Many companies choose to outsource most of their operations pertaining to inbound logistics. Or, they used to do. Once the pandemic disrupted supply chains and brought big production facilities to a full stop, logistics and operations managers started reassessing their choices.
The new rule of the thumb in global supply chains became keep your facilities close and your supplier closer. In many ways, it is a good thing. Breaking the umbilical cord between China manufacturing facilities and global brands opened up opportunities for many local companies.
The Packaging Sector Is a Key Player in Inbound Logistics
For packaging producers like Logistic Packaging, this new paradigm shift brought once again into focus the importance of our products in the supply chain. Inbound logistics management depends a lot on the ability to count on a trusted packaging provider.
Returnable packaging materials keep goods moving in internal logistic loops in traditional and new business models. From automotive companies to grocery delivery businesses, both big and small players need a local producer of high quality plastic pallets, containers and shipping totes to help them keep their inbound logistics in smooth working condition.
Why Stop Externalizing to the Best Economic Offer You Get?
South-East Asian countries grew their economies tremendously based on several factors:
- A large workforce
- Substandard working facilities crammed with workers
- Low wages
- Huge harbors and other maritime facilities for storage and shipping of goods.
Thus, their price per unit or per labor hour will always be lower than the offer made by a local supplier, who maintains safe, ergonomic and comfortable working facilities and pays their employees a decent wage.
So, why pay more? Here are some key benefits of choosing to control your inbound logistics and shorten your supply chain:
1. You Can Maintain a Better Control on Inventories
When you order products to be made in China, you order in large quantities. It does not matter that you will have lots of money blocked in stocks – you only expect a few deliveries per year.
When you are in charge of inbound logistics through partnerships with local vendors and suppliers, you can order exactly as many products/raw materials you need based on careful planning and lean manufacturing principles. Thus, you have more money available for strategic investments and as a safety blanket for difficult times.
2. You Can Plan Your Logistic Flows with Precision
Using the kanban method has helped the automotive industry optimize its processes and reduce its costs. The same principle can be applied to any industry, with one condition. The company must be able to plan every step of its production process with great accuracy and reliability.
Making inbound logistics an in-house process with local suppliers is the only way of being able to create reliable plans for the short, middle and long term. You will always be aware of their delivery capacity and of the available packaging materials for extra orders when necessary.
3. You Can React to Emergency Situations Faster
Localized inbound logistics does not mean zero disruptions. Accidents do happen and you may get a message that your expected shipment will not arrive on time. However, a local vendor will be able to give you this notification much sooner than an overseas partner.
Even a few days can make the difference – you can order an emergency stock of raw materials from another local supplier or you can reach another type of agreement with your own clients in due time. The sooner you act, the more likely you are to minimize the negative effects of the unexpected blockage of your supply chain.
4. You Can Reduce Operational Costs
Last, but not least, you may have pay more for raw materials and semi-finished products, but by keeping inbound logistics local you save money in many other ways. Here are just some types of savings you stand to make:
- Reduced transportation costs
- No custom taxes for imports
- Greater availability of packaging materials for repeated use cycles
- Fewer people involved in handling products
- Reduced percentage of products damaged during long distance shipping.
Logistic Packaging is a professional producer of returnable packaging materials, dedicated to building long term partnerships with clients all over Europe. We developed a strategic network of production facilities and distribution centers which allows us to be close to your business whenever you need us. Send us an email or schedule a Skype video call with us to discuss your packaging project!