Navigating logistics outsourcing without much experience can lead to common mistakes.
In this video, I’ll cover key pitfalls to avoid and share practical advice to help you approach the process more confidently and efficiently.
Common Pitfalls in Logistics Outsourcing and How to Avoid Them
Logistics outsourcing is an area where many companies make costly errors that could have been avoided with the right approach. Whether you’re a business customer or a logistics provider, understanding and addressing these mistakes early on can save you significant time and money. In this post, I’ll outline three of the most frequent mistakes I see when companies outsource their logistics, specifically focusing on what customers of 3PLs (third-party logistics providers) should avoid.
Insufficient or Inaccurate Information
One of the biggest mistakes businesses make when outsourcing logistics is not providing enough detailed or accurate information. Without the right data, it’s nearly impossible for a 3PL to create an accurate, cost-effective solution. If you’re outsourcing warehousing, for instance, you must provide precise details about your products. This includes product dimensions, weights, and packaging information—things like how many cartons fit on a pallet or the number of layers on a pallet. This data helps the 3PL design an efficient storage solution that maximizes space and minimizes costs. Another critical set of information is demand data, which includes how often orders are placed, how many SKUs are in each order, and your picking and labor requirements. Ideally, providing 12 months of transactional data will give the 3PL a clear understanding of your operational needs. Failing to supply this level of detail forces the 3PL to make guesses, which typically leads to higher costs and less efficient operations.
Rushing the Process
Another mistake that companies often make is underestimating how long the logistics outsourcing process takes. Many think it will only take a few months to finalize everything, but in reality, this process requires much more time. From gathering data and preparing your RFP (Request for Proposal) to contacting 3PLs and evaluating their proposals, there’s a lot involved. For a simple warehousing solution, you should expect this to take at least six months, and even longer if you’re considering a more complex solution or a new facility. The more time you allow, the more thorough your decision-making process can be, helping you avoid rushed decisions that might not align with your long-term needs. Rushing can lead to missteps, and it’s best to allocate six to eight months for the entire process, or even longer if possible.
Targeting the Wrong Logistics Providers
Finally, selecting the wrong 3PLs can be a significant mistake. It’s tempting to reach out to as many providers as possible to cover all your bases, but this can cause unnecessary confusion and waste time. Instead, focus on narrowing down the field to four to six providers that are the best fit for your business. Do your research to ensure they have relevant experience in your industry and the capabilities to handle your specific logistics needs. By starting with a manageable number of providers, you can focus on finding two or three strong candidates who will be able to offer the right solutions.
By avoiding these three common mistakes—providing incomplete data, rushing the timeline, and approaching the wrong providers—you’ll ensure a more successful and effective logistics outsourcing process.
Related articles on this topic have appeared throughout our website, check them out:
- 6 Quick Tips for Successful Logistics Outsourcing
- Insourcing or Outsourcing Logistics: Don’t Choose the Wrong Reasons
- 10 Common Pitfalls to Avoid in Logistics Outsourcing
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated April 19, 2023, under the title “Top 3 Logistics Outsourcing Mistakes You Don’t Want to Make“.
