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The Right Time to Outsource to a 3PL

When do Companies Start Thinking About Outsourcing?

As all companies grow, they must continue to evolve their business processes in order to stay successful. For many, this means focusing on manufacturing efficiency, for others it means improving the customer experience, and others may need to invest heavily in product development. Each company faces a unique set of challenges that are determined by many factors:

  • Company size
  • Market conditions
  • Technology
  • Customer needs.  

Because of this, each company will also reach different goals and achieve different benefits through outsourcing their supply chain or distribution services to a 3PL.

Understanding how your company stands to benefit from outsourcing, as well as identifying which specific tasks or functions make the most sense to outsource, will determine whether now is the right time or not.

Let’s now take a quick look at the different benefits that companies can achieve through outsourcing to a 3PL.

Benefits of Outsourcing to a 3PL

Of the numerous benefits that companies aim to achieve through outsourcing to a 3PL, the most common is cost savings. Outsourcing can allow companies to significantly reduce many types of costs, including labour, materials, overhead, transportation, and more. The scale of these savings varies depending on many aspects of the business, but for many companies that engage internationally, the savings from outsourcing to a 3pPLcan have a big impact on the bottom line.

Other companies obtain benefits from the ability to refocus efforts and resources on core values and activities. This is done by shifting internal resources away from functions that can easily be outsourced, such as warehousing or transportation, and reinvesting these resources in areas of the business that can have a much more significant impact on customer experience, product development, and other aspects that directly drive the growth of the business.

Seasonal industries that see dramatic surges in business are able to achieve much greater flexibility in meeting the demands of these cycles by bringing in additional resources through outsourcing to help manage the peaks. Once the surges have subsided, the temporary additional resources can then be released until the next surge when they are needed again.

Key Signs It’s Time to Outsource to a 3PL

While each company will have a different set of circumstances that prompts them to consider outsourcing, there are many common factors that these companies will see as outsourcing becomes an increasingly viable option for them.

Maintaining profit margins is a challenge for any business, but even more critical for businesses in fiercely competitive markets, or products that have notoriously thin margins. A common sign that a company may benefit from outsourcing to a 3PL is the continual erosion of profit margins and increasing costs. For companies that have tight budgets, outsourcing could be the right way to manage profit margins, as supply chain processes and distribution, when done in-house, contribute to a large portion of the overhead.

In markets where the workforce is not as plentiful as the company requires, outsourcing may be the only way to acquire the talent needed to drive the company forward. If a company is struggling to attract talent from the local area, it may be time to consider expansion through outsourcing to a 3PL that has established relationships with employment agencies and a greater volume of talent available to draw from.

Another potential sign that outsourcing could be a good move is if overtime is increasing in your facility beyond what should reasonably be expected. Outsourcing could provide a fast and effective way to reduce the load without adding excessive overhead or additional labour costs.

While this is not an exhaustive list of the factors that cause companies to consider outsourcing to a 3PL, it should give you a general idea of the typical warning signs to look for.

What can be Outsourced to a 3PL?

One of the most common ways that companies choose to improve their supply chain or distribution efficiency, and one of the easiest for many companies to implement, is outsourcing a variety of logistics services and tasks to a third-party logistics provider (3PL).

Shipping, warehousing, order fulfilment, packaging, and return logistics are all functions that can be managed through outsourcing. In addition, since many third-party logistics providers have resources in locations across the country or even globally, they can open up new markets that may have previously been unattainable.  Leveraging the resources of a third-party logistics provider can be a major benefit to companies that are struggling to achieve growth.

Decision to Outsource to a 3PL

The decision to outsource is not one that should be taken lightly, but at the same time it should not be shunned or discounted. If your company recognizes one, or several, of the warning signs we described then it may very well be time to consider outsourcing. It’s best to look at the trends your company has been experiencing, both internally and externally, in order to determine if now is the right time to make a shift.

By looking internally at factors such as profit margins and worker capacity, and overlaying these with trends in the market and competitive environment, it often becomes clear how things will keep going if nothing changes. Integrating some level of outsourcing can help companies reverse downward trends and improve their market position by helping to alleviate the pain points that are causing problems.

If your company recognizes these warning signs and pain points, contact SCI today and let our logistics experts help you with an in-depth analysis of whether outsourcing is the right move.

