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Send  Share  RSS  Twitter  17 Feb 2012

LOGISTICS: Insourcing is the New Outsourcing

 





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Take control by embracing your logistics service providers and using insourcing in three easy step.


Few organisations today will contest the results that outsourcing can achieve – both from a capital- and cost-reduction perspective. Rarely does implementing the outsource model come without challenges, however. Gaps in communication. Incompatible technologies. Contractual restrictions. These can all interfere with the quality of your service levels.

Over the last five to seven decades the argument for outsourcing has taken a firm hold of logistics experts. But research* of the past five years shows a failure among organisations to fully integrate the logistics functions – both those that are outsourced and those that are managed directly or ‘internally’. The result is a high degree of ‘unhappiness’ with the outsourcing of the warehouse and transport functions.

While many organisations have incorporated outsourcing as part of their logistics strategy at decisioning levels, they are frustrated by a perceived lack of control. It is with this problem in mind that Cargo Carriers has created new meaning for the term ‘insourcing’. And such a model is not difficult to embrace, if one is to change one’s approach by taking three simple steps.

Insourcing - Build Closer Relationships


“Strategic relationships are key to success,” says Cargo Carriers Marketing Director, Andre Jansen van Vuuren. “The market place demands that organisations need to inject greater flexibility and competitiveness into their supply chain system. Developing closer relationships with their outsourced service providers gives them much more visibility and the flexibility that high service levels require.” A glass pipeline is, after all, only as good as the information it conveys up and down stream.

As a leading supply chain solutions provider, Cargo Carriers in some instances even establishes offices at their clients’ premises to adopt their culture and circumvent potential communication breakdowns. “Closing the information loop through ‘insourced relationships’ can enhance the typical benefits of outsourcing,” says Jansen van Vuuren. “With greater strategic alignment the costs can be reduced further for our clients. As their control increases so does their visibility, flexibility and responsiveness – all contributing to better service levels.”

Insourcing - Create a Virtual Team


To build sustainable success into the integrated ‘insourced’ model, collaboration from both sides is vital. It enables improved planning and forecasting, coping with increased volumes and, importantly, eradicating the organisation’s skills shortage.

Research* shows that companies endowed with superior supply chain management skills enjoy greater success in terms of their ability to service the market. The same research tells us that these companies are pursuing strategic relationships with their logistics service providers – augmenting their own skills base by tapping into their partners’ expertise on a variable cost basis.

Insourcing - Forget the Crystal Ball


With the global supply chain environment changing at an ever-faster pace, the ability to predict demand cycles with any certainty is becoming increasingly difficult. In a market place where customer needs are continually evolving and lead times are shrinking, it is visibility and flexibility that enable the kind of responsiveness which leads to competitive advantage.

The only way to satisfy customer expectations is having the ability to respond quickly to changes in demand. This agility is enabled through tight-knit teams (whether outsourced or not) collaborating for improved communication and higher levels of organisational control.

ItÂ’s how you do it

Cargo Carriers’ approach towards ‘insourced’ relationships is simple. A unit comprising representatives from the client and from the logistics solutions specialist is first established. An optimised and integrated supply chain model is conceived, engineered and designed. This model is implemented in line with a cost-benefit proposal and within an agreed timeframe.

“We become consultative,” says Jansen van Vuuren. “We can never fully know a client’s business as well as it does, but our advice is based on theory as well as practical considerations. Our experience obviously comes into play. And as the ‘insource’ partner we need to ”walk the talk”. But the true value we offer lies in our ethos of continually improving supply chain efficiencies for competitive advantage. The environment never stops evolving, so why should your solutions‘”


 
 
 
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