Delegating transportation services to reliable external companies is a business model that can boost efficiency, cut costs, and allow focus on strategic objectives.
How can outsourcing logistic processes contribute to your company’s success and strengthen its position in a competitive market? You will read about this in the following article.
Outsourcing services – what’s behind it?
Before we discuss the advantages that logistic process outsourcing brings, let’s explain what service outsourcing actually is. Simply put, it is a process associated with transferring certain functions, processes, or organizational activities to an external company, specialized in providing these services.
We can divide outsourcing into several tasks as it can cover many areas of a company’s operations. It’s the client who decides which areas to include in the cooperation. Popular areas handed over to external companies include accounting and finance management, carrying out marketing and advertising activities, human resource management, and managing the logistic processes.
What are the characteristics of transportation service outsourcing and what distinguishes on-demand transport?
What is outsourcing in logistics and transport?
Operating based on outsourcing offers many benefits, such as lowering operational costs, saving time, greater flexibility in adjusting the scope of activities to changing needs and market requirements. This allows organization to focus mainly on company’s core goals. The same applies to transportation service outsourcing, which may include comprehensive management of logistic processes and selected functions related to transport, such as:
- Management of transport and delivery of goods to customers
- Supply chain coordination, including warehouse management and route planning
- Fleet management and maintenance
- Handling reverse logistics, which includes planning, implementing, and controlling the return flow of used products or utilized materials and packaging
Of course, outsourcing can take a formalized form, based on a long-term contract, or it can be an on-demand model. It is a type of cooperation that allows companies to use transportation services whenever the company needs it without necessity of signing a contract.
7 benefits of outsourcing transportation services
All types of outsourcing have numerous advantages important for every industry. Below we will focus on the benefits of outsourcing that are most relevant to processes of transport and logistics.
Cost reduction
Undoubtedly, one of the most significant benefits of transportation service outsourcing is the reduction of expenses related to managing logistic processes. Carrying out such tasks internally would involve investing in a vehicle fleet and bearing the costs of its maintenance, hiring and training drivers, dispatchers and logisticians, purchasing fleet management and transport tracking software, as well as paying operational costs.
By outsourcing transportation and logistics tasks to external companies, you can significantly lower the costs of running your business. Especially since transport companies, thanks to their industry knowledge, have an advantage in negotiations with fuel suppliers, service providers, or vehicle suppliers.
For instance, in the case of on-demand transport, transport companies consider all factors of a given day to offer clients the highest quality at the most competetive price, adjusted to current conditions.
Partnership with transport-specialized companies also helps avoid costs connected with adaptation to current transport regulations and legal requirements. It helps reduce risk of potential fines for overloading or lack of customes clearance. Companies specialized in transportation need to be up to date when it comes to every law change that may influence transport.
Additionally, transport provider can complete several loads during one route (shared truck space – part-load), which also helps reduce costs.
Saving time and increasing efficiency
An incredibly important advantage of outsourcing is also accelerating processes related to transport and delivery. Without specialized knowledge and experience in transport and logistics management, it would be difficult to effectively plan routes, optimize delivery times, and take quick and effective action in case of potential problems.
Furthermore, you don’t have to engage resources in organizing transport, searching for available carriers, negotiating conditions, tracking deliveries, monitoring travel time, identifying potential delays, or preventing them.
Customer satisfaction and building competitive advantage
Naturally, fast and efficient delivery translates into customer satisfaction and increases their trust in the company. A satisfied recipient – both the end customer and the B2B recipient, is much more likely to make repeat purchases and use services, as well as recommend the offer to others. In this way, you can gradually gain a competitive advantage, which is extremely important in increasingly saturated markets. Of course, high-quality service requires cooperation with proven partners, as direct control over the way services is performed in the outsourcing company may be problematic.
Limitations on Maintaining Warehouse Space
A Transport Partner can also help company limit or even completely eliminate the cost connected with warehouse space rental. Streamlining the flow of goods means that goods do not unnecessarily stay in warehouses, which allows for further cost reduction. It is worth noting that in many cases, just-in-time deliveries play a key role, perfectly tailored to the production line plans.
