A recent survey suggests that 69 per cent of SME business owners who had outsourced their transport function aren’t seeing any benefits of doing so. Here, logistics expert Walter Scremin explains why.
I wasn’t surprised to see widespread discontent from business regarding outsourced transport, as revealed by a recent supply chain and warehousing industry survey.
The survey showed that 69 per cent of respondents who had outsourced their transport function said they were not seeing any benefits in the key areas of transport costs, transport asset reduction, order fulfilment and delivery service levels. Perhaps as a result, 74 per cent of respondents said they were reviewing their transport strategy within the next 12 months.
This didn’t shock me, because anyone can buy a couple of vans or trucks and say they have an outsourced transport solution. There has been a proliferation of smaller operators engaging in a race to the bottom on price in our industry, with the impacts on service self-evident from the survey. The key take-away for business when outsourcing any service is buyer beware. How can your business avoid being stung? There is no foolproof answer, but the following steps may sort the wheat from the chaff:
- Be careful not to rush into an agreement with the first supplier you meet.
- Ask astute questions, similar to a competency test, for a better idea on their capabilities, skills and resources.
- Look for recommendations – talk to their clients for a clearer picture on performance, value for money and ability to respond at short notice.
- Remember the cultural aspect: you’re starting a relationship – get to know the people, the culture and the history of the company. Can you work closely with these people?
- Avoid making a decision based on price alone – there is so much more to outsourcing than cost.
Outsourcing should benefit your business, provide flexibility, asset reduction and cost reduction. It should help your business to grow. Taking outsourced business functions back in-house after a bad experience is a backward step. In transport, it would mean imposing a massive fixed cost back on the business. Mostly, headaches can be avoided by taking more time and asking tougher questions of your next supplier.
Walter Scremin is General Manager of Ontime Group.
Join us for the 2014 My BusinessAwards.
Like My Business on Facebook now to get involved in the SME community discussion.
Follow @mybusinessau on Twitter for breaking stories throughout the day.
Learn more about the SME Association of Australia, the Publisher of My Business.