Outsourcing logistics: Pros and cons

It does not matter if you are a manufacturer, an import/export trader or just someone needing complex logistics services at some point of your business. Whatever reason you might have to need the complicated 3PL (Third Party Logistics) operations, you will be dealing with a simple, yet complicated choice. Should you be outsourcing logistics operations, or prefer to implement those operations into your business core? None of the logistics services users have made an easy decision regarding this matter. This is why we decided to consult some of the top experts in outsourcing logistics to tell us the pros and cons of making each choice. 

Should you or should you not outsource complex logistics operations?

Do you prefer dealing with the logistics yourself, or outsourcing it?
What is your decision, outsourcing logistics or dealing with it yourself?

There are various operations you might be looking for to outsource. Dealing with each of them could be an easy thing for you and your company, or it could require outsourcing as the only reasonable solution. Given that life, and especially business, is not a black and white picture, there are always reasons for or against outsourcing logistics. Knowing the advantages and disadvantages of using TPL services should help you make your mind. But first, let us say a few words about different logistics services people commonly outsource:

  • Different types of transportation If not an importing or exporting oriented company, many companies decide to outsource this activity. One example is the transportation of exhibition cargo.
  • Storage facilities- It doesn’t matter if you’re not a company constantly using warehousing services. You should ask yourself whether or not the need for them would be more often in the future.
  • Moving services Are you someone changing job locations on a regular basis? This influences the answer if you should be outsourcing logistics necessary for this.
  • Cargo forwarding Do your products travel long-distance across the country, or even across the borders? If passing the borders, you might consider:
  • Customs clearance Leaving this logistics activity outsourced, or implementing it into your business?

We mentioned just those the most obvious logistics operations to outsource, or not. And what is following are the basic pros and cons of outsourcing the logistics operations.

The matter of labor: To outsource or not?

There are always two sides of each coin. On one hand, if you choose to outsource the demanding logistics activities, you will not need to hire extra labor force. It means fewer expenses on salaries, smaller company, not so many headaches regarding the taxes etc. So, simply, in case you need, i.e. a logistics service requiring strong workforce, a suggestion is to outsource.

On the other hand, what happens if you do choose to outsource activities? It, primarily, means less control! You are very difficult to be in charge of something done by someone else. I mean, as someone paying for the service, you would have the option to require the quality or the price that suits your needs. But, everything else is in hands of a company conducting the job. If dealing with some extra sensitive items, or something very valuable for you, you might take some time to think if outsourcing different logistics services is that good idea.

The expertise matter: Outsourcing logistics could bring instant experts

Take money into consideration only after securing quality logistics services
Secure quality logistics before taking money into consideration

How many times have you considered implementing a new activity in your company? But you got a strong headache just imagining what it would be like. Hiring new people from that specific area of business. In our example, someone specialized in some part of the logistics chain. Only, available true experts are very difficult, or impossible to find. So you would need to hire the trainers and pay all of them the trainers and the trainees until the newcomers reach the level of expertise you expect. So you commonly get closer to the decision of outsourcing activities of logistics that are too complicated. 

But, even if you do. How do you know if the company you are dealing with is a reputable and reliable one? Yes, there are recommendations, which are a good source of quality 3PL companies. (Speaking of which, you should consider hiring Kokusai Express Japan as one of the best TPL companies in Japan and also worldwide). But, the certainty is a completely another thing. Especially for entrepreneurs. People always looking to do everything by themselves if possible. Because, nobody else could do it as committed as we, people taking care of everything with our own two hands. If you are thinking like this, we suggest you read the previous paragraph again.

Managing higher volumes of inventory: In the long term, will you be able to do it yourself?

We suggest outsourcing if you can't manage high volume inventory
If you can’t manage high volume inventory, we suggest outsourcing

In the beginning, when a need for some additional logistics service, as transportation or storage, for example, appears, you could manage it with no troubles. Hiring some affordable company for each service. Or buying a few vehicles, and building your own storage facility. But what if the volume of inventory you should take care of rises exponentially? And what if you need some other part of logistics implemented? Such as customs clearance, in case you enter foreign markets (and hence also potentially need the services of international air freight forwarders). Well, this is actually why you should start thinking about using the logistics from the third party since you first need the logistics service out of your company business core. Given that you would be experiencing large expenses, and possibly the loss, even if your job grows at a high rate.

If deciding so, the matter of risks comes on the table once again. You would need to explore what companies are there. Hiring the best, or one of the best. Because you want to make an impression on your customers and clients. And you don’t want the delays in delivery or lowering the quality of products because of being badly managed. Therefore, if looking for such a company guaranteeing for the top logistics services, you would probably need to pay a little more in the beginning. But in a long term, what you get from those third party company logistics will outcome many times what you have invested. With Kokusai Express Japan, we guarantee that you will be happy with the investment from the very beginning!

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