There are many reasons for outsourcing your logistics. Fluctuating demand or seasonality, risk management, efficiency gains, focusing on core business. There are different ways to outsource your logistics. You can outsource to a logistics partner that will use one of its own locations to run your warehouse operations, called contract logistics.
Another option is to find a logistics partner willing to take over your operations, including warehousing or specific logistics flows within your factory. This is on-site logistics. Considering the current challenges, this is a trend on the rise. Let me take you through some of the key benefits of outsourcing your logistics.
Benefit 1: Human Resource Management
Good logistics workers are hard to find, and when you find them, they can be hard to retain. Staff turnover is high, especially for workers with specialist skillsets such as forklifts or reach-truck drivers. The constant search for new workers, onboarding, and training people is costing companies a lot of money that they can’t spend on further developing the skills of existing workers. Automation may come to mind, but clearly, that is not always possible either.
A logistics service provider with an extensive footprint and multiple operations has two main advantages over companies that run their own logistics operation: scale and flexibility. With multiple logistics operations in an extensive network, the logistics service provider has many logistics workers, which it can leverage across its different logistics operations. They also benefit from larger contracts with temp agencies. Because of the size, they can negotiate better rates as opposed to companies with a single operation. Another benefit of outsourcing your logistics operation from a human resource point of view is that you make labour costs variable instead of fixed costs. Potential risk can be the cultural aspect, but when you have a mature service provider, they will ensure to adopt the cultural values of its customer.
Benefit 2: From CAPEX to OPEX
Every factory or warehouse environment has the burden of large capital expenditure, blocking working capital. Forklifts, reach trucks, pallet trucks, these all need to be bought or leased. Logistics service providers can leverage material handling equipment across multiple operations. A logistics service provider has a better bargaining position with material handling equipment manufacturers because they need many more machines than a company running a single logistics operation. Whether they buy or lease them, the same goes for the maintenance contracts.
Benefit 3: Continuous Improvement
One way to bring down the costs of your logistics operation is to increase its efficiency. Continuous improvement is one of the best ways to do this. Continuous improvement is not a trick, but it requires training, skills, and experience. It looks at all the processes in your operation and optimises these, removing waste and making them faster and more efficient.
This can mean running the same process with fewer workers, less equipment, or less floor space. A good logistics service provider employs continuous improvement specialists to drive down costs and increase efficiencies across their operations. A company with a single logistics operation can do the same, but it will not leverage the knowledge and experience gained from multiple operations.
You can take continuous improvement one step further and not only improve a single logistics operation but optimise a complete network design or look at inventory management across multiple sites. At Ahlers, we use a combination of classic continuous improvement tools such as Kaizen and state-of-the-art data analytics software and algorithms. We have a team of design specialists and data analytics experts daily optimising processes, warehouse design, and footprints.
Benefit 4: Systems
There is nothing wrong with using your existing systems if they are the right fit for your logistics operation. A logistics service provider that takes over your operation, through warehousing logistics or on-site logistics, should be able to work with your existing systems. There are, however, advantages to contracting a logistics service with its own proprietary systems, like Ahlers.
It is far easier to update or change a system if changes in the logistics operation require it. One of our customers that runs on the Ahlers WMS (warehouse management system) changed their operation from pallet picking to box picking. Within two months, we updated the WMS with the new functionality. Recently they added piece picking, which we were able to program and implement within a month. The same goes for human resources, equipment, and continuous improvement. We can leverage our experience from multiple operations that run our systems.
Outsource your logistics operations to Ahlers
We have you covered in human resource management, equipment, continuous improvement, and systems. We run and continuously improve your logistics operation, whether it is a warehousing and distribution operation or factory logistics. The benefits of outsourcing your logistics to Ahlers:
- Center of Excellence: the specialists from our Center of Excellence will ensure a smooth transition and implementation of your processes in a new location, if applicable. They will not stop there and stay involved in continuous improvement processes whilst we run your operation.
- Leveraging its Network: we have an extensive network of warehouses and on-site operations across Russia and Ukraine, enabling us to capitalise on this, both from brick and mortar, people, equipment, but also knowhow and sharing best practices across operations.
- People: we have a skilled and experienced workforce. Our company culture, benefits package, and relationships with temp agencies ensure we always have the right people available for the job.
- Systems: our in-house WMS is so good we sell it separately to companies that don’t want to outsource their logistics but do want excellent warehouse management software. The same goes for our data analytics software, which is in high demand to serve the centre of excellence teams and advise other companies with premium strategic consultancy.
Didier Duponselle is Business Unit Director at Ahlers. Ahlers provides state-of-the-art logistics support in sustainable supply chain management, warehousing, projects & machinery logistics, secured transport, trade logistics, after-sales services, and data analytics. Their extensive experience and knowledge of local markets make Ahlers your ideal partner for business in China, Russia or the CIS countries.
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This blogpost is sponsored by Ahlers