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Making the decision to outsource selected supply chain functions and processes to a Third Party Logistics (3PL) company can be challenging yet rewarding to the organization. Supply chain functions have grown increasingly complex with globalization, technology, and competition advancing at a rapid pace. Thoroughly examining the motivations, expectations, and justifications for outsourcing critical supply chain functionality enables companies to make effective decisions which generate incremental profitability and shareholder value. Careful consideration and analysis of cost factors, performance gaps, financial impact, and suitability for outsourcing yields superior outsourcing strategies and transition plans.
Outsourcing ultimately requires trust. Handing over various aspects of supply chain operations to a partner can be difficult for organizations that do not typically view their suppliers as cooperative partners. Ralph Waldo Emerson is credited with saying, “Trust men and they will be true to you; treat them greatly and they will show themselves great”. Entering a relationship with a 3PL company is like handing over your wallet to a business associate - Do you trust that your cash, credit cards, and family photos will be intact when you ask for it back? 3PL outsourcing is exactly like using a bank to handle your financial transaction management – you make deposits, you issue payment instructions, and you expect a perfect balance.
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Hugh D. Kinney, Jr is expertise in Supply Chain Strategy, Outsourcing Relationships, Business and Financial Management,
Process Improvement of The Progress Group.
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