International Logistics Group outlines process for outsourcing fulfilment

International Logistics Group (ILG) has released advice detailing the key indicators that suggest a business should consider outsourcing its fulfilment operations. The guidance outlines the potential benefits and considerations for businesses contemplating such a move.

According to ILG, businesses experiencing significant growth forecasts, nearing the end of current warehouse lease agreements, or facing the conclusion of existing third-party logistics contracts should evaluate outsourcing options. Launching new products or a review of financial performance, revealing cost savings, are also cited as common triggers.

The company highlights several advantages of outsourcing, including a shift from fixed operational costs to a variable model where clients pay only for services used. This can significantly reduce overheads associated with running in-house warehouse facilities. Furthermore, responsibility for health and safety compliance and managing staff absence are transferred to the logistics partner.

Outsourcing allows businesses to concentrate on their core competencies, such as product development and marketing, rather than managing the day-to-day complexities of fulfilment. ILG emphasizes the importance of selecting a partner that deeply understands the client's products and customer needs, functioning as an extension of the business itself.

As a financial benchmark, ILG suggests that annual logistics costs, excluding carriage, should ideally not exceed 6% of a company's total annual turnover to ensure efficient and cost-effective operations.