Is it Time to Outsource Your Logistics Safety Program?

Posted by Paul Little on 15 April 2014

Outsourcing is the purchase of products or services from an outside supplier located across town or across the globe. Outsourcing has been around for many years, but some industries have taken to outsourcing more than others. It has been a common business practice in information management and it has also made significant inroads in logistics procurement, but the outsourcing of logistics safety has been much more selective.

The use of consultants to lead a response to a transportation notice of violation or conduct hazmat training is quite common, but the concept of relying on an outside supplier to manage a shipper’s entire logistics safety program is still relatively new. The scope of strategic logistics safety outsourcing can include:

  • istock 000031714234small outsourcingMonitoring & implementing transportation regulations
  • Implementing applicable industry initiatives (e.g., Responsible Care®)
  • Determining compliance requirements
  • Classifying chemicals
  • Training of employees
  • Auditing for compliance
  • Evaluating & managing transportation risk
  • Establishing chemical handling procedures
  • Developing & implementing logistics security plans
  • Coordinating distribution incident responses

It is important to recognize the value provided by your logistics safety team in order to justify outsourcing. This typically requires an assessment of their capabilities. And without clear objectives, it will be difficult to evaluate the success of your decision. Outsourcing objectives can include one or more of the following:

  • Lower cost or reduce head count
  • Acquire new skills
  • Support a growth strategy of mergers & acquisitions
  • Improve compliance with on-demand support for employees
  • Develop a more flexible organization capable of 24-7 support

Here are 5 examples where outsourcing may be advantageous.

1. When your logistics function is outsourced.

When your in-house logistics department is outsourced to a 3PL, it can isolate or diminish the effectiveness of your remaining logistics safety group. You can correct this situation by outsourcing your logistics safety requirements to an organization that is self-sufficient and doesn’t need the direct support of logistics professionals. This will ensure the continuity of your logistics safety compliance program.

2. When your employees handle limited shipments of hazardous materials.

Even though your company may not ship large quantities of hazardous materials, when your employees are hazmat employees, your company must comply with all applicable regulations. Your employees may not be sufficiently exposed to the regulations to become skilled at monitoring, implementing and complying with all the applicable requirements. Outsourcing to a supplier that can maintain your logistics safety program will let your employees focus on their primary chemical handling responsibilities.

3. When your employees lack experience.

Your employees will initially need the support of experts if they begin shipping a new hazmat class (e.g., radioactive materials). Rather than have your employees attend training and rely on short term consulting support, outsourcing your logistics safety program will allow your company the flexibility to quickly take advantage of new business opportunities.

4. When your employees lack the capacity.

As your hazmat operation grows, it may outpace the ability of your employees to maintain support. As a chemical company becomes a global organization, the logistics safety staff must support additional international and domestic regulations. And if your business expands to a 24-7 operation, your current compliance team will be challenged to support this growing demand. Outsourcing will allow your company to scale your operations to meet regulatory and customer demands.

5. When you need to focus on new business opportunities.

The regulatory compliance workload can rapidly escalate when mergers and acquisitions are anticipated. When logistics safety administrative activities could disrupt your integration goals, a deeper source of compliance support should be considered. An outsourcing partner will have the capacity to align the logistics safety programs of both companies and provide for a smooth integration.

Outsourcing logistics safety can strengthen your company’s supply chain by leveraging the skills of outside the company experts. However, outsourcing can be troublesome if communications don’t effectively convey your needs. It is beneficial to identify a coordinator that is responsible to keep the lines of communication open between supply chain management and your outsourcing partner.