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Disadvantages of Outsourcing Logistics

Although the decision to outsource logistical procedures is not an easy one, more and more companies are opting to do so, and with success The choice to outsource is usually done not only because of the necessity to expand and to scale, but also because most businesses are unable to keep up with a constantly changing and evolving supply chain by themselves. Outsourcing logistics to third party logistics (3pl) has many pros and cons. Knowing these can help you make such an important decision. In this article, we will describe major third party logistics advantages and disadvantages.

1. Disadvantages of Logistics Outsourcing

Articles like this usually begin with recounting of benefits but we are going to break the tradition and begin our discussion of third party logistics (3pl) advantages and disadvantages with getting the unpleasant things out of the way first.

1.1. Transfer of responsibility leads to a loss of control

Handing over your logistics to 3pl means, 3pl will be responsible for a large part of your communication and your relationship with your customers. If 3pl mess up, there are consequences for your company, because your partnership with 3pl is invisible to your customers. If something happens, you will be the one to blame. Because of that level of dependency in the relationship with 3pl, it is very important not only to choose a reliable partner, but also to secure yourself with contracts and agreements.

1.2. Additional costs in the beginning

Outsourcing is usually seen only as a cost-cutting measure, which is not entirely true. In fact, outsourcing logistics is very cost-effective in the long term, while setting up the system in the short term is an investment, which will pay off later.

1.3. Miscommunications

Even though 3pl are there to support the logistical operations of its customers, they may have a different understanding of how to work on certain issues. This kind of misunderstanding can have undesirable consequences for your business. A successful partnership with 3pl require straightforward communication and alignment of goals and strategies between both parties.

2. Advantages of Logistics Outsourcing