It’s no secret that the world’s most successful companies, such as Hewlett-Packard, Apple and P&G, owe much of their success to logistics and other business process outsourcing.
Strategic decisions to outsource logistics and manufacturing can affect capital costs, operating costs, revenue growth, customer service and human capital.
Outsourcing can enable workforce reduction, freedom from restrictive labor environments, logistics management and technology issues, expanded geographic coverage, operational flexibility, reduced cycle times, improved responsiveness and cost reduction.
In their search for increased competitiveness and success in the global marketplace of the twenty-first century, many companies are following the trend of increased outsourcing, or they are rationalizing their existing outsourced logistics or manufacturing operations to better leverage spend, reward strategic partners and reduce the complexity of too many outsourced relationships.
Our logistics consultants are your first points of contact for learning how you can leverage the power of third party logistics and manufacturing providers.
Logistics Outsourcing Solutions
Tompkins International helps companies establish logistics and manufacturing outsourcing relationships. We guide you through the steps necessary to identify, evaluate, select and implement third-party relationships.
We establish the outsourcing relationship needs, and then provide the expertise to find and choose the right vendor, to outline the service parameters, to establish service agreements and to manage the partnership for long-term success.
We also work with companies needing to realign existing outsource agreements for greater savings and increased performance.
Our solutions ensure that you realize the maximum benefits from your outsourcing logistics service provider partner relationships.
Logistics Outsourcing as a Core Competency
Outsourcing is a management tool that shifts the organizational structure of companies and a business transformation process that can create great opportunity for improved performance. However, it can also create the opportunity for problems, issues and even failure if poorly pursued.
In the search for core competencies and non-core competencies to outsource, it’s easy to overlook the fact that outsourcing is itself a competency.
As such, it must be approached with business process knowledge and outsourcing processes experience to reap its full benefits. A company with outsourcing as a core competency can effectively develop outsourcing relationships and manage its outsourced functions.
Read Outsourcing: Solution or Setback? for a step-by-step guide to making outsourcing a core competency.
Logistics Outsourcing Risks
There are huge potential benefits from outsourcing. There are also huge potential risks associated with each of the four major steps in outsourcing: Strategy, Selection, Implementation and Management.
- Outsourcing strategy is the process of determining whether or not to outsource and, if so, what to outsource.
- Outsourcing selection is the process of finding and evaluating potential outsourcing partners.
- Outsourcing implementation is where the relationship between outsourcing partners is defined and established.
- Outsourcing management is the monitoring and evolution of the ongoing outsourcing relationship.
Each step comes with its own unique set of risks, which, if addressed, will go a long way to making the benefits of logistics outsourcing reality.
Read 40 Risks to Establishing an Outsourcing Relationship (Acrobat PDF).
The percentage of logistics and manufacturing activity provided through Contract Manufacturers (CMs) and Logistics Service Providers (LSPs) is on the rise. With many more companies evaluating the viability and the benefits of outsourcing relationships, it is increasingly important to know just what you’re getting into with an outsourcing relationship.
During its life cycle, the outsourcing relationships will form, adjust and reform. All parties involved must plan for this evolution and the changes it will bring.