Is your LSP cost effective??

Cost is one of the primary factors that attracts or distracts a customer. Choosing a Logistics Service Provider on the basis of cost efficiency can prove beneficial in terms of consolidating the presence in the market. But, when it comes to quality of service and delivery of service, cost efficiency factor is overlooked in most of the cases. Cost remains a major issue everywhere. In a developing economy like India where logistics cost is almost 13 percent of the product, managing cost efficient service is something which bothers the people working in Logistics department. When considering whether to employ a third-party logistics provider, it is important to factor in the expenses and costs associated with them.

It is essential to know whether the costs of such services are a worthwhile investment. Key driver in the increased emphasis on price is greater pressure on cutting cost within the customer company. Customers seem to be fixated on cost decreases, even if they do not truly understand the services they are receiving. This is because, 10 years ago, most companies were outsourcing for the first time. Then, as the relationships with 3PLs matured, they became more demanding about the cost of the services. In fact, many customers today assume that the cost of logistics services will continue to decrease while the quality and number of services received continue to increase.
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