10 Common Mistakes to Avoid When Outsourcing Logistics

When you think about how popular logistics outsourcing has become in the last few years, you might think that success is a sure thing. But, as some companies have learned the hard way, there are some mistakes to avoid if you want your partnership with a 3PL New Jersey provider to work.

Mistakes to Avoid When Outsourcing Logistics

By knowing what mistakes to avoid when outsourcing logistics, your supply chain can save money, time, and effort but:

·       Mistake #1 is hoping for too much. Rarely does an outsourcing project save all of the money that was expected. Don't let this news make you too sad, though. Even if you only reach 70% of what was planned, that's still a big win for your business. In fact, if the only reason you want to outsource logistics is to save money, you should be very careful. If your current operations aren't really inefficient, outsourcing may even make your logistics costs go up.

·       Mistake #2: Everything you want from your outsourcing partner should be outlined in documented procedures.

·       Mistake #3: Too much outsourcing, too soon. Plan for a "honeymoon" period and start by outsourcing a small part of your chosen process. If everything goes well, raise the scales.

·       Mistake #4: Without an exit plan—Ensure your provider's contract includes a method for disengagement if the collaboration fails.

·       Mistake #5: Outsourced procedures are still your processes. Micromanagement isn't necessary, but monitoring and measuring are.

·       Mistake #6: Treating the process like a buy – Outsourcing logistics is a long-term collaboration. Choosing a service based on pricing is rarely a wise move.

·       Mistake #7: Internal negativity and finger-pointing may undermine a relationship quickly. Change management and stakeholder buy-in are worthy investments.

·       Mistake #8: Rushing bids – If you plan to find a 3PL partner, complete a deal, and start outsourcing logistics in a few weeks, you'll likely be disappointed. An outsourced relationship takes four to six months to establish.

·       Mistake #9: Outsourcing strategy – Not every firm needs outsourced logistics. You should tell people what your goals are for outsourcing. If you don't, you'll treat it like a strategy when it should just be a tool for your strategy.

·       Mistake #10: Not realizing how important communication is: Once you start working with a 3PL provider, you must resist the urge to keep everything to yourself. Logistics outsourcing won't work if you aren't willing to share short-term forecasts, long-term plans, and, perhaps most importantly, important business data with your partner.

Avoid the ten mistakes listed above, and choose your 3PL partner wisely. This will provide your business with the best opportunity to make money without too much trouble.