Friday, November 04, 2005

To Outsource, or Not To Outsource...That is the Question!


In warehousing and transportation operations, anyone can buy trucks, rent a warehouse, fill it with racking, forklifts and even the latest logistics systems…and still end up with a dysfunctional and failed operation.

How can your organization dodge this classic ending to a very old story? Here are a few suggestions:

Foresight: Taking into account all available knowledge and data, develop a vision and understanding of the task or operation to be planned. Then, stick to the vision and communicate it in a collaborative manner throughout the organization.

Qualify: Gather all available data to define requirements. They may include volumes, dimensions, weight, item counts and other related details. Adding up these factors leads to a cost/result, both quantitative and qualitative. Don’t get caught up in the current flurry of metrics, measurements, etc…just keep it simple. This will help the communication, and buy-in of the vision.

Planning: The keystone of successful logistics and supply chain operation planning is based on a close approximation of the end requirement and ensures an optimal cost/result. For example, warehouse space and trucking requirements are directly proportional to the types/volumes of product, required storage/handling and processing (cross-dock, storage/picking, and so on). Again, common sense and logic will prevail, as they should.

Change Management: Changes affect the cost/result. If a warehouse is leased to support a flow-thru/cross-dock operation and all products suddenly require storage, a larger warehouse is needed, impacting staffing, materials handling equipment (MHE), fixtures, systems, and supplies. Hence, create an atmosphere of collaboration and embrace the chaos.

Free Agents: Most companies don't understand the costs and relationships of all factors relating to outsourcing. However, they can define their needs to an expert, stick with the plan and create profitability. Careful selection is important, based on previous personal experience or positive recommendations and references from other trusted sources. So, logistics professionals need not understand all the details involved in executing supply chain operations to be successful. Using solid, experienced third party firms to execute a logistics operation based on a well-defined and accurate requirement is crucial.

Use common sense, let logic be your guiding light, and use an open, honest platform of communication to create a collaborative success!

1 Comments:

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