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Surprising Research on How Top Companies Choose to Outsource Logistics

best-in-class companies outsourcing logistics

When you’re in the trenches and faced with making a decision on whether to keep your logistics in-house or hire it out, have you ever wondered, “What do leading companies do?”

You are not alone. That’s why Aberdeen Group conducted a survey of 123 supply chain professionals in August and September 2011. The survey results show that in order to address globalization challenges and supply chain complexities, best-in-class leaders use a strategic combination of both in-house activities and outsourcing solutions. When companies find the right logistics service provider (LSP) and balance that with optimizing their own core competencies, they experience reduced freight spend, decreased warehousing costs, improved on-time order rates, and extended global reach capabilities.

What are the best-in-class companies outsourcing that results in these kinds of benefits? According to the survey results, the best-in-class are more likely to outsource global compliance to customs brokers (78%), consolidation and deconsolidation (61%), direct-to-store delivery (60%), warehouse storage (57%), and TMS container load planning (57%). Although top companies currently outsource in virtually any area, they tend to keep the management of their domestic warehouses and logistics fulfillment in-house. Specifically, they retain control in-house over mode selection (74%), carrier selection (74%), transportation procurement (70%), global trade management administration (60%), and carrier contract management (82% domestic, 74% international).

The survey revealed that 90% of respondents are currently using an LSP, and many are using more than one LSP. They select providers by measuring the LSP’s ability to service all geographic areas, compare service levels for outbound deliveries, and assess the ability to provide the range of services necessary. Additionally, the author of the study suggests that companies should align themselves with a provider that is an extension of their own internal practices and incorporate LSP criteria into their long term growth plans.

No matter what business pressures you face, working with an LSP offers you flexible and customizable solutions ranging from transactional to managed services. Working with an LSP also can be applied to isolated segments of your business.

To read more on this subject, click here to request your free copy of Outsourced Logistics vs. In-House:  Comparisons and Strategies until December 2. The report has a $399 value and contains more valuable information on:

  • How companies can prepare for a successful outsource
  • The top business drivers for outsourcing processes
  • Operations most likely to be outsourced going forward
  • The top strategic goal used to compare outsourcing to in-house
  • Technology solutions best-in-class companies are utilizing

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There is a lot to consider in the decision to outsource vs. retain functions in-house. What do you think? What pressures are you facing? What factors are you using to decide?