[FR] Logistics outsourcing: what are the advantages? What are the points to watch out for?

Logistics outsourcing is a strategic lever for optimising your operations and boosting your competitiveness, but it can’t be improvised.

In this article, we take a look at the main advantages of outsourcing, while highlighting the points to watch out for. You will also discover a series of key questions to ask yourself to prepare your project with peace of mind.

A practical guide to making logistics outsourcing a real asset for your company.

What can you outsource in your logistics?

You can use logistics outsourcing to delegate all your logistics tasks, or just part of your supply chain.

To help you find your way around the various logistics service providers available to you, there is a classification of the different levels of service on offer:

• 1PL logistics(First Party Logistics): these service providers take care of the direct transport of your products, from the manufacturer to the point of sale.
• 2PL Logistics(Second Party Logistics): you can outsource all transport services by rail, sea, road or air.
• 3PL Logistics(Third Party Logistics): you can delegate your entire supply chain to your own warehouse – including storage, handling, order preparation, packaging, delivery and goods transport.
• 4PL logistics(Fourth Party Logistics): these are consulting firms that can carry out audits and provide advice on optimising your strategy. In particular, they can advise you on the software to use, or on the management of all your external service providers.
• 5PL Logistics(Fifth Party Logistics): this involves outsourcing your entire supply chain and logistics strategy based on automation.

Now that you know all the logistics services you can call on, it’s time to weigh up the advantages and points of attention of logistics outsourcing for your business.

What are the advantages of logistics outsourcing?

Whether you’re managing logistics for an e-commerce business, a mass retailer or any other company, the advantages of logistics outsourcing can be numerous.

By outsourcing your logistics processes, you can :

• Improve your logistics quality. Logistics subcontractors are specialists in this field, who can help you to put in place quality processes (such as personalised packaging or delivery with an optimum customer experience).
• Handle urgent orders, such as express e-commerce deliveries or deliveries of perishable products. In this case, you can use a logistics platform that specialises in fast turnaround.
• Coping with seasonal peaks in activity. You can use outsourced labour to cope with order influxes that are difficult to manage in-house.
• Gain flexibility in your logistics activity. Need to resize your operations without committing internal resources? Logistics outsourcing can help.
• Internationalise your business, without having a physical presence in another country. This is an ideal strategy for penetrating areas that are reputed to be difficult to access, such as China.
• Reduce your costs, thanks to massively negotiated rates from external service providers. This is particularly the case with carriers, who are often the biggest item of expenditure in a logistics budget.
• Access to advanced technology. Service providers often use cutting-edge tools(WMS, TMS, IoT, etc.) to optimise your flows. They also have real-time monitoring and data analysis technologies to improve your decision-making.
• Focus on your core business. If you’re not a logistics specialist by trade, by outsourcing, you can concentrate on developing your business.

What do you need to bear in mind when outsourcing your logistics?

While these advantages may be tempting, you do need to be aware of the disadvantages you face if you use an outsourced logistics provider.

First of all, bear in mind that outsourcing logistics means you lose control over your logistics flows. Your service providers will be responsible for some or all of your operations, and you will not have direct day-to-day control. So make sure you establish a genuine working relationship with your external service provider, so that they are transparent about their processes and the results they produce.

The consequence of the previous point is the risk to your corporate image if your service provider does not offer an optimal quality of logistics service. Take the time to co-create the processes with your service provider, to choose the packaging best suited to the customer experience you want to deliver, and to keep an eye on your customers’ satisfaction with the logistics implemented.

Finally, the risk of your company losing its autonomy is also significant. If your logistics subcontractor goes out of business, your logistics activity may come to a halt, either partially or completely. Make sure that your logistics subcontractor provides you with proof of its reliability and trustworthiness (support from customers in your business sector, performance metrics for previous years, etc.).

To find out more, read our article: “Internal or external logistics? How do you choose?”

The checklist of questions to manage your logistics outsourcing project properly

To make sure you get your logistics outsourcing project off to a good start, we’ve put together a checklist of questions you should ask yourself beforehand. It’s up to you to make an informed choice of service provider, and outsource without a care in the world!

Your needs and objectives

• What are the strategic objectives of your logistics outsourcing: reducing logistics costs, improving quality, increasing flexibility, etc.?
• What logistics aspects would you like to outsource: order preparation, transport, warehousing, returns management, customs, etc.?
• What are the volumes, frequencies and particularities of the operations to be outsourced?

Your choice of service provider

• What is the service provider’s reputation and experience in your business sector?
• Does it have specific expertise tailored to your needs (e.g. for sensitive products or regulatory requirements)?
• What are their technological capabilities (WMS, TMS, real-time traceability)?

Your costs and ROI

• What are the direct and indirect costs associated with logistics outsourcing?
• How can you assess the return on investment (ROI) in the short and long term?
• Are there any hidden costs (additional services, penalties, etc.)?

Your contract and the terms of the commitment

• Does the contract include SLAs (Service Level Agreements) and metrics to measure performance?
• Are the responsibilities and obligations of each party clearly defined?
• What is the duration of the contract, and what are the conditions for renewal or termination?

Collaboration and monitoring

• How will you communicate with your service provider (frequency of meetings, collaborative tools)?
• What are the procedures for reporting and resolving potential problems with logistics operations?
• How will you monitor your service provider’s performance and adjust processes if necessary?

Scalability and flexibility

• Is your service provider capable of managing fluctuations in volume (seasonality, future growth)?
• What is its capacity to respond quickly to unforeseen or urgent requests?

Impact on your customers

• What impact will outsourcing have on your end customers (in terms of delivery times and quality of service)?
• Is your service provider able to meet your customers’ expectations in terms of speed and reliability?

Compliance and sustainability

• Does your service provider comply with local and international regulations (customs, transport, environment)?
• How does it manage its environmental and social responsibility (carbon footprint, ethical practices)?

Risks and safety

• What are the main risks associated with logistics outsourcing (loss of control, dependency, etc.)?
• How does your service provider protect sensitive data and intellectual property?
• What mechanisms are in place to manage disputes or breaches?
• What happens if your service provider does not meet your expectations? Do you have a plan B?
• Have you considered hybrid management (partly in-house, partly outsourced) as an alternative solution?

Transition and implementation of logistics outsourcing

• What are the plans for the transition of activities to your service provider?
• What training or adjustments are required for your in-house teams?
• What timescales are envisaged for full and effective implementation?

Armed with these questions, you’re ready to start outsourcing your logistics operations, without cutting back on the quality of service you offer your customers or your costs.