Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Posted by on in Business Transformation Strategy
  • Font size: Larger Smaller
  • Hits: 241
  • Print

Should your company Outsource the Management of its Logistics Operations?


As baby boomer logistics leaders move into retirement, their successors are tasked with directing the company’s distribution operations. Informed business leaders realize that we are in a period of profound changes. Companies such as Amazon and Uber are disrupting current business models. Technology and automation are altering manufacturing processes. Ecommerce and omni-channel distribution are upsetting existing retail processes. As my colleagues and I meet with shippers, we find many companies are exploring their options. Should they try to manage these changes in house or should they enlist the support of outside resources?

In-House or Outsource?

It is important to understand that business leaders do not face a binary choice. The field of Logistics is more complex than it has ever been. Senior logistics professionals must possess a variety of business skills and possess a depth of knowledge in a range of areas such as supply chain design and management, warehouse and inventory control, customer service, transportation and information management. These leaders must then be able to adapt and apply their skills and knowledge to specific companies in the manufacturing, distribution and retail sectors, including bricks and mortar and eCommerce organizations. This leads to a fundamental question for every organization. Does the company have a set of leaders who possess this range of skills and knowledge?

While it is unlikely that one senior executive will possess all of these attributes, the broader question is does the company possess these skills across its logistics management team. If not, what skills and knowledge does it need to import from external sources? This article outlines how to create a leadership plan ( ).

Should we hire a Consultant or a Logistics Company and/or a Recruiter?

Once a company goes through the exercise of identifying its logistics strengths and weaknesses, in conjunction with its supply chain goals and objectives, it is then in a position to determine which skills, if any, it needs to acquire.

Does the company require a TMS system and the IT expertise, internally, to document its needs, prepare an RFP and recruit vendors that match up best against its business profile? Does the company need to redesign its network operations or craft an effective strategy to structure the optimum mix of distribution channels? Is the requirement more extensive? Does the company have a leader or leaders who can drive the organization’s logistics operations?

Every company has a different set of logistics requirements; every company requires a unique logistics management strategy. For companies that have some major gaps in their logistics organization structure, a top industry recruiter may help fill the gaps. Some companies need to pay for consulting expertise for a specific period. If they need an IT or process resource to perform specific functions, a consultant may meet the need. Once the task is performed, they then need to bring the management of the new process in-house.

For those companies that don’t wish to make the investment in in-house expertise, or hire a consulting company to provide the expertise, they have the option of outsourcing some or all of the management of their supply chain operations to one ore more logistics service providers. Shippers need to be aware that LSPs have a consulting arm.  These are the people who design the logistics solutions for their clients.  

On the other hand, these companies will try to adapt their clients’ requirements to their business model, IT capabilities and carrier network. These so-called “consultants” are working for their LSP. This must be kept in mind by companies that take this route.

Going the 3PL route begs another question. Does the company that is doing the outsourcing have the resources and KPIs necessary to manage the logistics service provider or providers?  While it can be advantageous for some companies to outsource some or all of their logistics operations, these functions need to be scrutinized and evaluated. Otherwise, the shipper loses control and is essentially at the mercy of their LSPs.

We see some smaller organizations that place the logistics function in Finance and deploy a set of mid-level managers to lead these technical departments (i.e. transportation, order processing, inventory management), with varying degrees of success. Smaller companis cannot abdicate their responsibilities to manage their supply chains. While they may not be able to afford or require a high caliber logistics executive, they have an obligation to make sure that the executive, and the team supporting the logistics leader, receive training to perform these functions at a high level.

Larger organizations will often utilize two or three options. This raises another set of issues. Just as some shippers don’t possess all of the requisite expertise, neither do all consultants or LSPs. Some logistics companies specialize in certain industries (i.e. automotive, refrigerated products) and in certain functions (i.e. transportation management, return goods management) but have gaps in other areas (i.e. retail, warehouse design).

In other words, the company seeking external resources must do their due diligence to make sure that the organizations being evaluated and recruited will possess the skills to achieve excellent results. Here are five traits to look for when choosing a logistics consultant) ( ).

