As time has marched on in this large and wonderful world of Logistics, outsourcing has developed from services provided by a few 3PL giants to a community of many businesses that come in all sizes, covering a variety of areas, offering a wide range of logistics outsourcing options for their clients.  This widening of Logistics outsourcing choices for companies has not only provided countless options for almost every part of their operations, it has also made their decision; if to use an outsourcer, what to use an outsourcer for and finding the right fit, a daunting task.  As more companies warm up to using logistics outsourcing as part of their best methods of operation they discover that the path to finding just the right provider can actually be the equivalent of taking a stroll through a mine field.  Why? 

It stems from the fact that so many are jumping on board the outsourcing provider band wagon.  Some service providers have very specialized and focused expertise, while others have a much wider and deeper offering of experienced management that can address many of the needs that companies may want to explore.  That isn’t to say that providers with limited experience cannot grow and develop into experts in areas other than their core competency, it just means that the expertise may require development.  Once the first hurdle has been cleared by answering the question “which service provider offers what I require?” the second hurdle becomes answering the question “What do I have to pay for the level of expertise I require?”  “How does it compare with the cost to develop the talent and physical space to do it in-house?”

As I see it, any company can developed processes to be handled internally.  But many cannot develop them economically.  When processes are designed to work in-house, most managers are faced with a couple of expensive limitations.  The first is the initial and ongoing investment in space and equipment.  Second are the limitations of working with-in the guiding personnel policies of that company.   More so every day, companies are finding these combined costs to do some functions in-house vs. the cost to use outsourcing services are not fiscally responsible.

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So what should you be looking for?  There are quite a few things to consider when deciding on the right outsourcing service provider.  Most outsourcing providers have the basics, but what are the real make it or break it components of a service provider?

Experienced Management.  Because of the growth in the outsourcing sector, you can easily find many talented managers with a wide range and depth of experience in the logistics arena.  Many of these managers have gravitated to Outsourcing companies that provide the ability for them to “Use their talents”  I’m sure the loss of this management talent is considered a bad thing for many companies but for the outsourcer and their potential clients it is a real jackpot. 

Ability to measure the results vs. the requirements.  All processes have milepost spots along the way.  The ability for an outsourcer to develop and install a sharp analytical process which include spot checking critical points in that process are key to assuring requirements are being met, and frankly it will keep you from being up nights worrying about the results.  I know from many years of experience that being assured of consistent results is irreplaceable. 

Reaction Time.  The needs for outsourcing services can materialize like a severe storm, at a moments notice!  The abilities of an outsourcing firm are greatly varied, usually depending on the access that firm has to have well trained workers ready and available to do the job.  A sense of urgency is in many ways, a defining factor for most service provider, in any segment of the business world and especially logistics.  Today in this ever changing, easy come, easy go world we live in, we deal with many commodities that have a short shelf life which cannot be shortened even further by delays in reaction time on the part of the outsourcer. 

Communications.  Not just talking about stuff, but communication to assure that a process is on planned completion and communication of exceptions to the plan.  You can ill afford to wake up one morning to find that your selected outsource provider is telling you about a problem that there is now no time for course correction and still meet the commitments. 

Flexibility.  Many outsource providers have committed large amounts of capitol in equipment that will run faster and jump higher than anyone else, but only if the box is 12”X12”X12”, as an example.  I clearly recall many years ago that one of Sam Walton’s key philosophies on Distribution was that a warehousing or distribution operation had to “Perform at the same speed and agility, regardless if they were handling riding lawn mowers or bulk BB’s”.  He made that statement many years ago, but he couldn’t be more correct today.  An outsourcing service provider must be able to address any and all needs. 

Outsourcing providers with strong partners.  Especially in an environment where the work is multi leveled such as; free standing or countertop displays or retail display cartons, where the scope includes printing and die cutting packages, filling those packages with product, shrink wrapping, fulfilling orders of those packages and labeling & shipping.  In this example having a strong team of printers, product suppliers and carriers are all key players in this type of project having the required results. 

What intangibles should you consider?  Or the “Sure would be nice to have’s”

·       The ability to meet regulatory or compliance requirements. 

·       Process improvement skills.

·       Measurements.

·       Another source of ideas for best methods.

Just a decade ago logistics outsourcing was considered an emerging industry.  The rapid growth over that decade has brought us to a point where over 60% of Fortune 500 companies report to use logistics outsourcing providers.  As firms put even more focus on core competencies, creating the need for them to examine the use of outside service providers for what is considered support activities, the rapid growth will obviously continue.  Make sure you are focused on finding just the right outsourcing service provider for your specific needs.

Gary Barnett, Director of New Client development, InserTec, Indianapolis, Indiana. Gary has been a Logistics Manager for over 30 years serving in a wide range of capacities with such companies as Wal-Mart, Target, Handleman Entertainment and most recently with InserTec, a Logistics outsource service provider in Indianapolis, Indiana. Besides facility responsibilities for the companies Gary has worked with, he has also served in leadership roles on many projects and committees, garnering many awards and special recognition, most recently being awarded Executive of the year with Handleman Entertainment. To learn more about InserTec please visit their web site at http://www.insertec.com
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