Express delivery of goods, even on the same day, often prevents very high costs associated with production line downtime. The situation is similar with cross-border deliveries in e-commerce, where products destined for one country are collected in the main distribution centre and then delivered directly to the logistics operator. This operator, in turn, delivers the shipments to the final customers or pickup points. On-demand transport solutions provider is a perfect choice for this process.
Avoiding Staffing Issues
Companies deciding to outsource transport also appreciate the fact that they avoid problems related to employing drivers, couriers, and other workers needed to implement logistic processes. This is especially significant as many companies are struggling with serious staff shortages in this area.
It is estimated that there is currently lack of about 300,000 professional drivers in Europe. Therefore, a company providing outsourced services in logistics and transport provides such human resources as are needed at any given time to carry out specific tasks, responding to current demand.
Ease of Commissioning Transport
A huge advantage for entrepreneurs using outsourced transport services is the ease of commissioning transport, for example, via the Quote&GO service. This solution allows you to order transport without logging, moreover, with the possibility of making a payment even up to 14 days after delivery.
How does it work? Just enter the pickup and delivery address, choose the type of car with which transport is to be carried out, accept the service quote, which appears within 5 seconds, and order the service. The Transport Partner will pick up the goods within a maximum of 24 hours and deliver them immediately to the specified address – in 37 European countries, even on the same day!
At the same time, a company using transport services receives professional support from freight experts, the ability to monitor shipments around the clock, comprehensive insurance up to 300,000 EUR, as well as a delivery receipt, sent within 24 hours from the delivery of goods to the unloading place.
High Level of Security
The guarantee of a high level of security is also significant, both for the transported goods and for the transport movement itself. This is the result of both the experience of professional drivers and the quality of the technical facilities of outsourcing companies specialized in providing transport services. Experienced transport companies, thanks to carefully implemented procedures, can prevent theft in logistics.
This is important because, according to TAMA (Transported Asset Protection Association) data, there are hundreds or even thousands of crimes related to loads in every European country every year!
From an external company, you can also expect to take full responsibility for the transport carried out, proper securing of loads, choosing safe routes, the ability to track transport online, as well as ensuring controlled temperature during the transport of goods. Specialized departments that are in contact with drivers around the clock ensure maximum safety.
Logistics Outsourcing in Practice
Knowing the benefits of outsourcing in logistics, it is worth considering when to use it and who benefits the most from it. Without a doubt, it is the right solution for any company that does not have extensive knowledge and experience in managing transport and logistics.
It is also an optimal way of operating for companies that do not want to invest their own resources in a fleet of vehicles and employees who could carry out tasks related to transport within the company.
Logistics outsourcing is also a solution for companies that have their own logistics departments or have signed contracts with forwarding companies, but at certain moments like ad-hoc situations (reloading needed, express transport etc.) the standard resources are not sufficient.
Cooperation with external companies can particularly benefit companies that need to transport unusual or oversized loads, such as machinery and construction materials, appliances, furniture, or car parts.
Cooperation with external companies providing transport is also irreplaceable in the case of occasional shipments, but also in the situation of irregular demand for transport. Outsourcing allows for flexible scaling of services in response to current demand.
This makes an external company providing transport services, especially on the basis of on-demand transport, a great partner for small and medium-sized companies, as well as businesses operating in the field of e-commerce.
Moreover, such outsourcing companies can support large freight companies, as subcontractors.
Thanks to cooperation with a reliable outsourcing company and thus, using external resources, you can support your company in implementing the accepted mission, improve customer service, or reduce cost connected with additional employment. And thus, work more efficiently and economically, focusing on what constitutes the main subject of activity.
In conclusion, outsourcing part of the tasks outside the company, including logistics services, has numerous advantages. It is worth paying special attention to on-demand transport, which provides immediate availability, fast service execution, a convenient form of cooperation while reducing costs at the same time.
Of course, there are also certain downsides to outsourcing. Negative consequences, such as the need to give up full control over selected processes, the risk of a decrease in service quality, or the possible leakage of data and the threat to their confidentiality.
However, the disadvantages of outsourcing can be eliminated by cooperating with a trusted, verified outsourcing company. That’s why more and more companies are choosing this model of operation.
If you too need support from a reliable transport company, get to know the verified transport service – Quote&GO – trusted by companies like Gefco, Zalando, Zara and many more.
