Outsourcing logistics has become possible with the rise of organized logistics partners!
Businesses are no longer asking whether they need to outsource logistics as they know it’s the future of doing business. Rather they are asking how to do it, where to do it, and to what extent.
This is due to increased specialization and technology offered by the 3PL or 4PL logistics which reduces uncertainty and cost.
This is especially true for newly established companies rapidly growing in their business. As they expand to newer outlets, they need to increase their warehousing facilities, inbound and outbound facilities. That means a huge burden of hiring an extensive team of workers and training them along with heavy investments to ensure smooth management of the supply chain.
How Outsourcing Addresses Logistics Loopholes
| Monthly expense of owning a tempo/ vehicle | ||
| Driver salary | fixed salary | 20,000 |
| Driver Other expenses | OT, Diwali, PF, Leaves, Phone recharge, Uniform | 2,300 |
| EMI | 12,000 | |
| Interest on Capital | 8% interest – also have deducted Resale value from down payment plus insulation and ac fitting | 1,300 |
| Fuel | CNG + petrol | 12,000 |
| Vehicle Insurance | 25000 is annual premium | 2,083 |
| Maintainance | Tyres, Repairs, Oil, Filter, service | 1,100 |
| RTO Charges | ad permit, speed governor, PUC, fitness, speed driving, no parking | 1,150 |
| Alternate transport | vehicle breakdown/ driver absenteeism | 5,000 |
| Accident Repairs | once a year factored expenses not covered by insurance | 2,500 |
| Van parking, washing | deep cleaning for food safety and daily cleaning | 1,200 |
| GPS tracker | 400 | |
| Total | 61,033 |
Monitoring your deliveries and assigning tasks to deliver boys and drivers and maintaining their workflow is the biggest hurdle for a business. When it’s done in-house the logistics costs such as owning an AC van can be as expensive as 61,000INR per month. Please see table for reference.
Also, every domain or new outlet that opens has a specific need which has to be tackled quickly. These specific requirements can’t be met by an in-house logistics facility. In such a scenario, outsourcing it to logistics companies that cater to your needs is the best possible outcome.
Logistics Cements Your Business Reputation
Apart from the basic reduction in cost and enhanced efficiency, outsourcing logistics has the added advantage of maintaining the quality and brand image of your company.
Most companies think their worries end with the delivery. However, that’s just the beginning of it. The real problem starts with reverse logistics which often goes unaccounted for if you have an in-house logistics facility.
A logistics company is equipped to deal with the cost of reverse logistics. Moreover, they can easily scale up or scale down the services in minutes to accommodate immediate changes which are quite difficult for an in-house facility.
Furthermore, in this digital world, a bad review for a slight delay in your orders can furnish the reputation of your company. Since 97% of consumers rely on reviews and ratings to opt for products from specific companies, this can be a huge setback. Nearly 74% of consumers shop from their tried and trusted companies.
So to retain your customers and to attract new ones logistics is the key.
Businesses that use 3PL logistics partners have efficiently reduced their costs by 75% and 91% of them say that they have a happy relationship with their logistics partner.
