Outsourcing your logistics: advantages and disadvantages | RAJA

Once a certain level of activity is reached, or in order to focus on their core business and develop their brand, some companies consider outsourcing their logistics. What are the benefits of such a decision? Should we favour “Make” or “Buy”? Does outsourcing logistics mean losing quality or gaining in performance?Find out the answers to these questions, as well asthe opinions of experts and logisticians This article was updated in December 2020.

1. What is logistics outsourcing?
2. How can you effectively outsource your logistics?
3. The benefits of outsourcing your logistics process
4. “7 benefits of outsourcing your logistics” – Christophe Leroy
5. Are there any advantages to insourcing your logistics?

qu’est-ce que l’externalisation de la logistique ?

L’externalisation de la logistique consiste à faire appel à un ou des prestataires logistiques qui prendront en charge l’ensemble de vos opérations logistiques, de la gestion des stocks à la préparation et l’envoi de vos commandes.

Concrètement et de façon très généralisée, cela signifie pour l’entreprise plus d’entrepôts et moins de salariés, et donc, a fortiori, une optimisation de votre stratégie transport et logistique.

L’externalisation : définition

Appelée également l’outsourcing, l’externalisation est le fait de transférer une ou des activités de son entreprise vers un prestataire externe spécialisé.

Cette sous-traitance permet à l’entreprise de se focaliser sur son activité première.

Comment externaliser efficacement sa logistique ?

Faut-il externaliser votre activité logistique ou non ? Avant de répondre à cette question parfois complexe,prenez

• Compare the costs, in-house versus outsourcing logistics: the fixed and accounting costs, but also the less measurable costs, what you could gain/lose in terms of quality of work for example;
• Take into account the cost of the transition time of your activity, and the cost of closing your warehouse;
• Do not hesitate to benchmark the different providers and compare their quotes;
• For your outsourcing to be effective, you need to build a real relationship of trust with your logistics provider: the idea is not to get rid of your logistics problems;
• You will also need to work together on your company’s plans, such as numbers, opening up to international logistics, etc.

The advantages of outsourcing your logistics process

The advantages of outsourcing are numerous. By entrusting your logistics to a specialist who will most certainly be more efficient, it allows the company to focus solely on its core business.Reducing risks for your employees and your companyOutsourcing your logistics allows you to reduce the potential risks, both for your employees and your company, and to free yourself from many constraints

• The maintenance or replacement of supply chain machines is no longer your responsibility;
• Management of driving hours and compliance with legal obligations;
• Management of accounting;
• Recruitment, training and replacement of staff in the event of absence;
• Administrative management of personnel (payroll, recruitment, dismissal, sick leave, etc.);
• Adaptation of the workforce to your seasonality and your peaks of activity without additional human resources costs (recruitment, training, taxes, etc.).

It is the best way to meet temporary logistical needs! Whether it is seasonal peaks (recurring need) or during an important transition phase during a logistical reorganisation (waiting for the opening of a new in-house logistical site)

Christophe Leroy, Supply Chain consultant at Suppleo Conseil

A focus on your businessA company must concentrate on its development (sales and product) and on its marketing strategy. But often, logistical problems take over, requiring such a high level of reactivity that companies have less time to develop the core business

It is the best way to improve the relationship between the service provider and the client. The reports are factual and in general, less emotional. Outsourcing allows for better data requirements and greater control.

Lucie Gibert, Logistics support & quality manager at Probikeshop.

the advantages of outsourcing are therefore numerous

• It allows the company to focus on its core business;
• Through its external service provider, the company benefits from an expert in the logistics sector, who can help it to improve certain parts of its supply chain, such as order preparation or deliveries
• This offers a potential reduction in logistics-related costs (your provider can sometimes save up to 10% in costs through its own partners and negotiated rates);
• It allows you to gain flexibility in relation to your sales (linked to the season or to your growth): your service provider can adapt more easily than you to your growth in activity;
• If it is already established in a country where you are planning to expand, an external service provider can help you improve the growth of your business internationally.

“7 benefits to outsourcing your logistics” – Christophe Leroy

Christophe Leroyahe now assists retailers with their omnichannel supply chain projects, working for Suppleo, a company based in the north of France. He concludes by sharing his list of the benefits of logistics outsourcing:

on the financial side

• By choosing to outsource its logistics, you make operational costs more variable: no threshold effect of a sharp rise in fixed costs linked to the opening of a site of your own
• In some cases, it is an opportunity to make savings on the transport of goods. In B2B, this will materialise, for example, by setting up pooling solutions (FM Logistic, for example, was a precursor in this area). In B2C, it will be a question of being able to benefit from the service provider’s transport contract

logistics expertise

• Supporting the growth of the company’s activity, while focusing on the business and not on logistics management
• Benefit from the service provider’s expertise in a product or business area (e.g. dangerous products, bulky products, co-packing services, precise flow management, etc.)
• To be able to take advantage, if necessary, of the mechanised infrastructures of the service provider, for example: the Cendrillon solution at ADS Rakuten, Scallog at BSL, the mechanised centre of Hem at Dispeo, UPL at Viapost/Morin Logistic..

organisational benefits

• To have a better flexibility and scalability of the logistics network.
• Access to warehouses/land in strategic areas or markets with a reputation for being difficult to access (e.g. Russia, China).

Are there

any advantages to outsourcing your logistics?

Our first piece of advice for entrepreneurs and e-retailers is to have a good grasp of your logistics. To have a clear vision of your flows. To do this at home, before outsourcing.

Florian Laudillay, Head of Sales and co-founder of ShopRunBack.

On the other hand, some companies are sometimes reluctant to outsource their logistics. What are the advantages of internal logistics?

• Better control of your logistics flows;
• Better control of costs at every point, provided you have the skills and resources in-house to deal with this continuous improvement;
• Better control of logistics quality if your company aims to differentiate itself from the competition with specific packaging, such as personalised packages, for example.

It is the best way to have logistics that are better adapted to your business. It obviously favours a more porous relationship between the logistics function and the other departments – an undeniable advantage, particularly in the management of after-sales. In terms of the overall management of the company, it provides a better balance between operational interests and customer relations. In short, by internalising your logistics, you can finally align the departments around a common vision!

Lucie Gibert, Logistics support & quality manager at Probikeshop.

Overall, internal logistics allow you toobtain better customer satisfaction, as you personally monitor the care taken in the preparation of your orders, and you can be more reactive in the face of any complaintsNote: companies with long-standing in-house logistics may shy away from the costs of change and transfer of activity, as these costs are not insignificant and need to be calculated.

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Tip: some companies choose to create a separate legal entity for their logistics activity in order to – among other things – benefit from subsidies for VSEs/SMEs.

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Purchasing equipment to limit the rate of MSDs (Musculoskeletal Disorders) in the supply chain can help you obtain state subsidies. Before making a decision, it is essentialtodraw up a set of specifications as well as a comparative list of costs for outsourcing versus insourcing.If your company lacks flexibility and logistical problems are polluting your core business, entrusting your logistics to a logistics services specialist may be a wise choice. On the other hand, if logistics is at the heart of your business, you will have better control over the flows internally.The 3 key points to remember

• Outsourcing your logistics allows you to concentrate on your core business: there are many logistics problems in the life of a company, and using an expert service provider relieves you of a large number of constraints, both technical and administrative.
• But internal logistics also allows you to better control flows and costs, provided you have the right technical and human resources.
• This issue must be considered and be the subject of specifications, as well as a precise comparison of the costs associated with outsourcing versus in-house.