2020 has placed more challenges than just trying to keep trucks full, business have their hands full of business process needs that can often feel like too much to handle, but perhaps the most important and at times challenging concern is the need for greater innovations and technology advances while remaining budget-conscious.
The idea of outsourcing in the logistics industry is not new. In fact, in many ways, freight forwarders and customs brokers are in themselves a form of Business Process Outsourcing (BPO).
BPO is a common method companies turn to for cutting costs, helping their operations run more efficiently, and freeing up time to focus on their core competencies.
After all, is it the best use of an employee’s time at any company to perform labour intensive back-office logistics functions – many of which can be automated with technology or at least managed more efficiently by a team set up and dedicated to the specific task?
At a high level, smart BPO develops ways to take arduous tasks and make them run better. Many functions that are manual and repetitive can be completed more efficiently when they are done at scale and with trained people. Another way to look at it is that BPO is about spending your resources on higher-value activities like reducing freight rates and expenses or finding new ways to better serve your customers.
It’s the purpose of logistics and the supply chain to worry about the tasks and goals that are core to making businesses run better. BPO helps to enable this focus, but doing it successfully takes an outsourcing partner who brings resources and deep industry experience – and most importantly a sound process.
A common way to deconstruct a BPO project is in four parts, each integral to how a final solution is implemented:
Current State – a look at what is happening now
Gap Analysis – finding areas that can be improved
Design – documenting and planning for the solution
Measure – a process for managing and determining the level of success
The process of managing logistics for any large company involves a complex network of data, technology, suppliers, as well as countless other details. A big part of it is also inertia – the ever-present idea that things are done a certain way because “that’s always how we’ve done it”. BPO is a great way to break through that inertia.
With so much of logistics, in particular, international shipping, being data and documentation intensive there are many areas BPO can provide added value.
Here’s a list of common logistics processes that can be improved with BPO.
Customer Service (issue resolution, complaint handling, data entry)
Many of the tasks and functions on this list are things your logistics operations must do. Thinking of each, do you see any gaps in your process for getting the work done? Do you see where technology or team trained to focus on a specific task could make it easier?
One way to describe the concept of logistics is to say it is controlling complexity through efficiency. As a logistics professional, you know there’s a problem that needs to be fixed when your processes, technology, and data are not optimal.
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Why BPO for logistics companies?
Rapid cost reduction is mandatory for companies trying to survive the most challenging economic climate in over 60 years. And while they have been laggards in BPO uptake, logistics companies can gain significant cost savings value by leveraging BPO. For example, approximately 60 percent of a logistics company's operating costs are attributable to customer service. Of this, roughly 60 percent is back-office document processing or phone-based customer contact. Outsourcing these processes to a logistics industry-savvy service provider can deliver cost savings of 40 - 50 percent
But BPO delivers benefits which extend far beyond cost savings, including moving costs from fixed to variable, maintaining focus on the customer and retaining them in the face of operating cost reductions, placing focus on knowledge rather than intuition to increase revenue, consolidating delivery operations to standardize business processes, getting even more out of shared services costs and delivering continuous improvement. Logistics companies which have included BPO in their corporate strategy are better poised to weather this economic storm which threatens to sweep even the most established players away.
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