporting administrative services to customer-oriented services, which offer added value.
4. How do I choose the right partner?
While the first three questions in your research are easier to identify and measure, the choice of your partner is always influenced by an emotional assessment.
In the choice of your partner, it is crucial to ask this question: Does this partner suit me? You enter into a partnership with the intention of doing this in the long term. The extent to which it suits you is at least as important as answering the first three questions. Even though the question of the right partner is the most difficult to answer as it is the least measurable. However, certain sub-questions can help you in your choice:
- What is the DNA of my company and that of my partner?
- How well does he understand my question and my strategy?
- How transparent is he about his operation and how does he communicate about it?
- How important is flexibility to me and can my partner think along with me?
In short, the answer to the question, I outsource my logistics is not a simple yes or no. What is important is that you make the right decisions:
- Where your unique added value lies and what your core activities are?
- How do you digitize them?
- What costs are involved in outsourcing your logistics operation?
- What requirements does your partner have to meet?
This way, you automatically get the right answer and the possible choice of your partner. But it doesn’t stop there. In addition to finding the right mix to answer all these questions, a sustainable partnership is also a commitment to continue investing in each other. It is this commitment that makes you move forward together.
Do you have questions about this article or last week’s article? Would you like to test these questions specifically on your unique story? Feel free to contact us, we are happy to help you.