What Is Distribution Outsourcing in Outsourcing Physical Distribution?
Every company has different strengths, that is a given. However, most companies also have the same basic operations that must be performed. Businesses have to have accounting and payroll departments, janitorial teams, and any other number of activities that are in no way related to their core business practice. For many of these roles, companies choose to outsource to different companies that specialize in those fields. As a result, payroll companies exist that handle the payroll accounts of hundreds of other companies. After all, as long as the work gets done, it’s not like a manufacturing company is going to increase its market share because it has a superb payroll department.
For most companies, distribution, the act of getting finished goods to customers is a similar task. Of course, it needs to be done, but warehouses and shipments aren’t the sorts of things that the board of directors or management gets excited talking about. For those firms, the option to outsourcing physical distribution is an easy one – why accept mediocre practices within a firm’s distribution when you can pay for the best? However, it’s not right for every company. In this lesson, we take a look at distribution outsourcing, hiring a company that specializes in distribution to handle it for your company’s needs, to see how it would work and the advantages and disadvantages of doing so.
Outsourcing Physical Distribution
Recent non-conventional approach to outsourcing physical distribution totals physical distribution. Marketers make arrangements with outside physical distribution service providers and allow them to operate independently, more like an extension of the company’s physical distribution arm. They may handle only physical distribution or may also function as a distribution channel. Outsourcing may help to achieve more efficiency, better service standards, and cost effectiveness compared to company’s own handling of all physical distribution functions. Air express companies provide such services and should not be confused with couriers or freight forwards. Just one agency handles all responsibility to move freight faster and provide the convenience of door-to-door transportation. Some of them even offer additional warehousing facility and function as a complete system. In India, AFL, Elbee, and Blue Dart are some examples of companies providing air express services.