Supply Chain Digital takes a closer look at Gartner’s logistics outsourcing trends for 2020 and why supply chain executive should priorities outsourcing.
How has outsourcing changed over the years?
Business Leaders no longer ask ‘should I outsource?’ instead they are asking ‘how much?’. Today, more and more businesses rely on third party logistics providers (3PLs) for packaging design and management of company-owned assets. In a study completed by Gartner 45% of its respondents are now looking for 4PL services.
Outsourcing has, over the years, become mainstream 80% of Gartner’s participants plan to significantly increase their logistics outsourcing budget to more than just warehousing and fulfilment in 2020, not only to optimize cost but save money too.
What is driving this change?
The logistics industry is a very fragmented and complex industry that is built on a lot of traditional methods. Gartner highlights a few reasons as to why executives are prioritising logistics outsourcing in 2020, including: real-time operations, speed to market, end-to-end visibility, system incompatibility, cyber threats and fast innovating technology.
Courtney Rogerson, Senior Principal Analyst, Gartner also notes that with “digitalisation, globalisation and rapidly evolving customer expectations, demand a shift in how leaders responsible for logistics, approach their outsourcing strategy. The task for supply chain leaders responsible for logistics, is to also know how the logistics function will be used to achieve business success.”
What are the benefits of outsourcing?
Logistics outsourcing, with realistic objectives, can keep a business agile and customer-focused. Participants of Gartner’s survey indicated that although there are technical and cultural challenges that can limit the return on investment (ROI), it is still typically worth the money even if it doesn’t provide hard cost reductions.