Analyst Insight: Logistics outsourcing is more in demand than ever. An increasing number of shippers are moving towards logistics outsourcing to gain better visibility into their freight track and spend, two key factors in determining business vitality. Although supply chains are starting to normalize and rebound, COVID-19 exposed a lot of weaknesses and led shippers to gain a better understanding of the importance of data portfolios, which is the primary purpose of outsourced logistics solutions.
In a nutshell, outsourcing is more in demand than ever from shippers because of rising costs.
Visibility and data remain top-value propositions that outsourced logistics entities solve for. Consider inflation and the rising costs of production and manufacturing: Almost everything, whether the transportation of fuel, raw materials, or workers, has caused shippers to lean on logistics professionals to provide contextual data on how all those variables are affecting their own customer base. This information is then used to adjust shipper pricing strategies, eventually pushing increased costs back to consumers. The ripple effect of inflation has streamlined the benefits of managed logistics, which provides insights to combat escalating costs in an effort to maintain profit margins. In a nutshell, outsourcing is more in demand than ever from shippers because of rising costs.
Over the next several years, outsourced logistics programs will need to evolve to include greater automation processes. It is crucial to identify as many tasks and administrative functions as possible that can be self-sustained. Logistics management operators are working to embed efficiencies that can be passed along to shippers, as well as deep dive into predictive and prescriptive analytics. Current analytics gives logistics providers a sort of “rearview mirror” approach, allowing practitioners to make observations from a specified data set and then recommendations going forward. And so, the next step will involve finding methods to predict what’s going to happen in the future before it actually does, using historical data.
At a macro level, the impending recession could pose many challenges and cause deviations in the tactics of outsourced logistics offerings. Current plans are based on budgets, forecasts, and strategic vision. Depending on how deep the recession goes, companies will decide next how to balance service levels with cost control.
Achieving supply chain optimization requires next-generation technology products that go beyond standard logistics systems.
Achieving supply chain optimization requires next-generation technology products that go beyond standard logistics systems. The right TMS is designed to give ownership over simplified supply chain management. Driven by data and actionable insights, shippers can increase the value of their business.
Outlook: Optimizing supply chains through outsourced logistics takes a custom logistics management program that includes cloud-based TMS, ERP integration, process management for mode conversion, order optimization and network design, RFP management, dedicated account managers, and supply chain analysis of distribution processes. A full-service, managed transportation program allows shippers to gain more control over their logistics network while focusing on core competencies and allocating resources to scale their business.