Blogs - Logistics Services Outsourcing
| Logistics industry needs to use business process outsourcing to survive the economic storm. |
| By Jaison Augustine on 6/29/2009 4:03:50 AM |
The sudden burst of the economic bubble last year has had a significant impact on the logistics industry. To underscore the point, the world’s largest package delivery company and global leader in supply chain services reported diluted earnings per share in 1Q09 of $0.52 as against $0.87 in the previous year.
The bleakness of the situation is characterized by decreasing revenue and profitability, changes in product mix, the affect of the declines in fuel surcharges and the impact of fluctuating foreign exchange. Adding to the industry’s woes are increased operating expenses which are pressuring cash flows. In a nutshell, the industry is in a ‘perfect storm’.
One option for the logistics sector to weather the economic climate is outsourcing business processes services to proven business outsourcing providers. To dimension the opportunity, reduction in the cost of business support processes can range as much as 40 to 50 percent, and, importantly, through consolidation, deliver enhanced MIS capability and process uniformity.
However, logistics companies considering outsourcing should keep several simple rules in mind:
1. Ownership from the top: In uncertain times, sponsorship for critical initiatives such as outsourcing must come from the very top. Only the CEO can deliver the message that there are no other options for survival. Otherwise, the imperative for outsourcing is not taken very seriously.
2. Approach outsourcing with an open mind: Organizations today are capable of handling a range of processes from simple to analytical and complex. As the aim of the outsourcer is to improve operating ratios and reduce expenses, relatively straight forward financial processes such as Accounts Payable, Accounts Receivable, Reconciliations and General Ledger should be outsourced as a first step with the complex ones being taken up later.
3. Keep it simple: The core objective of an outsourcing program should be cost reduction with no compromise on quality. Companies should not attempt to reinvent themselves and perhaps adopting new technology during their first forays into outsourcing. Activities which are time consuming and repetitive in nature should be outsourced quickly, leaving more complex or technology-dependent work for later phases.
4. Do not look back and move quickly: Once a timeline is assigned to the program, it is essential to stick to it without reconsidering the decision midway. Companies can quickly put in place outsourcing programs by mandating that aggressive timelines are a must. Truth is, there is no change without urgency. If moving quickly to implement BPO is not seen as vital to the basic survival of the company, it will not produce the desired results. But imposing deadlines for the development and implementation of a roadmap – including scope, provider selection and transition – will mobilize the organization.
5. Develop a realistic deployment plan: The transition roadmap should be realistic so that the company effectively copes with the implications of change on their ways of working. A deployment strategy that builds up steam over time after the success of initial phases is far more likely to meet objectives. For example, due to the geographically dispersed nature of the logistics industry, a key initial consideration is which operating regions are better suited to consolidation via outsourcing benefits than others.
6. Insist on alignment and domain knowledge: It is critical for the outsourcing partner to understand the implications of the industry on client operations and performance.
7. Debit budgets in advance: Nothing builds more commitment towards making a change in operating model than debiting budgets in advance. It sends a message to everyone down the line that the company means business.
An outsourcing approach represents a strategic and efficient life raft for companies striving to stay afloat in these tumultuous times. If implemented appropriately, BPO can be a fast and simple solution to rapidly reduce costs, help companies survive the economic downturn and set the stage for future growth and expansion after the economic tsunami subsides.
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 7 Comments so far |
Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
Hi outsourcing tend is in positive path again in India. BPO companies are going to hire a huge number of employee in next quarter .Liked your post
Thanks again
Alex | | |  | | | | By Alex on 11/26/2009 12:16:05 PM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
Nice article. Are there any related articles where companies which have implemented LBPO (Logistics Business Process Outsourcing) have been interviewed? | | | | | | | By Ash on 1/26/2010 10:26:54 AM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
Nice post, I agree that Logistics industry needs to use business process outsourcing to survive the economic storm. | | | | | | | By David on 2/9/2010 9:12:38 AM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
As a BPO company owner myself, I can tell you that our business has definitely grown during the recent US economic downturn. The call center industry in general is experiencing more growth due to signifigant gains in business outsourcing ventures in attempts to save money by lowering their work force. It will be interesting to see where our company stands and other call centers when the economy picks up. Will there continue to be such a need for outsourcing? | | | | | | | By Call Center on 3/20/2010 2:25:24 PM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
Nice choice of article. Very informative. Thanks for sharing your insights. | | | | | | | By philippine call center on 4/30/2010 10:00:30 AM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
This article is quite interesting. I've spent some time reading this blog and it gives so much information. Thanks for posting this one. Looking forward for more of your informative articles.
Regards,
Sienna | | | | | | | By philippine contact center on 5/13/2010 8:16:38 AM |
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Re: Logistics industry needs to use business process outsourcing to survive the economic storm.
Today marketing options differ but not all of them provide such a wide flow of information like call centers. Partnering with a call center is not only strong marketing advantage but it is also a perfect business solution that gives a chance to outsource information about your company, attract the potential clients and make deals with them.
| | | | | | | By philippine call center on 6/1/2010 3:58:11 AM |
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