While a well-planned logistics outsourcing approach can yield cost advantage; the very same approach if ill-managed can cost the company a lot.
Logistics outsourcing is without doubt gaining significance in today’s business world. Companies aim to focus on their key activities; while letting others focus on the peripheral activities. However, poor managerial decisions while outsourcing can eat up all the possible benefits. Some of the mistakes made while selecting logistics and storage partner include:
- Obsession with cost-reduction: Cost matters a lot, but it is not the only thing. Compromising on quality for the sake of improved cost figures is a common anymore repeat mistake.
- Site-related problems: The logistics partner must be in the vicinity or somewhere easily accessible to the delivery points.
- Market research: Poor market research yields less than optimal results, because companies end up contracting with a partner other than the ‘best logistics partner’.
Moreover, it is advisable to start by giving out small contracts first while contracting with a new logistics partner. It allows time to evaluate performance before moving to bigger contracts.