Outsourcing distribution can raise a number of questions for manufacturers. With outsourced distribution, you’re putting your trust in a third party to deliver your goods on time, and in the perfect condition they left their journey in.
As such, the decision can be both strategic and complex, requiring detailed planning and serious contemplation. While this may seem daunting for small businesses making their first step towards scaling their operations, trust that with the right preparation and insight, you can find the ideal arrangement for you and your enterprise.
Learn how distribution outsourcing can be key to a well-oiled, streamlined, and cost-effective supply chain – and how best to do so.
Contents
- Understanding contract logistics
- Choosing an outsourcing partner
- The benefits of distribution outsourcing
- Overcoming the risks and challenges
- The first steps
Choosing an outsourcing partner
We understand that circumstances can change, so we’ll always be transparent with you when it comes to signing your contract. A well-established and effective outsourced distribution partner should be scalable and flexible.
When you find one that appears to ‘fit the bill’, ensure that you conduct due diligence and assess your potential partner’s track record and technological infrastructure along with their industry certification. For instance, at Dennis Distribution, we achieved AA+ for our unannounced BRCGS audit in August 2023 and regularly support high-demand supply chains for clients such as restaurant chains and companies in the bakery sector.
If you cannot find similar details on a distributor’s website, it’s best to reach out via email or phone to get a good grasp of their offering; although a reputable haulage company should be transparent about their processes.
When you work with a trusted supplier, you’ll soon discover that outsourcing distribution can help you to:
- Save time with admin and planning
- Navigate local customs and/or legal affairs
- Scale up or down your distribution
- Reduce your carbon footprint
- Access the best technology
- Cut costs via fuel savings, efficiency and competitive pricing.
So, how does outsourced distribution benefit your business?
The benefits of outsourced distribution
The key benefit of outsourcing your distribution is that you’re putting your goods in the hands of the experts – those who know the best routes, how to keep your product safe, and what to do in the case of an emergency.
This allows businesses to reap a number of advantages that may give them an edge over their competitors. Here are the advantages of working with a distribution partner in greater detail.
Using technology to ensure goods arrive in perfect condition
Your role is to ensure you produce the best products, but these are at the mercy of your distribution network. By using a 3PL, you’ll benefit from the third party’s tech, including:
- Live tracking software, checking temperature-controlled goods
- Warehouse and transportation management systems
- Radio frequency identification for stock taking
Having this tech at your disposal also means you’ll cut down on warehouse costs. Generally, this type of technology is very expensive – with third parties, it’s all part of the haulage rate, helping you to reinvest where your business needs it most.
Adjusting to demand in real-time
Another benefit of outsourced distribution is that you can react to changes in demand. No matter how slick your operations, customers change their minds, order numbers fluctuate, and destinations vary. Managing this in-house can quickly become an administrative headache.
Scaling your operations
By outsourcing distribution, you’ll have access to a vast network of drivers around the country, ready to take on new challenges as and when they come in. Besides adapting to changing consumer demands, it is also essential if you want to scale quickly.
Long-term, this also makes scaling more sustainable, without having to worry about extra staff or procuring your own vehicles. Meet demand without sacrificing customer care. Sustainable growth results in lower costs…and higher profit margins.
Making your shipments more efficient
One of the key drivers for enterprise in 2024 and beyond is sustainability. By working with a third-party distributor, you can ship more of your goods in fewer journeys – despite different temperature requirements.
Combine multiple drop-off points in a single journey to save costs and reduce your impact on the planet. Then add a strategic, centralised location or distribution hub into the equation and become even more efficient. These sustainable distribution practices will not only improve your bottom line and environmental credentials, but they have a positive knock-on on effect for your brand reputation.
Lower capital expenditure
With less money spent on technology, warehousing space and training, you can allocate more funds to your business. There’s no need to invest energy and funds into plant maintenance, staff and repairs, leaving you the time to focus on your key business functions. Scale up or enter new markets while the experts handle the logistics.
Maintaining your reputation
There is little sense in manufacturing the perfect product, only for it to perish in transit. Outsourcing distribution gives you the time to focus on your product, while your distributors manage getting it from A to B. Don’t be let down by failing infrastructure – save money on fleets and staff, and outsource instead.
Expertise and specialisation
When it comes to maintaining your business, peace of mind cannot be overlooked. By partnering with a distributor with years of deep expertise within the industry, you can rest assured that your products will be transported and stored safely and compliantly. This means meeting and going beyond food safety legislation to ensure they arrive in perfect condition.
Outsourced distribution: the risks and challenges
It’s perfectly normal to be concerned about working with a third party. Your processes may be unique to you, and you may have justified worries about the customer service elements. This is why it’s so important to understand the risks and choose an accredited supplier.
Marketing and pricing
When handing over distribution to a third party, you may worry about how this affects your pricing – for example, added costs for mileage. Working with an accredited supplier means you’ll have access to drivers who know the most efficient routes, cutting down on fuel costs and passing the savings on to you.
For instance, we’re members of Logistics UK, which offers drivers the latest sustainability guidance in their mission towards Net Zero. Thus, the added cost of outsourcing your distribution is offset by a variety of benefits that, collectively, will improve your overall operations.
Product handling
No two products are the same, and many may need extra care during transportation – such as chilled and ambient temperature foods or pharmaceutical goods. You’ll need to choose a supplier who is familiar with the intricacies of transporting your particular product.
Accreditation to look for
To negate any risks related to product handling, you should look for accreditations like the Brand Reputation Compliance Global Standards (BRCGS). This means that distributors follow a strict set of guidelines for temperature-controlled goods, giving you peace of mind and compliance assurance.
Some accreditations may also be product specific. For example, we are accredited by the Dairy Transport Assurance Scheme – offering quality control when transporting milk products and ensuring optimal food safety during transportation.
Inflexible contracts
You should always be wary of any inflexible contracts or long-term agreements that are hidden behind reams of legalese. An honest outsourced distribution service will tell you exactly what to expect. Don’t be tied into long-term exclusivity agreements without reading the small print.
The first steps
Once you’ve weighed up the risks and benefits and have decided to work with an outsourced distribution provider, you’ll come to an agreement about the exact processes and services involved.
An essential first step is to decide which part(s) of the supply chain you need to outsource and to pass on your expected journey requirements and product details. Clearly communicate your expectations when detailing your product specifications, expected volumes, delivery timelines, and any unique challenges will ensure alignment from the outset and prevent misunderstandings down the line.
This will allow your provider to get to know your business and provide the most seamless experience possible. As we’ve discussed above, transparency is key to a good working relationship. Once both parties are up to speed, aware of their responsibilities and have all the necessary tools, the real work can begin.
Striving for the best customer service
Everybody has their role to play in the supply chain. Yours is to continue serving your loyal customer base, and ours is to bridge the gap between warehouse and consumer.
We do our utmost to ensure as much stock can be transported as safely as possible. We also have fleets operating throughout the UK and Europe, helping to reduce mileage.
As a family business, we’ve made a name for ourselves doing this for decades. Get in touch with Dennis Distribution here to start outsourcing today.