Last week we explored the importance of differentiation, choosing your core activities and digitizing these activities. This week we focus more on the effective cost differences when outsourcing your logistics as well as how to choose the right partner.
3. What is the cost of logistics outsourcing?
If you already have an existing order volume, an external e-fulfilment provider can easily calculate your cost price based on this data. If you don't have this, then we can do this based on an estimated volume. But what internal costs do you include to make a proper comparison?
Operating costs
Specifically, an external logistics partner has a positive impact on your operational costs. Especially as your order level increases, but also as your order flows vary. After all, you link your costs directly to your usage. An additional positive effect is that costs resulting from over- or undercapacity (people, space ...) are eliminated. These costs are often severely underestimated and not factored in when comparing outsourcing logistics operations.
Supporting consequence costs
There are also the "supporting consequence costs" of a logistics operation. As you outsource your logistics operations, they can be digitized and this impacts the administrative support of your operations. So you no longer have to spend time hiring and monitoring operational staff or automating your invoicing. The speed at which you inform your customer also improves!
These "supporting consequence costs" usually cannot be calculated exactly. Yet we notice the change in time spent with our clients. From supporting administrative services to customer-oriented services, which add value.
4. How do I choose the right outsourcing partner?
Where the first three questions earlier during your research are easy to name and calculate, choosing your partner also remains an emotional assessment.
Then it is crucial to ask yourself if this partner is a good fit for you. You enter into a partnership with the intention of doing so for the long term. The extent to which the partner suits you is at least as important as answering the first three questions. Even though this question is the most difficult to answer since it is the least measurable. Still, certain sub-questions can help you make your choice:
- What is the DNA of my company and that of my partner?
- To what extent does he understand my question and my strategy?
- Is he transparent about his operation and how does he communicate about it?
- How important is flexibility to me and can my partner contribute to this?
In short the answer to the question, do I outsource my logistics is not a simple yes or no. What is important is that you determine properly:
- Where your unique added value lies and which are your core activities?
- How do you digitize these?
- What costs all factor into outsourcing your logistics operation?
- What requirements must your partner meet?
This automatically gets you to the right answer and yet it doesn't stop there. A sustainable partnership, besides finding the right mix on the above questions, is also a commitment to keep 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? Would you like to test these questions specifically against your unique story? Feel free to contact us and we'll be happy to make time.
