Companies outsource their logistics functions is in order to decrease the number of warehouses, vehicles and excess inventories and to reduce shrinkage, and labor costs. Such moves bring down fixed and working capital investment. Companies can therefore focus on their core business activities and share the risks.
Outsourcing is a viable business strategy because turning non-core functions over to external suppliers enables companies to leverage their resources, spread risks and concentrate on issues critical to survival and future growth.
Why outsource?
1. Strategic Factors:
- Focus on core competencies
- Improve customer service
- Enhance flexibility
2. Operational Factors
- Improved process execution
- Improved technology
3. Financial Factors
- Reduce costs
- Reduce capital requirements
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