View Outsourcing as a Continuous Process

Outsourcing your warehousing functions should be viewed as a continual journey, rather than a quick fix for all your warehousing processes. It involves several stages, including solution design, testing, implementation, and start-up. Each stage presents a learning curve for both your company and the third-party logistics provider (3PL). However, certain processes that have a significant impact on overall operations, such as label requirements for inbound material, your own IT infrastructure, and order consolidation processes, may fall outside the control of your 3PL and need to be managed concurrently with the outsourcing project.

Involve All Relevant Parties Early

Deciding to outsource logistics activities is a strategic move that can have functional and emotional implications for various departments within your organization. Therefore, it is better to involve all relevant parties in the outsourcing process at an early stage, rather than waiting until it is too late. Despite having identified potential cost savings, initiated the project, selected the appropriate provider, presented a compelling business case, and devised an ideal logistics solution, outsourcing proposals can still face obstacles in the boardroom.

Ensure Sufficient IT Testing

To ensure successful implementation, it is crucial to have a structured and well-planned IT test strategy. Thoroughly test the interfaces between your own systems and the logistics provider’s warehouse management system and transport management system. It’s important to note that under time constraints, some testing plans may not cover all processes and potential exceptions. Additionally, it is common for testing to be conducted on individual steps rather than end-to-end testing of the entire process.

Maintain Consistent Data Quality

It is crucial to ensure consistent data quality throughout the outsourcing process. Data is typically shared with the logistics service provider during the proposal phase as a basis for a quote. However, the data may be unreliable in an operational context due to inconsistencies in units of measure, weight, dimensions, and units sold. During implementation, IT problems can arise if the data quality does not match what was presented in the proposal. This can lead to operational and cost issues as inconsistent data generates more exceptions and manual work.

Incorporate Undocumented Processes

It’s common for supply chain organizations to have acquired knowledge and practices that are not formally documented in systems or process manuals. Failing to incorporate this information, such as customer-specific stacking patterns or non-documented special packaging requirements, can result in significant service disruptions during outsourcing implementation.

Don’t Let Uncommon Scenarios Become the Norm

Ensure that exceptional processes are properly documented and included in the proposal stage. Often, these processes are not considered during the quoting phase, and their frequency can be underestimated. Failure to manage these exceptions during the implementation phase can result in additional costs that were not taken into consideration, leading to unexpected expenses when the first invoice arrives. Don’t let exceptions become the rule by ensuring that they are properly accounted for and managed from the start.

Have a Realistic Understanding of Your Organization’s Project Management Capabilities

The organization should have a realistic understanding of its project management capabilities when embarking on a logistics outsourcing implementation. This type of project involves a new way of working and a steep learning curve for logistics professionals and management. It is important to ensure that those involved in the project are experienced and equipped with project management.