Warehousing
Management of Outsourced Operations
Warehousing Decision – Insource or Outsource?
Warehouse Management: The Insourcing Perspective
In-sourcing is a strategic business and human resources alternative to outsourcing. In-sourcing means building up or adding new business activities in the company that have been or could be outsourced.
There’s a common philosophy “Do what you do best and outsource the rest”. It is a common practice to outsource logistics and supply chain activities like warehousing. However, as the modern trade proliferates, we see more and more organizations insourcing logistics activities like warehousing. In today’s competitive environment, the competitive advantage that companies gain derived is not only from product differentiation but also from the fact that how efficiently they manage logistics. Warehousing in such a situation becomes not just an activity that can take a back seat. It forms a core function for any company and hence a source of core-competency. Following are the advantages that can be gained from managing warehousing internally. * Control: A primary advantage of in-sourcing is increased control. This is what motivates many companies to switch from outsourcing to in-sourcing. They want more control over the time, resources and results of the work. * System Design: Companies can develop and execute their own plans in a specialized area with in-sourcing, as opposed to turning these elements of work over to an external provider. The company can integrate the new or growing specialization into the organizational structure. * Logistics too important to consider outsourcing: Logistics is an important function. Seamless flow of material information keeps the business moving forward. * Service Level commitments may not be realized: Outsourcing is a marriage; it may not work well for the organization unless both parties involved work for common objective with mutual interest. * Cost reductions may not be
Warehousing Decision – Insource or Outsource?
Warehouse Management: The Insourcing Perspective
In-sourcing is a strategic business and human resources alternative to outsourcing. In-sourcing means building up or adding new business activities in the company that have been or could be outsourced.
There’s a common philosophy “Do what you do best and outsource the rest”. It is a common practice to outsource logistics and supply chain activities like warehousing. However, as the modern trade proliferates, we see more and more organizations insourcing logistics activities like warehousing. In today’s competitive environment, the competitive advantage that companies gain derived is not only from product differentiation but also from the fact that how efficiently they manage logistics. Warehousing in such a situation becomes not just an activity that can take a back seat. It forms a core function for any company and hence a source of core-competency. Following are the advantages that can be gained from managing warehousing internally. * Control: A primary advantage of in-sourcing is increased control. This is what motivates many companies to switch from outsourcing to in-sourcing. They want more control over the time, resources and results of the work. * System Design: Companies can develop and execute their own plans in a specialized area with in-sourcing, as opposed to turning these elements of work over to an external provider. The company can integrate the new or growing specialization into the organizational structure. * Logistics too important to consider outsourcing: Logistics is an important function. Seamless flow of material information keeps the business moving forward. * Service Level commitments may not be realized: Outsourcing is a marriage; it may not work well for the organization unless both parties involved work for common objective with mutual interest. * Cost reductions may not be