Outsourcing Logistics and Supply Chain Can Help Boost Profits For Start-up and SMEs
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While the significance of logistics in the success of a business cannot be undermined, for most SMEs and bootstrap start-up’s, logistics demands a heavy investment of monetary and human resources. On the other hand, a competitive marketplace driven by innovation and customer centricity, demands that modern businesses focus on their core competencies in order to survive and flourish. Apart from focus on core competencies, having experts handle the ancillary business functions, is also becoming the need of the hour as success for modern businesses is driven as much by core competencies as timely and efficient service delivery.
Logistics and Supply Chain is one such business function that is evolving as a service oriented competency, moving away from being the one of the core traditional Business operations. This has made a huge impact in the success of several Start-up’s and SMEs, who have leveraged the competent services of 3PL and 4PL service providers so as to enjoy leaner operations, efficient results and save on costs.
With the rise of global marketplace and the need to reach far-flung destinations within stipulated time frames, modern businesses today are seeking to adopt an integrated and organized logistics approach. As a result, the need to outsource their logistics activity has become vital for the evolution of most sectors, especially considering the presence of an organized and integrated ecosystem of contract logistics service providers that are now available.
Worldwide, since the early 21st century, there has been a large shift in outsourcing logistics and, just in the USA, spend on Outsourced Logistics Services have grown 800per cent, from $10 Billion in 2003 to $80 Billion in recent times. Commonly referred to as third party (3PL) or fourth party logistics (4PL) players, the contract logistics services in India today, has evolved from the traditional transport and storage facilitators to modern consultants for end-to-end supply chain engineering for business.
Some key benefits of outsourcing to external Logistics partners can be understood, as under:
Save Resources: Led by a well-trained and specialized team of experts, 3PL services ensure in-house resources can be diverted to more specialized functions, enhancing core competencies
Save Costs: Compared to in-house function, 3PL service providers integrated and superior logistics services backed by tech-enabled infrastructure, at a relatively reduced cost
Leaner Operations: Having an outsourced the logistic function, In-house supervisory functions are replaced with automated reports and transparent processes which offer easier management of the logistic flow
Enhanced Effectiveness: 3PL service providers ensure greater effectiveness of key functions like timely shipments and desired results that drive overall business growth
Enhanced Efficiency: Modern, standardized and professionally managed 3PL networks ensure efficient logistics processes that are result oriented and impactful
Extended each: With a pre-established global network, 3PL partner can offer businesses a ready access to international markets, facilitating enhanced reach and expansion of services
3PL firms today have developed competencies in the modern management of logistics processes, along with an extensive network of information and communication. Several 3PL and 4PL players are well equipped to offer extensive service to clients, including access to a pre-existing supply network which can be used across industries, along with automated supply chain offering services from inventory management to loading goods in transporting vehicles for last-mile deliveries.