Manufacturing News

Manufacturers urged to outsource transport only after due diligence

Leading national outsourced transport provider Ontime Group has urged
manufacturers considering outsourcing of their delivery transport requirements to
exercise caution when hiring a transport service provider.

Ontime Group General Manager and transport industry veteran Walter
Scremin warns that the unregulated industry is now teeming with suppliers, and
observes that anyone who can buy a few vans or trucks would present themselves
as transport solution providers. However, to avoid future problems, manufacturers
need to ask astute questions, consider a competency test and find out more
about the company, their track record, the business culture, and client
experiences.

A survey of the supply chain and warehouse sectors from earlier this
year found dissatisfaction with outsourcing transport arrangements. The survey
showed that 69 per cent of respondents who have already outsourced their
transport function said they were not seeing any benefits in the key areas of
transport costs, transport asset reduction, order fulfilment and delivery
service levels. About 74 per cent of respondents were planning to review their
transport strategy within the next 12 months.

However, Mr Scremin believes moving transport back in-house is
equivalent to taking a step backwards. He explains that running an in-house transport
service saddles the business with a massive, unnecessary fixed cost, and also increases
risk because the company will be responsible for chain of responsibility,
WorkSafe and other legislations.

He said outsourcing was ultimately a smarter use of resources as it made
transport a variable cost and freed up capital, which would otherwise be spent
on huge upfront costs. He adds that outsourced transport should provide more
control over resources, greater flexibility and lower costs while operationally
solving issues such as staff absenteeism and improving overall performance.

Mr Scremin also underlined the importance of getting a full picture of
the actual cost before committing to any program, to avoid future issues with hidden
costs.

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