Should You Outsource, or Stay in House With Logistics?

It may be a bit of a stretch for some to comprehend the idea of outsourcing their supply chain logistics. This is because most people’s idea of outsourcing involves moving jobs overseas. However, outsourcing logistics only involves the hiring of a 3PL (third party logistics) company to take over some, or all, of the work done by an in-house logistics teams. Jobs such as procurement, inventory management and goods transportation are being taken over by 3PL firms, as companies whom own logistics departments are failing. Two major US companies are at the forefront of this trend, namely Justin Brand and Target.

The last couple of years have been a bumpy ride for investors in Target. Beginning with the huge data breach, which led to thousands of their American customers having their financial information compromised. This is on top of the unmitigated failure of the Canadian expansion, which produced $5.4 billion in losses for the company. Things may be on the turn however, and the optimism is due to their latest moves.

They are currently implementing a cost-cutting plan on an unprecedented scale, for Target at least, with the objective of saving $2 billion, and doing so while increasing the efficiency of their supply chain operation. They are now more focused than ever on streamlining their supply chain.

This involves:
• Dedicating the latest technology to the online sales outlets.
• Creating a user friendly service for providing information about localized product lines, including about location, demographics and climate.
• Identifying and focusing on the four main categories – style, wellness, baby and kids – in order that they can gain advantage in the areas which produce the highest number of purchases by shoppers.

It is claimed that Target will spend over $1 Million on developing their supply chain and related technology in order to boost reach and increase sales.

Justin Brands are also in the business of outsourcing their logistics, a company who specialize in Western style cowboy boots. In this capacity, they are outsourcing their logistics operations to 3PL companies in an attempt to bring more efficiency to their logistics operation. This allows the company to focus on creating the best product while others worry about the distribution.

Are you considering outsourcing your logistics? Contact Barcoding, Inc.

This blog post is based off of an article from Cerasis, a 3PL with a focus on technology and managed transportation services.

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