Internal and external logistics: making the right choice

At the start of activities, many companies find themselves faced with a dilemma: should they internalize or outsource their logistics activities? This question is fundamental since it will determine the packaging, the transport, and the customer experience, while impacting its costs and consequently its turnover.

Choose internal logistics

Internal logistics corresponds to the exchange of physical flows and information within a company which will ensure, beyond its production role, the smooth running of all stages of the supply chain.

4 branches are integrated into internal logistics:

• Production of finished products, ready for storage
• Internal transport is provided within the limits of the company's facilities. Loads can be moved between the different production sites, from one building to another, or from one cell to another.
• Inventory management must be taken into account by the company. The latter must be able to locate the goods at all times, know its stocks and thus ensure the proper preparation of orders. The WMS (Warehouse Management System) will assist in all of these tasks.
• Warehouse management will integrate order preparation missions, product location management (FIFO/FEFO), palletization, and shipment to the end customer.

What are the necessary conditions to set up internal logistics?

Internalizing your logistics will require large spaces. Indeed, the company must be in possession of an area that can accommodate both production activities (industry, machines, etc.), but also a storage area (warehouses, factory large enough to ensure storage, etc.) .

To ensure the unloading of trucks or containers of raw materials, but also to ensure the loading of finished products to the end customer, the company will automatically have to have docks.

It is a set of conditions that require significant financial resources.

Internal logistics will also require significant resources. Indeed, it will be necessary to consider human resources and integrate employees dedicated to the management of the supply chain, as well as transport specialists, or even handlers.

The material means must also be taken into account (forklifts, computer means, etc.). This mobilization has a certain cost, but it is essential to the proper functioning of the supply chain.

It is true that the internalization of logistics offers certain advantages, this can make it possible to no longer depend on a logistics provider, to reduce transport distances and reduce the number of handling operations.

A greater control of the production and distribution process can then prove to be appreciable for the company. However, any decision to internalize its logistics is made in comparison with the advantages and disadvantages of outsourcing.

Why use external logistics?

We talk about logistics outsourcing when a company entrusts one or more service providers with the management of its logistics operations. The logistics service provider can then be entrusted with inventory management missions, package preparation, up to the final delivery of orders.

The advantages of external logistics

It allows you to focus on your core business. Bringing together its means and efforts allows the company to improve on other strategic points such as research, design, marketing and thus strengthen its competitive advantage. Today many companies are exclusively focused on research and development. They thus transfer manufacturing to a factory and their entire Supply Chain to a logistics provider such as XP LOG. This structural change is part of a real optimization process.

It grants a financial advantage. Outsourcing, also called outsourcing, reduces investment needs (infrastructure, such as multimodal logistics platforms), but also reduces operating costs (transport, storage, payroll).

It allows you to maintain a relationship of trust. Trust in supply chain management skills will be established. It will provide support to the company that uses it and allow it to exploit skills that it would not have been able to develop itself. Working with specialists remains above all a guarantee of quality and responsiveness.

It also makes it possible to meet temporary logistical needs.

As we have seen, both external logistics and internal logistics provide many advantages. But to make this complex choice, it will be necessary to establish a confrontation of the solutions and / or the advantages proposed, the most adapted to achieve the objectives of the company.

Our advice for making the right choice

First of all, you can make a comparison of the possible costs related to an internalization with the costs induced by an outsourcing. Consideration of fixed costs, variable labor costs, etc.

Then, it is necessary to put in competition the quotes of several logistics service providers by carrying out a call for tenders. Or consider costs related to the transition of working methods.

Our expertise

Today, as a logistics provider, XP LOG can support you in your outsourcing process. Indeed, with more than 20 years of experience in the sector, the international logistics provider XP LOG offers you modular logistics services according to the specificities of your products.

Located in Le Havre in Normandy and in Fos-sur-Mer, our port location and our mastery of the supply chain allow us to offer you complete and tailor-made solutions by integrating all supply chain trades from the reception of your goods in containers to final distribution to your customers, including warehouse storage and order preparation.

XP LOG has fast and rational logistics solutions based on solid human and technical expertise. Our role is to provide you with advice on optimizing your stocks, with a constant concern for quality and competitivity

Our services are flexible according to the specificities of your products. Thanks to our 189,000 m² of storage warehouses, and our 20,000 m² of container park in Le Havre, as well as our 24,000 m² of surface area including a chassis park in Fos-sur-Mer, our logistics company offers you complete and tailor-made logistics solutions allowing you to concentrate on your core business.