Guest Article

Outsourcing – the User’s GuideDiamond Logistics

by Kate Lester, Managing Director of Diamond Logistics.

As sick as we are of the terms ‘credit crunch’ and ‘recession’ you can’t escape from the realities of an economic downturn.   Sales aren’t easy to come by and margins are affected so it’s essential to look at costs to survive.  The company still needs human resources, a despatch department, a marketing guru and a financial director – it’s just you can no longer justify that cost on a full time basis. With five weeks holidays now the acceptable norm, employers’ NI contributions set to rise, not to mention sick pay, maternity and paternity leave and employment law issues, the costs of employing staff has never been more expensive.  What do you do?  The wise companies are outsourcing.

There are many advantages.  First, the flexibility of cost and service provision – contractors can be reactive to the natural ebbs and flows of business.  You can use what you need when you need it and when you don’t, the cost stops.  In Surrey we are blessed with an array of independent service providers.  With fierce competition, these contractors live and die by their reputation so the quality of their service provision by necessity is good.  These contractors are specialists in their field – experts in doing that specific task –so you are buying in an excellence one of your all rounder employees may not have.  This enables you to focus on what you are best at – your core business.

However, don’t enter into an outsourcing relationship without checks and balances in place.  It’s paramount to brief subcontractors appropriately, setting very specific and realistic goals for them to achieve.  For example, a legal colleague recently had subcontracted the generation of leads to a telesales agency – generating a lot of interest in wills and inheritance issues – not great as his speciality is divorce. Brief thoroughly and specifically, setting mutually agreed standards and checkable targets.  And monitor results – don’t delegate without checking you are getting the results you are paying for.  My PR company, for example, proactively includes a summary document with their invoice every month with all the media mentions I have had so I know what I am getting for my monthly retainer.

Pricing is important.  Remember, if something looks too good to be true it probably is.  Get quotations and compare and I strongly suggest binning the cheapest.  Anything that is disproportionately cheaper than the competition will be cutting service standards along with costs.  Don’t forget this supplier will be acting as an ambassador for your company so you want them to reflect you and your business.  This works on every level from the tone of your telesales to the appearance of your courier.

We have worked with companies who have outsourced on varying levels, including the replacement of company van drivers with contract runs plus ad hoc deliveries to replacing an entire fleet and providing the call centre for incoming calls.  For example, a laboratory used to take receipt of incoming calls from over 100 surgeries requiring the collection of pathology samples from 0800 to 1200 every work day.  They then had to organise six drivers to collect them throughout the South East between 1200 and 1500, and bring them back to the lab for same day processing. Of course, with this came all the accompanying administration – wages, driver pay, vehicle and staff issues etc. Now their clients phone us directly – and our couriers collect – for a fixed weekly cost. Our client concentrates on being an excellent lab providing same day results – and we concentrate on providing them with our specialist subject, being a great courier.

Is outsourcing the way forward?  Not exclusively, as the concept of an entirely virtual business is alluring, but not entirely credible.  But with a good balance of solid office- based resources and the ability to buy in specialist services when needed, I think you can have the best of both worlds.

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