The contemporary economic climate is certainly inflicting gloom, doom, fear, and, in some instances, panic in the logistics industry. The credit crunch, unparalleled monetary volatility, deteriorating client self-assurance, yo-yoing gasoline charges, multiplied governmental policies, declining revenues, extreme earnings, cash float pressures, lack of pricing energy, and excess capacity are all having an impact on the enterprise’s bottom line.
BPO comes to the rescue
Business process outsourcing (BPO) is a strategic and efficient life raft for companies attempting to stay afloat in these turbulent times. If properly implemented, BPO can be a quick and simple solution for rapidly reducing costs, assisting businesses in surviving the economic downturn, and laying the groundwork for future growth and expansion after the economic tsunami subsides.
Why should logistics companies use BPO?
Companies that want to survive the most difficult economic climate in over 60 years must cut costs quickly. And, despite being laggards in BPO adoption, logistics firms can gain significant cost savings value by leveraging BPO. Customer service, for example, accounts for roughly 60% of a logistics company’s operating costs. Approximately 60% of this is back-office document processing or phone-based customer contact. Outsourcing these processes to a logistics industry expert can result in cost savings of 40 to 50 percent.
However, bpo services outsourcing provides benefits that go far beyond cost savings, such as shifting costs from fixed to variable, retaining customers in the face of operating cost cuts, focusing on knowledge rather than intuition to increase revenue, consolidating delivery operations to standardize business processes, getting even more out of shared services costs, and delivering continuous improvement. Logistics firms that have incorporated BPO into their corporate strategy are better positioned to weather the economic storm that threatens to sweep away even the most established players.
The Expansion of Business Process Outsourcing
BPO has evolved from being the domain of entry-level tasks or one-time projects. Data entry, call center operations, and payroll have long been accepted as cost-effective operations and management alternatives, but larger-scale business operations are now expanding the BPO landscape to more senior positions.
Agility is a top priority for businesses of all sizes, including small local businesses, because they now operate in a global environment. With competition as close as a few web clicks away, businesses must be responsive to their customers’ and prospects’ changing needs and expectations. Businesses can respond to changing market needs more easily if they can quickly locate and engage a variety of service providers.
The advancement and integration of technology platforms has altered how businesses interact and meet service obligations. Because of the near-universal availability of connectivity and “cloud-based” data, outsourced business processes can be accessed from anywhere in the world.
The removal of logistical and geographical barriers has also contributed to a reduction in the cost of outsourcing business processes. Further cost savings are possible when businesses eliminate the physical overhead of staffing, office space, and equipment.
These factors, when combined, have fueled the adoption of executive and managerial-level BPO, which includes financial operations, sales leadership, and management, information and data technology, e-commerce front ends and fulfillment, and human resource management. To some extent, most business operations can now be outsourced.
The Advantages of Business Process Outsourcing
The aforementioned drivers can also be viewed as advantages of business process outsourcing. However, other advantages have emerged as motivators for BPO adoption:
When a company outsources, the service provider bears a large portion of the cost of maintaining current technology, such as software and communications equipment, and they spread that cost across multiple clients.
Specialization And Expertise
Businesses that use BPO can remain competitive by retaining top talent without incurring the full cost of overhead and embedded costs for recruiting training and certification, and onboarding.
Smaller businesses can keep their budgets intact by hiring outsourced business process consultants on a fractional basis. That means they can obtain the required senior-level expertise on a part-time and low-cost basis.
Management of Performance
If performance falls short, it may be easier to transition to new providers via business process outsourcing than to implement a performance management plan for internal staff, which includes terminations, recruiting, training, and onboarding.