Why Outsource?

One of the best recognized and analyzed trends in business today is the trend toward outsourcing. We at IWLA feel that this trend bodes well for the future of the warehouse logistics industry because we represent an attractive option to establishing a costly and perhaps hard to staff logistics function within all but the largest manufacturing and marketing companies. The main drivers behind this trend are:

Re-focusing on core competencies. A company which manufactures computer chips has as its core competency manufacturing computer chips. Certainly, they have internal functions such as accounting, marketing, MIS, etc., but one costly and hard to staff function may be logistics. Rather than invest in warehouses and warehousemen, trucks and truck drivers, etc., the company may find logistics to be one of the easiest competencies to outsource, and one of the most financially attractive. In other words, the company may choose to partner with one or more 3PLs (third-party logistics providers), or perhaps one 4PL (those who coordinate the efforts of a series of 3PLs) to relieve themselves of the burden of logistics in-house. Then, they can re-focus on what they do best, making computer chips. "Bottom line" concerns. A dollar that does not need to be spent maintaining in-house warehouse facilities, fork lifts, trucks, etc. is available to drop to the "bottom line." While companies are busy focusing on what they do best, making and marketing their products, they can save logistics dollars by partnering with those who do logistics best, largely IWLA member companies.

Technology advantages. 3PLs today are investing in technology as never before. From warehouse management systems software to environmentally friendly fork lifts, workstations replacing clipboards to barcode scanning equipment and RF devices, today's successful warehouses need to stay on top of the latest technology and employ it wherever it suits their needs. It's their business, and manufacturing and marketing companies may not have the access or budget dollars required to invest their IT dollars wisely.

As you begin or continue your search for a warehouse logistics company, remember that outsourced logistics is a partnership between you and your provider. As your relationship with your warehouse logistics provider develops, you will see first-hand the benefits of outsourcing your logistics operations. With shared information, the partnership can smooth product flow, reduce or eliminate unnecessary inventory, trim costs and improve service for you and your customers. The relationship you develop will hopefully last you well into the future.

This article was published by the International Warehouse Logistics Association - Copyright 2001 by International Warehouse Logistics Association, all rights reserved.

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