Companies need to be able to identify risks in their total supply chain and be able to manage any potential threats to their own business. One potential risk area for businesses is outsourced logistics; which includes but is not limited to: transport, warehousing, fulfilment operations and distribution; diverse activities which can be outsourced to Logistics Service Providers (LSPs).
Risk of continuity of supply occurs when LSPs, amongst other businesses, begin to experience difficulty; piquing the danger of in-house skill and expertise (let alone the physical infrastructure) becoming extinct internally within an organisation (as many parts of the infrastructure have been outsourced) resulting in internal “de-skilling”.
The answer to mitigating risk within your Logistics Operations however, is not necessarily to bring logistics “in-house” as this depletes substantial time and investment in physical resource, and also usually requires up-skilling the internal workforce through large scale training and recruitment programs.
Alternatively, the better solution is to ensure an improved detailed level of understanding of the current LSP service and how it operates within the overall LSP market. With a higher level of understanding, businesses can quickly identify what expertise is available and where to react quickly to supply chain demands should the current LSP be unable to continue. Furthermore, it can enable a company to identify the early warning stages of potential Logistics Operations issues, and where possible, work with the LSP to mitigate these effectively.
The Logistics and Supply Chain Specialists at Gideon Hillman Consulting who have a background of working with or for Transport and Logistics Service Providers, and have significant experience in developing the scope of the logistics outsourcing tenders to cover all operational and service requirements; recommend investing in a specialised internal Logistics risk management team, to work very closely with your business’s current LSP, to understand every aspect of their operations and capabilities, and also of the LSPs own disaster recovery or business continuity plan.
Such an investment could protect your business, and be the difference between enabling your business to react quickly and efficiently; and avoidable changes in the supply chain. As such, a small percentage of money saved in previous years by outsourcing logistics, could be integrated into the a business’s budget to facilitate such an investment.
After all, the speed at which a business can revert to ‘business as usual’ depends on an effective business continuity plan, and how quickly it can be implemented; all conducive to mitigating risks in Logistics Operations.