02/16/2024
Seven key steps to optimize logistics outsourcing
Although there are many benefits to logistics outsourcing, a strategy is needed to implement it properly. Here are 7 key steps for e-commerce players!
From inventory management to distribution and returns, it's not always easy for e-commerce operators to manage the logistical aspects of their business. To reduce costs throughout the supply chain, enhance quality and knowledge, or free up time, many companies turn to outsourcing their logistics. In this article, we'll take you through seven steps to help you get over this hurdle and maximize the benefits of outsourcing.
Step 1 - Define your logistics needs
Forecasts are the key to successful e-commerce management, including logistics outsourcing. The better you know your needs, the better the outsourcing solutions you can implement. E-commerce logistics outsourcing involves delegating to a 3PL provider the management of your e-commerce logistics and fulfillment, from stock to deliveries, order preparation, packaging and customer returns management.
Start by identifying your storage requirements: how much product will you need your logistics provider to stock?
To calculate the number of cubic meters required, three factors need to be taken into account:
- the target stock coverage
- the number of sales
- the type of products you sell
The logistics provider can adapt its storage methods and picking locations to suit your needs. Also consider your expectations regarding shipping and delivering products to your customers. Would you like personalized parcels? Special services such as copacking? How will you manage product returns? What expertise does a particular provider offer?
The answers to these questions will help your chosen logistics specialist optimize processes and costs, ensuring customer satisfaction.
The service provider must be able to offer storage solutions tailored to your needs. Your choice might also depend on the location of your warehouses: are they well situated, close to carrier hubs or major road routes?
Each logistics provider offers a different service and has a unique skill set. Take the time to study their proposals and ask them about customized solutions tailored to your company's profile. Special criteria may come into play, such as attention to the environment, or cutting-edge technologies, like Cubi Scan, which enables GEODIS to precisely measure each item of merchandise to calculate its volume, optimize stock management and achieve storage cost reduction, etc.
Of course, make sure that each player is reliable!
Step 3: Connect the logistics solutions to your IT system
Integrating the logistics solutions also needs to be taken into account. To access order status management functions and track deliveries or returns, not all logistics service providers supply plug & play software that can be quickly and easily integrated into your IT system.
Check the compatibility of IT interfaces (CMS, WMS, OMS and marketplaces) with the technology solutions proposed. For example, OMS complements WMS. If you want to accelerate your international expansion, it's a good idea to use it, as it offers better order management and optimization performance than WMS.
An automated returns management solution, integrated directly into your site, will save you time and enhance your organization and reliability, thereby enhancing the customer experience.
Step 4: Entrust your goods to the logistics provider
You'll then need to send your goods to the warehouses of the e-commerce logistics provider you've chosen. This step is essential, even before you start receiving orders.
A carrier will be assigned to this task. To choose the right provider, assess and compare not only costs but also the location of each carrier's hubs and the associated transportation time, the proposed collection times and, last but not least, the services specific to each provider. If your goods are very large or fragile, or require special care (cold, medicines, etc.), make sure this option is available.
Each product must be well packaged before shipment. Pack them in sturdy cardboard boxes, ideally on pallets, for easy handling. Above all, remember to label pallets and packages with product SKUs, to make it easier for the logistics provider to find its way around on arrival!
Step 5: Delegate intralogistics to ensure compliance with current standards
Intralogistics is a series of processes designed to improve the organization of goods and information. These processes, which can be used to receive raw materials or define shipping and storage standards, are complex. It’s possible, and even advisable, to delegate them to your logistics provider in order to comply with the various regulations your company needs to meet.
For example, in addition to shipping labels and EANs, which are used to facilitate the transport of goods, you'll need to add MSDS (Material Safety Data Sheets) when working with certain products. This is the case if, for example, you store or ship fragrances, aerosols or products containing lithium batteries.
Another type of high-risk merchandise requiring enhanced intralogistics processes are products with rotation constraints, such as food products subject to HACCP standards, or perishable products subject to BBD or BUD dates. A reliable logistics partner will be able to take these data into account and optimize stock management to ensure sufficient rotation.
Step 6: Define shipping and delivery specifications
To improve your customer experience, shipping and delivery are areas that mustn’t be overlooked. As an e-commerce operator, you can deal directly with a carrier. However, you can also choose a subcontractor for these tasks, in this case a logistics provider.
The benefits of this second solution can be measured in terms of cost. Because providers have a relationship with lots of companies and work with very large volumes of goods, they have greater agility and are better able to negotiate advantageous rates with carriers.
Logistics specialists are also accustomed to managing product shipments. They know how to choose the right packaging to suit the size or type of product, and how to pack it properly to limit breakage as much as possible. Lastly, a logistics provider will manage the administrative aspect of delivery: invoicing, delivery problems, insurance, etc.
If you opt directly for a carrier despite the potential drawbacks, pay attention to several criteria: pricing, of course, to maintain a certain degree of competitiveness, but also the environmental footprint, the location of your warehouses and their proximity to the various carriers’ hubs, and the location of your customers. Some achieve more efficiency than others, depending on the country.
Step 7: Monitor your e-commerce activity on a daily basis
Finally, you need to be able to monitor your activity in real time throughout the supply chain, so that you can maintain control over inventory management while using an outsourced logistics provider. Good flow monitoring enables you to adjust stock levels if there is a temporary fall in activity, or conversely, a sharp increase or a peak season (season, Black Friday, Christmas, sales, etc.). Avoiding stock-outs is key to maintaining a good customer experience.
Optimized real-time tracking is also a major benefit on a day-to-day basis, for tracking returns and refunds (and ensuring better communication on this with your customers), as well as for more specific cases: for example, in the event of a defective product or a non-compliant food product, which will require a product recall procedure, or as part of managing perishable products, to ensure good rotation and avoid throwing away products with expired dates.
Lastly, this will have an impact on e-merchandising optimization. Do you have great sales of beach umbrellas in May? Thanks to regular, careful monitoring, you'll be able to look ahead to the next year and expand your product range over this period, boosting the growth outcomes for your e-commerce business. Similarly, frequently returned products could perhaps be removed from the catalog, upgraded or replaced.
In summary…
There are many advantages to outsourcing your logistics, provided you take the right steps. From knowing your needs to tracking your inventory in real time in the supply chain and choosing the right logistics partner, the seven points we've covered in this article are vital not only for your internal organization, as they help you improve productivity and focus on your core business, but also for your customers, as they help increase your customer satisfaction rate. This will take your e-commerce business to the next level…
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