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What Health and Medical Companies Need to Know About Logistics Management

Companies that serve the health and medical industry face many challenges that are unique, especially in the areas of logistics management. Due to the very sensitive nature of equipment and products, the strict quality control regulations that must be followed, and the urgency of customer needs, there are many factors that impact the success of health and medical logistics operations. Fortunately, many of these factors can be effectively managed by implementing the right processes, investing in the proper technology and systems, and partnering with the best logistics service providers.

In this article, we will describe some of the most significant factors affecting health and medical logistics, and how a third-party logistics management company can assist in overcoming these challenges.

Warehousing and Distribution

The array of products found in the health and medical industry is extremely diverse. It includes everything from pharmaceuticals and scientific laboratories, to advanced medical technology. As such, the warehousing and distribution needs of companies in this industry are equally varied. Some companies may require precise, climate-controlled environments for their products, while others may need specialized vehicles to carry and deliver extremely sensitive and high value equipment such as MRI & CT imaging devices, laboratory equipment, servers and more. Since the facility and fleet ownership costs are extremely high and complex, most companies look to third-party logistics providers to meet their needs.

The reality is that there are few logistics providers that are capable of meeting the specific needs of every company that exists in the health and medical space. This means that these companies need to carefully evaluate potential logistics providers in great detail in order to determine if the facilities and equipment of the logistics provider are really up to the task.

Some of the specifics that need to be examined are the ability to closely manage and track inventory, environmental conditions of facilities, suitability of the material handling equipment, and transparency regarding the processes used. In addition, health and medical companies would be wise to also look at industry experience and commitment to continuous improvement in their logistics providers. As potential logistics providers are evaluated against these criteria, the list of viable options will become short quite quickly.

Regulatory Compliance

There are few industries in the world as heavily regulated as the health and medical industry. This is further complicated by the fact that many regulations vary in scope and complexity depending on the country where the products will be manufactured versus the country where they are sold or used. Many of the regulations that must be followed relate specifically to logistics functions, such as transportation and storage conditions, packaging and labeling, material handling, documentation, and more. Often, these regulations can be met by utilizing what are known as GMP (good manufacturing practice) facilities.

GMP facilities adhere to a set of standardized principles put forth under governmental oversight that dictate how the facility is operated, how personnel are trained, what equipment is to be used, and other important factors. For health and medical companies, for example those involved in pharmaceuticals, benefit greatly from these standardized practices as they ensure that each and every product is handled in exactly the same way before it reaches the end consumer. For health and medical companies, partnering with a third-party logistics provider that includes GMP facilities as part of their available resources is a way to offset significant investment and risk while simultaneously assuring quality control.

Transportation Services

Many of the concerns related to warehousing and material handling extend through the entire transportation process, and each stop or checkpoint along the way. It’s critical that transportation personnel, equipment, and environmental conditions are consistently managed at every step. Ensuring that everything that occurs during the journey from once facility to another follows all necessary standards and requirements can be an extremely difficult and complicated process. In order to meet these demands, third-party logistics providers utilize sophisticated tracking and monitoring technology, as well as extensive training for all personnel to ensure that everything is managed as it should be, with no exceptions.

In many cases, this also includes setup and installation of complex equipment once it arrives on-site. Full-service logistics providers will have the capability to deliver complete, turn-key solutions for high value transportation needs and even same-day transportation requirements. This could take the form of either business-to-business or business-to-consumer, depending on the needs and business model of each customer. Flexibility is an important factor to look for in third-party logistics providers, as this will allow them to meet changing needs or unusual situations with ease.

Another benefit to leveraging third-party logistics services is the potential cost savings that can be achieved through their higher levels of efficiency. In addition, since third-party logistics providers specialize in these functions, the risk of product damage or loss is greatly reduced, and the consistency of the end-user experience is improved, resulting in significant savings in time and resources.

Why it Matters for your Business

As you can clearly see, there are substantial benefits for companies in the health and medical industry who invest in the areas of logistics, transportation, warehousing, and distribution. Choosing the best third-party logistics partner will yield increases in efficiency, provide assurance of regulatory compliance, reduce costs and improve the overall ability for a company to meet the demands of the highly competitive health and medical industry.

If your company is struggling to meet these challenges, the experts at SCI can help. Our team of logistics professionals can assist your health and medical company adjust and evolve your approach to material handling, transportation, warehousing, regulatory compliance, and more.

Contact SCI today and let us help you achieve greater success through strategic logistics management.

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