If you think about it, huge parts of many organisations most crucial customer-facing elements are outsourced.
How many organisations rely on third-party customer service, delivery organisations or temporary staff to service their most essential customer functions?
These essential services are often outsourced to third parties and where more complex services – like Logistics – are included, a lack of internal expertise can lead to poor supplier management.
Often issues are only uncovered when problems arise and when this happens, the knock-on effect to relationships and reputation can be damaging. According to a recent survey by Logistics Manager, 80% of UK companies are in some way dependent on Third Party Logistics (3PL) suppliers, but only 11% feel equipped to deal with their failure. The same survey also highlighted a 46% increase in the number of logistics operators reporting “significant financial distress”.
Logistics is a sector with high capital cost and traditionally low margins. With cash-flow also an issue, chaotic market conditions represent a real threat to the sustainability of suppliers’ businesses.
In our experience, not enough understanding of the market exists within the buying organisations, meaning there is little way of making practical comparisons about suppliers, or decisions concerning their long term practicality as partners.
And when your customer value promise relies on them so heavily, with no internal expertise, the value of independent external advice cannot be dismissed.
For more information, please contact us.
Article by: Ken Rogers