Outsourcing: Yes or No?
There are many reasons for and against contracting out road transport and these have shown that there are compelling motives for each - depending on the type of operation and cost.
Essentially, the call is that road transport is Capital-intensive and not really core business, so it is best accounting practice to outsource the work to Professional Carriers who understand the business.
There are, of course, many reasons for not contracting out road transport and the strongest call is that it provides greater flexibility to meet rapidly changing service delivery demands from customers.
George you are correct, we are talking about fleets dedicated to a single operation and owned by the company. George says he gets nervous when told that his firm is seriously considering out-sourcing transport. “I am repeatedly told that fleet capex has been put on hold as capital is being reserved only for core business interests”, says George.
This sounds familiar, but in reality it calls for what is needed to deliver the same results, I am talking about convenience verses cost. It begins with what they are getting from their own fleet versus what they will pay for if delivered by a contractor.
What readers say:
"I agree with George’s point, and it is about cost verses service, but goes a little further than that. For a start, the company has to first consider the problems of managing the outsourced transport provider, which is seldom factored into the equation".
"My experience is that the transport operator becomes a sort of 3rd party, caught up in pleasing his customer and his customer’s customer, especially when it comes to delays in loading and off-loading the vehicles".
"Johan has a good point there and I would like to add that freight claims become a nightmare. Auditing PODs require strict supervision over lost and damaged goods claims as it delays transport invoice payment , which“hurts” the relationships both at consignor and consignee level".
3 Tips for great conversations:
1. Don't be long winded, get to the point.
2. Be respectful of other people's views
3. Think about what you can add, don't repeat