Inbound Logistics | July 2023

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Navigating the Insourcing vs. Outsourcing Debate in Post-Covid Logistics

Q Insourcing or outsourcing logistics execution—what has changed post-Covid? A Gartner Research reports a continuous increase in the demand for logistics outsourcing, with 68% of companies already outsourcing or planning to do so in the next two years. Current economic conditions have further fueled the need for new solutions, as rising costs in real estate, equipment, technology, and labor have increased supply chain budgets. Shippers are searching for options that o¨er productivity, scalability, and rapid time-to- value realization to address concerns about potential economic downturns and achieve cost reduction targets. Q How are third-party logistics companies addressing the evolving needs of shippers? A Logistics companies must go beyond traditional value propositions. While experience, access to best practices, risk mitigation, and cost reduction remain essential, shippers now expect these benefits to be delivered at an accelerated pace without sacrificing control and flexibility. An e¨ective approach that fulfills this promise is a hybrid model that establishes a genuine partnership between the logistics provider and their customer. This model capitalizes on the combined capabilities and resources of both parties, with greater scale and shared knowledge generating optimal results.

For example, Capstone has developed a collaborative warehousing model known as “Guest in Your House.” In this scenario, the shipper controls the real estate and inventory management system to ensure flexibility and data continuity. Meanwhile, Capstone leverages our people, processes, and pay- for-production model to run and continuously improve tactical operations. Hybrid, customer-centric approaches like “Guest in Your House” are necessary for 3PLs to meet the evolving needs of shippers in the current economic environment. Q Why work with an integrated, multi-service 3PL company versus one focused on a single solution? A Working with an integrated, multi- service 3PL company brings significant benefits compared to partnering with service providers focused solely on warehousing or transportation. Integrated 3PLs o¨er seamless coordination and synchronization between di¨erent logistics functions, enhancing operational eciency, streamlining processes, and increasing supply chain visibility. They have the expertise and resources to handle diverse requirements, providing the knowledge capital required to quickly address network challenges and minimize the impact of broader ineciencies. Moreover, integrated 3PLs leverage advanced technologies to drive eciency, innovation, and data-backed decision-making throughout the logistics process. These advantages make working with an integrated, multi-service 3PL an attractive choice for businesses seeking a comprehensive and technology-driven approach to their logistics needs.

122 Inbound Logistics • July 2023