To Insource or Outsource? That is the Question

Move out, baby boomers… it’s now the age of “do-it-yourselfers.” When it comes to DIY projects, social media communities like Pinterest, Facebook, Twitter, and Youtube offer everything from blogs to video tutorials. Whether you want to make a Halloween costume for your toddler or need to know how to resurface your kitchen counter, you can find it with a quick web search.

While at times, DIY projects are awesome for saving money (and there’s a little pride to be had in finishing a project yourself), there are other times it’s best to outsource and rely on a professional. Of course, if people didn’t try to take on lofty DIY projects, we wouldn’t have the joy of reading endless “Pinterest Fail” articles.

The same is to be said for businesses when it comes to deciding what services to rely on internal resources for, versus what should be outsourced.

To Insource or Outsource? That is the Question

Every business’s supply chain is unique, and therefore, there is no “one-size-fits-all” for insourcing and outsourcing in logistics. Companies decide to outsource their freight services for a variety of reasons, whether it’s because of a lack of manpower, the need to free up employees to be able to focus on other areas of business, a desire for more visibility in their supply chain, or simply a preference to leave that part of the business to the “logistics pros.”

For 20 years, Korn Ferry has conducted an annual study on the state of logistics outsourcing and found that just as the logistics industry experiences trends, there are clear trends as to the commonly outsourced services year to year.

Twenty Years of Logistics Trends

When Korn Ferry’s study first began in 1996, the most frequently outsourced service was freight transportation. Just one year later, in 1997, the most outsourced activity was freight bill auditing and payment.

By 1999, more businesses surveyed reported using a third-party logistics (3PL) company, especially for warehousing services, with the market growing by 18 to 22 percent.

In 2010, 3PL global revenues reached $542 billion dollars, and by 2011, they reached $616 billion. This year’s survey by Korn Ferry indicates that relationships between 3PLs and their customers are successful and that their partnerships are producing positive results, with 70 percent of those who use logistics services reporting that their partnership with a 3PL has helped significantly reduce costs in their supply chain.

What is Commonly Outsourced?

According to Korn Ferry’s survey, businesses most commonly outsource when it comes to transactional, operational, and repetitive activities, while other customer service or technology-intensive services are most often taken care of in-house.

Trinity Logistics offers freight services, technology solutions, logistics consulting, and other outsourcing services like warehousing, supply chain optimization, and on-site freight management. We ensure that every customer has their own account manager who learns the ins and outs of their business’ specific needs and can offer consultations to help improve efficiency. This type of two-way relationship between a 3PL and its shippers reaches beyond the transactional side of business and opens more opportunities for outsourcing.

Outsourcing Trends

If you were to take a snapshot of businesses that have partnerships with 3PLs at different times in the year, or from year to year, you would most likely find that the amount or type of services outsourced versus insourced could fluctuate.

According to Korn Ferry’s survey, the use of outsourced logistics services is on the rise this year, up 73 percent compared to 68 percent last year.

As for insourcing, 35 percent of shippers reported a return to insourcing a significant amount of their logistics activities, compared to 26 percent last year.

Save Time, Money, Headaches, You Name it

As a 3PL, we have been arranging global freight solutions for businesses of all shapes and sizes for more than 35 years. We also have a network of more than 30,000 carriers, so capacity isn’t a problem. Working with a 3PL is like hiring an extension to your team to handle the nitty gritty parts of freight arrangement whether it’s booking loads, verifying insurance, tracking shipments, or handling any special requirements you may have.

Logistics is a fast-paced and at times overwhelming industry, which is why many businesses turn to a 3PL to handle the nitty-gritty. After all, a “Logistics Fail” sounds a lot more expensive and risky than a “Pinterest Fail,” doesn’t it?

Have a question, ask us here, or get a freight quote by filling out our form here.