A smooth functioning supply chain can be a business differentiator. Take the time to carefully assess the value of each of the three options for your business.


To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (



  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Tuesday, 22 August 2017

Most Recent Posts


Tag Cloud

2015 Economic Forecast bulk shipping Career Advice Business Strategy BlueGrace Logistics Fire Phone Search engine optimization Associates University of Tennessee Sales Management 360ideaspace the future of transportation President Obama Stephen Harper Trade Vision APL Shipper Consulting Warehousing Trump NMFC Werner Infrastructure Reshoring economic forecasts for 2012 Scott Monty Blogging Loblaw autonomous vehicles Donald Trump Climate Change small business US Auto Sales Derek Singleton Railway Association of Canada Grocery routing guide ShipMax CSX Success MPG transportation news freight bid IANA Management 2014 freight volumes David Tuttle CN broker bonds Retail Tracy Matura selling trucking companies NAFTA Crisis management LTL transportation audit freight payment freight audit Distribution Leadership Colilers International Outsourcing Sales Freight Matching Canadian freight market last mile delivery freight transportation Keystone Pipeline Transcom Fleet Leasing Transportation Buying Trends Survey hiring process Freight freight payment 2014 freight forecast USA Truck Canada Horizontal Supply Chain Collaboration US Manufacturing capacity shortage BNSF buying trucking companies Comey Regina CSA Freight Management NCC Entrepreneur Carriers Masters in Logistics Inbound Transportation Education EBOR NS Rate per Mile Failure financial management freight costs Canada's global strategy FMS network optimization freight rate increases 2013 Economic Forecast Yield Improvement Global Transportation Hub coaching Canada U.S. trade Microsoft shipper-carrier roundtable shipper-carrier collaboration MBA Map-21 Twitter Canadian economy online shopping Truckload LinkedIn LCV's Sales home delibery Bobby Harris FCA Broker Amazon Driver Shortage FCPC Transportation Accessorial Charges cheap oil Trucking Global experience Right Shoring Business Transformation Strategy Omni Channel Transport Capital Partners (TCP) Canada-U.S. trade agreement YRC Software Advice CSA scores Doug Davis economy dimensional pricing broker security driver shortages solutions provider Crude Oil by Rail Training New Hires FMCSA professional drivers UP energy efficiency Emergent Strategy freight broker robotics freight cost savings 3PLTL Deferred Packaging mentoring New York Times Surety bond freight transportation conference Dan Goodwill Freight Capacity Freight Shuttle System Toronto RFP e-commerce driverless pipelines 2014 economic forecast Spanx Packaging JB Hunt Freight Carriers Association of Canada Otto automation CN Rail Canadian Transportation & Logistics tanker cars 2012 Transportation Business Strategies. Jugaad truck drivers Success failure entrepreneur Transportation service US Election Canadian truckers Finance and Transportation Load Boards ProMiles Doug Nix Social Media fuel surcharge Rotman School of Business driver Muhammad Ali Ferromex Cleveland Cavaliers Business skills CITA Shipper Pulse Survey freight agreements TMS rail safety CP Rail consumer centric US Housing Market Transloading freight RFP Swift truck driver peak season Schneider Logistics Politics derailments home delivery intermodal US Economy Freight Rates TransForce Facebook $75000 bond Social Media in Transportation dynamic pricing 3PL marketing Job satisfaction Harper Davos speech Whole Foods freight forwarders business start-up Dedicated Contract Carriage shipping wine Conway freight transportation in 2011 customer engagement Hudsons Bay Company drones Wal-Mart FuelQuest Sales Training Freight contracts trade CRM Transplace trucking company acquisitions Training Load broker Celadon Rail Retail transportation employee termination freight audit transportation newspaper capacity shortages carrier conference Freight Recession Adrian Gonzalez KCS TMP Worldwide future of freight industry Life Lessons shipper-carrier contracts Driving for Profit shipping Dedicated Trucking

Blog Archives