To Outsource or Not To Outsource

To Outsource or Not To Outsource: when 3PL D.I.Y is the question

Tempting as it may be in tough economic times, bringing the 3PL requirements of your business in-house may or may not save money on the bottom line. How to recognise which option is best? We share with you some key factors to consider.

By Anita Fleming – Transtore [Logistics] Ltd, East Tamaki, Auckland.

End to end communication – unified links to address food safety and security issues:

Can you trust that each link in the chain is doing what they say they are doing? i.e. Did that pallet of delicious European snacks really go missing? And is your chocolate being exposed to sunlight while a truck is loaded; or your powdered spices sitting in a damp warehouse waiting for its next connection? Food products can be sensitive – ensure you do all you can to minimise risk of goods being damaged at each step of the supply chain.

Managing the origin to destination chain:

The more players there are in your supply chain, the more complex the logistics job will be to manage those relationships. Want to make life easier? Consolidate! If you ask the right questions and knock on the right doors, you’ll likely find suppliers who can manage several steps of the supply chain – eliminating the number of relationships you need to maintain. Ask your third party warehouse supplier who they know – and how they can assist in simplifying your supply chain.

Managing truck, ocean, air and rail transportation components:

If importing stock into New Zealand is as simple as 1, 2, 3 (i.e. factory, to ship, to port), logistics probably is not a big component of your role. If on the other hand, you are managing different types of transport to link source to destination, then it is likely you’ll be working with different rules for different types of transport component in your supply chain.

Some of the larger New Zealand food chains have specific rules about delivery times – which are well outside the normal ‘9 to 5’. Rail and air transporters also have specific requirements you’ll need to adhere to in order to use their services. The more sets of rules you are working to, the more complex the logistics role becomes.

Customs and country-by-country compliance regulations governing imported food products:

If you have years of experience in working with local and international ports, then working with them to get the results you want could be easy. However, with compliance rules changing on a weekly (and sometimes daily) basis, this component of your supply chain can be the thing of nightmares. Importing widgets may not be so tricky – importing food and beverage products on the other hand, are a different story.

Weigh up the time you are spending getting stock through customs, and ask yourself if it is time spent more productively elsewhere in your business. Remember that 3rd party logistics providers have a foothold in other countries and understand ever-changing laws and regulations. Delegating these relationships to a 3PL can work out cheaper for you in the long run – and save you a truckload of hassles.

Language barriers can also undermine efficiencies:

Are you confident you are being fully understood by international logistics organisations? Sometimes, until your stock arrives at its destination (in one piece, in perfect condition) you can never be entirely sure.

Put energy into forging healthy relationships with your key logistics partners that understand your products. And if you can, hire local; by doing so you’ll be giving your stock the best chance of getting to your customers in one piece. If problems arise, they can be dealt with promptly due to a shared mutual understanding of supplier/customer expectations.

To Outsource or Not To Outsource - The Bottom Line:

The more providers a company has operating their global supply chain, the more chance there is of confusion, misunderstanding, or difficulties in communication. There is also the increased risk of one of those providers facing financial difficulties, jeopardising your job of getting stock to your customers.

Here are our three 3PL gems for reducing risk:

• Where possible, avoid investing a lot of capital in something you are not sure will work

• Using multiple providers for specific links along the chain can cloud visibility – try to consolidate where possible

• Consider your key objectives, and work only with those who understand these objectives clearly (i.e. successful and on-time delivery to customers, speed to market requirements)

For more information on consolidating your supply chain for peace of mind and significant bottom line savings, call 0800 transtore, or visit our website at transtore.co.nz.

ENDS

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