Logistics in the hands of third-party operators. Why?

Logistics in the hands of third-party operators. Why?
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Many large companies that rely on manufacturing for their business had their own logistics and transportation departments decades ago – including their own fleet of vehicles. Today, business is becoming more digital, and success is determined by details. Because of this, companies are moving away from managing their supply chain on their own.

Outsourcing logistics is a difficult decision. This is because companies are handing over the product distribution part to external companies. This necessitates finding a professional and reliable partner, but also a change in the producer’s operation, who cannot rely on his own logistics habits. However, the benefits of outsourcing logistics are so big that more and more companies decide on such a solution.

An intermediate model between performing all logistics operations independently and full outsourcing was in the past the creation by manufacturing companies of specialized companies that provided logistics services for the parent company, as well as for other entities, using extensive know-how and optimizing costs through economies of scale. An example is Peugeout, which founded GEFCO in 1949. Its task was to provide logistics services for the Peugeot vehicle assembly plant in Sochaux and to help optimize transport costs. Initially, the transports were managed by a team of 10 people. Today, GEFCO has some 15,000 employees and is described as an expert in comprehensive supply chain solutions. The company had its origins in the automotive industry, but as a result of its deep business diversification, it now manages logistics from 1PL to 4PL for most industries.

We, together with specialists from GEFCO, will show you the 7 benefits of delegating logistics to external operators. We will draw on the company’s extensive experience in various national markets and sectors.

Reducing fixed costs – save with your head!

Fixed costs are a big burden on a company’s budget. They always remain at the same level, regardless of production volume. If it is growing, nobody cares about them. In moments of crisis (such as during a pandemic) it is worth thinking about reducing them.

This is where an external logistics partner comes to the rescue and relieves you of the burden of maintaining staff, warehouses and transport vehicles. The company’s management can concentrate solely on production, while delivery and distribution are already taken care of by the outsourcing company.

The perspective of more growth opportunities!

The above mentioned reduction is not only a chance for savings. It is also an opportunity to expand the company’s development. Flexible cooperation with a logistics partner allows you to adjust it to the demand or market expansion plans. Increased demand for further warehouse metres will not require further investments and the logistics operator will ensure quick access to space, human resources and materials.

Independent development is more difficult here, as it requires considerable investment and preparation. A logistics partner, on the other hand, will immediately provide the necessary conditions for development, proportional to the scale of production, business and demand, as well as plans for expansion into foreign markets.

Simpler and more efficient transport route

Empty runs cause the greatest losses in the transport industry. Transportation optimization would not be possible without involving third parties and combining cargo into seamless flows. This translates into huge savings and more efficient transportation. A logistics partner will consolidate loads from different companies, while a manufacturing company usually cannot do it alone. GEFCO Poland has a common groupage network for inbound projects, which receives goods from hundreds of suppliers and transfers them to transshipment centers. There, cargo is grouped together and full shipments are directed to production.

Expert knowledge and experience translates into customer success

Companies that provide external logistics services have accumulated extensive experience in domestic and international markets, and the knowledge and capabilities gained there pay off. Trust in this case is very important. This can be seen in the projects run by GEFCO 4PL, in which the client relinquishes its own structures and hands over to the 4PL operator the management not only of transport, but also of logistics engineering, purchasing, and invoicing. GEFCO is a great example here of the use of customer experience. Experience from the automotive industry is fully transferable to many other projects in other sectors. Long-standing experience has helped GEFCO to develop a range of special services, such as overnight deliveries with replenishment for dealerships, or express delivery of spare parts to the point of breakdown.

Global coverage

Entering new markets involves a number of difficulties and formalities. The various economic areas differ in matters such as tax and customs. Logistics partners who are already active throughout the world can handle all the formalities perfectly and do not need additional subcontractors. The customer, on the other hand, can plan an increase in production without worrying about finding legal solutions to enter a new market.

Saving on IT tools and digital processes

Digitalization is currently found in every area of the economy, including transportation and logistics. However, it consumes a lot of resources related to installation and implementation. There is no denying it – modern issues that help in supply chain preparation are very expensive. Not every company has the resources to invest in this department. It does not make economic sense for a manufacturing company to invest large budgets in digitizing logistics.

It is different with external and proven logistics operators. These have access to state-of-the-art systems such as those related to real process tracking, instant reporting and all other transportation-related issues. The costs of implementing such solutions are spread over a number of customers, which is why these operators keep abreast of innovations and technology.

For example, GEFCO works with start-up gas pedals and incubators, universities and laboratories, and internally seeks creative ideas through the GEFCO Innovation Factory. All this translates into increasingly automated processes and the implementation of new solutions.

Delegating more tasks without the need for investment

More and more projects commissioned by customers are happening on the border between 3PL and 4PL. Many companies are interested in logistics solutions that involve creating new schemes for the supply chain, and we can provide comprehensive 3PL solutions or integrated 4PL logistics. Such decisions are fostered by the rapid pace of innovation and the need for volume adaptations. In addition, the process of hiring new staff and financing the costs of the logistics structure can be cumbersome, which can generate demand for the outsourcing of complex solutions,” said Radosław Różycki, Key Account Manager, GEFCO Poland.

Manufacturing companies have a wide range of tasks, from 1PL to 3PL to 4PL. An extensive outsourcing network, advanced logistics engineering, and delegation of tasks in the hands of external contractors are all opportunities for growth. This situation often has opponents within a company who are concerned about employment, for example. However, 4PL is not a new model of cooperation on the market and logistics operators have many good practices that can dispel these doubts. These best practices are the key to success!

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(Photo: GEFCO/ submitted)

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