Logistics services are one of the industries in which the concept of outsourcing has been widely used in the Polish market over the last decade. Companies, mainly in manufacturing and trade, decided to reduce operating costs by reorganizing their structures and outsourcing transport and logistics tasks to external operators. Logistics operators responded to these changes by expanding their service offerings and –
in many cases –
by adapting their operations to the specific requirements of the client. Thanks to these trends, logistics companies have gained a group of large institutional clients with significant demand potential in the field of logistics, and outsourcing processes have become one of the most important factors that have influenced the dynamic development of the logistics services market.
However, experience to date in close cooperation between clients and operators shows that outsourcing processes are not always “destined for success”. To bring the planned benefits, they must be carefully thought out and professionally implemented. A key issue is the precise identification of the company’s needs in terms of external supply and the selection of the right partner with the appropriate infrastructure and experience. Both parties must also demonstrate great flexibility regarding the need for changes and modifications to the cooperation assumptions that will arise from practical interaction in changing market conditions.
Identification of needs
To correctly identify the areas of activity that would be more beneficial to carry out through an external provider, one must first precisely define the company’s core field of activity, which allows for achieving a competitive advantage in the market. All activities falling within the scope of these core competencies should be carried out by the company in-house. Other areas, however, can, under certain conditions, be replaced by external supply. One of these areas for many companies is logistics and transport services. In conditions of fierce market competition, the savings resulting from outsourcing this activity to a specialized operator can be significant. They will primarily result from the reduction of costs associated with maintaining infrastructure and personnel that previously handled processes related to supply, warehouse management, distribution, or transport. Furthermore, a specialized logistics operator will offer its client logistics services of a quality often significantly exceeding that obtained by the company for its own needs. This is related to the experience possessed by the external operator and usually an incomparably larger amount of capital involved in the implementation of logistics processes. The third important feature of such cooperation is the cost of the logistics services themselves.
Outsourcing, as a way of relatively permanent commitment to a logistics partner, means that clients receive a promise of having their services performed at prices lower than would result from standard price lists, even those including discounts and rebates for clients who frequently use the operator’s services. Comparing the achievable quality level and the calculations of logistics service costs for the “in-house logistics” and “outsourced logistics” variants is the basis for making a decision about outsourcing part or all of the activities related to this sphere.
An example of successful cooperation between a manufacturing and trading company and a logistics operator can be the implementation of supply chains for the AMBRA SA group by the logistics operator Schenker Sp. z o.o. The Ambra Group is involved in the production and trade of wines in Central and Eastern Europe; this is its core field of activity. Initially, the organization of distribution at Ambra relied on cooperation with many small entities providing transport services and on running its own warehouse. The Spedpol company (now Schenker) then joined the transport service system and quickly became the exclusive carrier handling Ambra’s transport. At that time, Ambra made the decision to liquidate its own warehouse and handed over warehouse processes to another logistics operator. However, the company’s ongoing development and changes in the wine market required the construction of a modern distribution center that would meet the growing needs reported by customers. Thanks to the already advanced cooperation with Schenker, Ambra did not have to undertake such an investment because it gained the opportunity to use the solutions and experience of its logistics partner. Currently, wine distribution as well as supply and warehouse management are handled entirely by Schenker. The logistics operator is the owner and entity operating Ambra’s distribution center (high-bay warehouse in Teresin) in terms of warehouse operations and handles the distribution of goods from production plants to the warehouse, as well as from the central warehouse to Ambra’s final recipients throughout Poland. Thanks to the solutions applied, Ambra avoided incurring costs associated with the need to expand its logistics department, hire additional personnel to handle logistics processes, and build and maintain a distribution center. It also received the opportunity to precisely match organizational and technical solutions to its needs, which allowed for the optimization of operating costs.
The article comes from the magazine “Logistyka” No. 3/2006.