Due to the nature of our sales cycle at KDL, our sales team spends the bulk of their time teaching and educating prospective clients about the logistics industry and answering a lot of questions. Much like payroll, human resources and IT, there are a lot of nuances and regulatory considerations in shipping that many companies just don't have the in-house skill set or the right technologies in place to stay ahead of the curve.
Many companies think outsourcing logistics or some part of this department has to be this big upheaval in the way they are doing things. But they are inevitably surprised when they learn that KDL can plug-in easily to add support along side their existing operation to bring more visibility, stream-line redundant processes, identify easy areas of consolidation or bring in technology that allows a company to collaborate internally and externally like never before.
For companies thinking about how outsourcing logistics or logistics support, we've put together a list of the ten most common reasons why outsourcing this area of their business makes perfect sense.
With the ups and downs of the economy, companies need to be able to expand or downsize quickly. But with the way the labor laws are, that’s easier said than done. Outsourcing allows companies to use a 3rd party's economies of scale to adapt faster to the expanding and contracting customer demands.
It can take years to build a well polished logistics department. And it’s costly to train people, having them leave, then train new people. By outsourcing an aspect of logistics, companies can get right down to the task at hand without having to build the perfect team.
8.) Peace of Mind
The thought of outsourcing can be unsettling. Companies often feel relieved once they get something in place. Contracts protect both parties, and remove any unsettling human interactions when a company is forced to lay off the sales manager’s brother-in-law. A 3rd party can be held accountable for poor service or negligence with a legally binding agreement – which makes outsourcing an attractive alternative.
7.) Freeing Up Internal Resources
Logistics is typically an area of a business where there are a lot of menial tasks that have nothing to do with the core focus of the company. Why pay salaries to have someone spend their time with data entry or matching paper work? People are inherently smart so why not pay people to use their brains to focus on what’s important to the business. By outsourcing basic functions, companies free up time and capital to focus on growing market share instead of pressing buttons.
6.) Minimizing Risk
Logistics is more complicated than it needs to be. With that said, many companies do not have the skill set to navigate the complexities of all of the different modes, rate structures and nuances that weave through this part of a business. Companies can make mistakes that cost them thousands of dollars every week and don’t even know it. Outsourcing this to the experts can remove the liability of costly amateur mistakes.
5.) Happier Customers
Most companies admit handing off functions like IT, HR and financial services makes sense because those areas are not core to their business. When they realize that logistics is also non-core to their business and decide to allow the experts handle it, service gets better and customers are better taken care of.
4.) Tax Benefits
Not having to dish out cash for payroll taxes, Social Security, Medicare, unemployment insurance, workers comp, etc. is always a good thing. When you are paying for services, you have none of that.
3.) Less Regulatory Concerns
The transportation world is littered with regulatory requirements that companies don’t know until they get hit with a big fine or worse yet a forced shutdown. Just recently, a customer called me in a panic that his truck wasn’t able to cross a state line because he needed a permit for the over-sized truck and it needed to be filed in-person and the approval process took 24-48 hours. Oh, and there were five workers with hefty hourly rates that they were going to have to pay to do nothing until the truck got there. When the experts are in charge, these types of concerns are handled ahead of time.
2.) Better Focus
Without having to exert energy in logistics, companies can use their skill set to work on what really matters inside their business, handling more duties and getting more done to move the needle for the organization.
1.) Cost Savings
Like it or not, money is what makes this world go round. Outsourcing the logistics function to KDL not only brings a ton of improvements and visibility but also typically puts big time dollars back into pockets of its clients by removing costs and driving savings. This new found money is gravy to the profitability of the company because there was no cost of sales to get it done.
If this is something your company is seriously looking into, I suggest you download the case study below.
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Please do not hesitate to contact us if you'd like to talk more about your company and what opportunity exists to increase its gross profits by partnering with KDL.