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Are you looking to improve the quality of your logistics? And to create value and boost innovation within your supply chain? Or do you want to become more agile so that you can respond quickly to the ever-changing market situation? There can be many benefits to working together with a logistics service provider. Logistics service providers relieve you of the burden of various logistics activities and take care of the provision of information. How could logistics outsourcing help you?
Companies are outsourcing their logistics activities more frequently, more broadly and more diversely. Within outsourcing, we’re seeing a shift away from traditional activities such as transport, storage and handling in favour of value-added activities (re-packing, recycling, assembly, testing), IT and even the complete outsourcing of supply chain management, including the responsibility for optimising logistics concepts and achieving even higher customer service levels.
First of all, there’s no doubt that the logistics role is becoming more complex all the time. Consumers are demanding an ever-greater variety of products, and product life cycles in general have significantly declined. More and more products are being launched on the market and consumers are increasingly impatient to get their hands on them (rising customer service demands).
Technology and logistics play an important role in this process of market-oriented specialisation. This complexity requires specific expertise that is not immediately available within every company and is often costly and time-consuming to acquire. In that case, outsourcing is an interesting proposition.
Secondly, globalisation is producing larger sourcing markets and sales markets, resulting in bigger and more complex supply chains. This is making it increasingly difficult to meet customer needs at low costs.
Logistics service providers often have access to a worldwide logistics network of offices, warehouses, transport, IT and human resources. Needless to say, setting up a large-scale/global network of your own takes time and money, so outsourcing is an attractive alternative.
Faced with increasingly demanding customers, companies are being forced to concentrate on their core activities. Outsourcing gives them the freedom and the flexibility to respond quickly to changes in the marketplace. Moreover, a logistics service provider offers new and innovative distribution concepts which enable companies to tap into new customer markets or provide better service to their existing customers.
When you outsource your logistics, the logistics service provider takes care of matters such as hiring in the right employees at the right time, planning to ensure sufficient workforce capacity (including during holiday periods), compliance with employment agreements and legislation, monitoring labour market developments and dealing with property and warehousing issues. The logistics service provider closely aligns its processes with those of your own company. You can expect seamless integration of the planning processes and administrative handling of shipments around the world, including customs declarations, plus the consolidation of freight flows.
Outsourcing can have a positive effect on your financial ratios. Generating the same revenue with fewer people means a higher contribution to profit per employee. Outsourcing the costs for vehicles and buildings will reduce the pressure on your balance sheet and increase your return on equity.
Many companies lack insight into their actual logistics costs because some costs can remain hidden in areas that don’t have an immediately apparent link to logistics. Logistics service providers work with transparent calculation systems that show which costs are connected to which activity. This transforms fixed costs into variable ones, as you only pay for what you need. This provides visibility of the actual costs and enables you to factor them in to your budget calculations.
Another consequence of not having to handle the logistics process yourself can be a reduced need to invest in IT. Furthermore, outsourcing your activities to a shared warehouse enables you to benefit from synergy with other shippers such as by making use of their peaks and troughs. This means that you don’t have to spend money on overcapacity, for example.
Outsourcing means that you benefit from the logistics service provider’s expertise and experience, which will improve the overall quality of your logistics services.
If your core activities do not include logistics, then outsourcing can result in more certainty for your company. After all, the logistics service provider bears the operational and financial risks on your behalf.
If you’re thinking about outsourcing your logistics, whether based on the reasons listed above or ones of your own, don’t forget to contact Hitachi Transport System! We’re looking forward to working in close collaboration with you to take your logistics operation to the next level.
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