What??

You’re here, unless you are really ‘into’ logistics I guess the real reason is because you want to figure out which is better for your business. Fork out for all the vans, insurances, branding and drivers to keep it in house or call in one of the many professional delivery partners up and down the country to take care of it all for you.

There's no universal right answer. There's only the right answer for your business, your customers and your situation. This article is from my experience delivering as a driver about the things I've learned watching companies make this decision.

Like it or not. Other than the initial sales meeting, the management meetings and your marketing. The person YOUR customer will see next representing YOUR company will be the person delivering the goods.

You better get this right if you want more orders.

If they're late, turning up in a van that looks like it’s driven through of a swamp, the driver looks neglected, rude, not respecting the customer site rules then kiss goodbye to all your marketing spend, all your sales effort and brush up on customer retainment (aka grovelling) skills.

This is why getting this ‘expense’ right really matters. Logistics isn’t pretty, it doesn’t generate revenue for you. It’s a cost centre and a very expensive one at that. Yet it has the capacity to seriously damage your business in ways you never knew possible, until it happens.

So how do go about navigating this annoying but necessary cost.

Initially, when you are small. The orders are few and far between. You have the time to deliver too. Then you’ll naturally start off with one van. You’ll have it sign written or even wrapped by a local company with all your livery, logo, contact details. You’ll look the part. Sure it’ll cost but if your business can afford this. Your going places right. Plus your customer will see you when you deliver.

Then the order books get better. More orders start coming in and you figure out who’ll be out delivering from within the team. All is managed in house and business is good.

Now that you’re getting a rep for producing excellent goods and delivering on time. Word start spreading and you sign up more customers who pay on time and order multiple quantities on an ongoing basis.

Your in house logistics dept is overwhelmed and you need to make a decision.

In-house or external logistics?

In-house logistics

With in house you’ll have total control of who delivers what, where and when. You’ll need someone to schedule a route, confirm with customers, keep a tab on delivery paperwork you have total control and total responsibility too.

Your delivery team builds deep product knowledge. They learn how your stuff needs to be handled, straps, padding, fragile edges, the specific way things need to be stacked. That knowledge lives in your team which you direct.

You will have to invest in more vans (lease them?), perhaps hire dedicated delivery drivers which itself is a challenge to find the right person too. Think about it, how do you treat a hire car? Exactly! Just take a look at the state of all them Amazon vans. There’s plenty of drivers out there. The entry into driving isn’t hard. Separating the wheat from the chaff is another article in itself.

Don’t forget you’ll have to cough up on fleet insurance, fleet maintenance the lot. Other than the financial outlay and ongoing expense you also need to have someone available to support your drivers too. Delivery timings, traffic delays, breakdowns, etc.

The downside is that these costs add up fast. Lots of fixed overheads that still need paying for even when going through a quite period in sales.

Sounds like a lot of fun for a cost centre that generates no revenue for your business yet does a fine job of bleeding out your profits.

However, on the upside you control the customer experience completely. Your staff, your uniform, your standards, the sign written vans. That's your brand exactly as you designed it.

Outsourced Logistics

Outsourcing logistics means an external transport co does the delivering for you. You do the orders, request a collection, they pick it up and deliver. Then they send you the proof of delivery (POD) paperwork and the invoice. You pay.

The benefits here are obvious. There are no more fixed costs. The cost becomes flexible. You pay for what you use, if you’re quiet you spend less, if you’re busy you just send more collection orders. Scaling logistics isn’t your problem. You pay for someone else to deal with it for you.

You’ll take advantage of their expertise, their knowledge or routes, regs, transport, et al. The operational risk is transferred to them.

All you need to focus on what you're actually good at. Making your product and selling as much of it as you can.

The best bit. It’s a damn lot cheaper than dealing with it all in house.

The Hybrid Approach

Here's where it gets interesting. Inhouse or external isn’t really that binary. There’s the third option of a hybrid approach.

Every business has it’s core customers and delivery locations. These customers are the ones where you deliver everyday. It's predictable, repeatable and you’ve already figured out the costs to make it work for you.

Then you get the weird stuff. The one off customer who isn’t located en route. Possibly in a remote location. The oversized item. The urgent last minute request your own drivers can't cover.

That’s where the hybrid model comes to the rescue.

Keep routes you run regularly and know well in house. Offload the one-offs, the uglies, the locations you never visit to external transport companies.

Ultimately, use your gut instinct and judgement. Don’t be surprised if you need to go through a few delivery partners before you find the right one.

Get in touch, tell us about your needs and requirements. Let’s see if we can assist.

Let’s talk.