If you’re working in Supply Chain and Logistics, one of the things you’re going to get involved with at some point is outsourcing and you know I’ve probably been involved in about a hundred different outsourcing projects over the years in different countries, and there are two or three mistakes that people always make about outsourcing.
Three things, I’m going to tell you about logistics outsourcing where you got to get it right. This is where people make mistakes all of the time.
- Time frame and let’s pick warehouse outsourcing. How long do you think it takes to go through the process of deciding to outsource, going through all the tendering, the evaluation, and so on, to actually picking someone. Some people think it can be done in a month, it can’t.you’ve actually got to allow at least 6 weeks, probably, for your potential partners to put their bids together, So, I would say 5 to 6 months is a reasonable time frame to go from deciding to outsource to actually picking a partner.
- During the evaluation process, be totally objective and the way I get my clients to do this is that we structure the request for tender or the request for proposal, in such a way, and then we put together a scoring matrix or evaluation matrix that absolutely matches almost paragraph per paragraph, that RFT So that people can go through and score it, and you need a number of people scoring it across the business It can’t be just one person’s decision. It’s a big decision, outsourcing you know it’s going to have a huge impact on cost, positive, I hope, certainly on service, so you need people from different areas of the business giving their views on that through the evaluation.
- The most important, and the one that people get wrong the most is providing plenty of information to the parties that you’re inviting to tender for your business. Now, think about it for a moment you don’t go to an architect and say, “Hey, just build me a house, will you?” you tell them how you’re going to use the house, and how many people are going to live in it, and so on.
It’s the same when you outsource your warehousing you’ve got to be very, very specific in how the operation’s going to be done, what needs to be done, all the little curly things like, do you have lots of returns or kitting? and most importantly, really accurate data on two things, the transaction volumes, so they can see the number of orders going out, and the number of lines per order, and also the product master, because it’s vital that they understand the weights, and measures, and dimensions of all of the products,. That’s really important in designing how the picking and storage is going to take place. So, three things that can go wrong a lot in logistics, outsourcing, warehousing, if you’re not very careful. Make sure that you’ve got enough time to do it. Make sure that you’re going to have people across the business involved in the evaluation, and thirdly, make sure you share lots of information about the operation so that those people bidding can get it, get their costs and resources accurate.