Outsourcing - 3PL

In-source or Outsource?

This decision is critical to your distribution and supply chain success. Facilities and technology investments are major, especially over the time required to modernize existing warehouses, upgrade software systems, reposition your network and/or relocate to a new distribution center(s). In the case of outsourcing freight management, this too may involve new technology and integration but from 3PL selection viewpoint this implementation would be a quicker process.

Generally, outsourcing usually requires a major commitment from your people resources to manage and implement thus the process is usually supported by expert consultants.  In this regard, outsourcing also requires a long term commitment thus deep experience to guide clients is a big benefit.

Should your new direction be a major in-sourced “buy” project or an outsourcing initiative? Deliberations would likely be about level of investment, best use of cash, maintaining total control over operations and service or giving up a lot of control. We can help you select the best path forward.

 

Our work with management begins with examining current costs in detail usually based on two years of history.  We build a model to compare your historical costs to what your future costs may be.  This is after we assess your distribution operationally, identify opportunities that can be addressed during a new project including facility engineering, technology and consideration of automation.

 

Outsourcing of transportation management can bring many execution benefits, potentially lower freight costs and improved visibility to shipment delivery status.  Of course the new software benefits would be available should you purchase the software in order to manage your freight in-house.
 

Whatever your objective, in-source or outsource distribution and/or transportation management, there are many steps to be taken such as:

 

  • Draft a project plan and an initial budget

  • Compile all relevant costs

  • Conduct an assessment of operations and customer service requirements

  • Determine at a high level what operational and customer service improvements will be needed

  • Establish a forward strategy for distribution

    • Use existing facilities or new ones?  How many? Should physical locations change?

    • Is there a need for facility redesign and/or new site selection?

    • What is the labor supply and wages in new site locations compared to existing?

    • What will the new freight costs be compare to existing?

    • What new investments would be required, i.e. technology-systems (WMS) - automation and implementation costs?

    • What is the plan and cost for new systems connections or integration including AI for data collection?

    • What distribution/warehouse metrics will be required?

    • If outsourcing selected what needs to be negotiated?

  • Establish a forward strategy for transportation/freight

    • Understand existing processes (mapping), systems and requirements.

    • Determine strengths and weaknesses of current model.

    • Assess transportation modes for effectiveness and efficiency.

    • Review carriers utilized and company fleet if it exists including value derived.

    • Assess value of any existing transportation systems; shipment tracking-visibility, software integrations for data collection.

    • Determine need for modern systems like TMS.

 

Whatever the nature of your in-sourcing-outsourcing project, solid Project Management with well-conceived plans to deliver the outcome you want are essential.  This is where TranSolutions excels.

WANT TO KNOW MORE?  CALL US TODAY AT 888.652.9590

© 2020 by TranSolutions Consulting LLC

1.888.652.9590

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