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Essay / Logistics and Logistics Essay - 1364
The following benefits are likely to be liquidity injection, cost reduction, third party risk sharing, etc. The main objective of this research is the reduction of costs such as production costs and operating costs, which would be one of the reasons why the company outsourced. Companies that tend to outsource have the opportunity to save the cost of labor, especially the logistics process, by offering a third party to take care of it, in regions where wages are low, like in Bangladesh and China. Since the company has outsourced the logistics activity, it means that it will not have workers for those particular outsourcing activities, then the company saves the costs as well as the production costs. By outsourcing logistics, some costs such as fixed costs, operating costs, utility costs, labor costs, machine maintenance costs, inventory costs, shipping costs transportation, etc. can probably contribute directly to helping the company reduce production costs. Again, the business or company is able to gain a competitive advantage on production and operating costs. However, there is more money to invest in other aspects, which will likely contribute to business development, such as R&D, to invent better quality products and services to gain satisfaction and reputation providing high quality services and services.