Say you’ve just established your own firm: a plucky little upstart destined for great things that you’ve been planning for years. Having smartly identified your business opportunities and neutralized your threats, you’re poised to be the next Chris Kirubi, but with better hair. We applaud your entrepreneurial spirit and ask you just one question: how are you handling your logistics? Have you chosen to work in-house or hire an external firm? There’s only one correct answer to that question, and we know what it should be.
The most integral part of supply chain management is also the key selling point in advocating for use of external logistics firms: vehicles. While having a large fleet of varied cars at your disposal seems like the perfect set up, it is a convenience that comes with hefty penalties, most of them associated with maintaining the vehicles.
Keeping cars in top condition requires routinely replacing worn out or defective parts to ensure smooth running. This means that your company will be forced to hold large reserves of car parts stocked, ready for use at a moment’s notice. Aside from unnecessarily tying up capital that would have been used elsewhere, this also requires you to have storage facilities for the car parts, preferably in a garage.
Since cars require repairs constantly, it will be necessary to set up a garage space in which repairs will be done. Purchasing or renting a location, acquiring the necessary equipment and staffing said garage with trained experts bring new costs that quickly add up and drag your company into financial quicksand. Having and operating a fleet of cars also comes with additional charges such as insurance fees for each car.
Assuming you decide to go with hiring a preexisting garage to maintain your fleet, the above named costs balloon based on the profit margins favored by your mechanics of choice. You must also consider parking space for the vehicles, as it is important to ensure that they are safe overnight or when not in use.
Having a firm-specific delivery crew will also mean that you need to recruit skilled personnel who can work with your vehicles efficiently. You will need to commit time and money into finding people who are appropriately experienced, and of course, plan for their salaries. Similarly, the issue of benefits such as health insurance comes up, with covers needed to extend to the families of staff chosen.
With fishy retailers charging VAT on milk and bread. I’m not giving you any good news today, am I?
With additional, “hidden” costs springing up all around you and budgets to be made, your competitors who chose to contract a logistics firm are breathing easy. With external service providers, you as a business owner simply need to point out where and when you require delivery, then allow the logistics company (like ours) to do the rest. In case of any mishaps or delays, finding a solution and rectifying the situation is left to the supply chain management company, whose sole duty is to meet requirements set by you as a client.
Connected to this is the concept of transference of risk. In running your own fleet, issues such as liability for accidents, or planning for eventualities such as delays caused by mechanic malfunctions rest squarely upon your shoulders. Where an external logistics firm is involved, you as the client are absolved of any wrong doing in the case of an accident, and may even be entitled to compensation for services not rendered or goods damaged in the process.
Not only does delegating your delivery to a logistics firm cost less, it also guarantees more efficient freighting by the far more experienced firm you just wisely hired. With this information readily available, it is up to you to choose between a life of constant worrying about unexpected expenses and dedicating your energy to your core business, knowing your deliveries will be taken care of. We know which one we’d choose, do you?