In-house vs. Outsource: What’s the Best Model for Unloading Freight?
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In-house vs. Outsource: What’s the Best Model for Unloading Freight?

April 20, 2022

In today’s challenging supply chain environment, keeping warehouse facilities moving on schedule is a critical element to your success as a warehouse manager, and for the success of the supply chain overall. A key activity to ensuring delays at the dock door are minimized is your operational processes around unloading and loading freight shipments. As a warehouse manager, you need this done quickly, safely and following your operational plan. There are two basic business models you can follow for these critical activities:

  • Use in-house warehouse staff, or
  • Outsource to a 3rd party lumper service.

Each of these models has its own unique benefits and drawbacks, so if you are considering outsourcing to a lumper service, or if you already outsource and are thinking about bringing the activity in-house, you’ll want to make an informed decision about how each model will help you achieve your business goals. Let’s take a closer look at the pros and cons of both.

In-house Benefits

One key benefit of in-house freight unloading and loading is the direct relationship you have with your team, which can provide you with better control and visibility over their activities. As a manager of employees who answer to you, you manage the day-to-day business. Communication is immediate, held through conversations and meetings rather than phone calls and emails, and you can make sure that your instructions are followed — because you follow up.

When you work in-house, you and your management team set policy from top to bottom. You can test changes with small teams before a wider rollout and can monitor your teams in case problems emerge. They come to you with feedback and concerns, and you respond in kind.

You must also consider the potential financial benefits of keeping loading and unloading in-house. With in-house work, you control payroll, staffing, and hours. You tailor work to your revenue and reduce the expense risk of overstaffing reducing the chance you are paying for idle employees.

Additionally, an in-house team offers greater visibility into the unloading activities providing a better overall understanding of warehouse operations and insight into the fee revenue opportunity that unloading activities provide.

Finally, warehouse dock doors are busy and frequently dangerous places that often run 24/7. Safe operation is paramount in this environment and another benefit of having in-house unloading staff is minimizing unknown people on the docks who may not follow your safe work habits.

In-house Drawbacks

While there are numerous benefits to having an in-house staff, there are drawbacks to this business model.

Staff expects consistency in their day-to-day jobs — don’t we all? During peak hours or irregular rushes of heavy product volume, your employees may become stressed, overworked, and irritable, which increases risks for everyone at the warehouse docks. And even if you wanted to hire more unloading staff, your ability to quickly increase your workforce to meet a demand surge will be limited by the time it takes to hire, onboard, and train new employees.

Additionally, with a dedicated freight handling team, you will be responsible for significant overhead expenses like training, paid vacations, overtime hours, payroll taxes, and more as well as be exposed to the additional risk of injury, liability, and workers’ comp claims.

Lumper Service Benefits

Hiring a 3rd party lumping service can provide numerous benefits. When you hire lumpers, you reduce your team’s workload and offload a key responsibility from your desk to a professional.

In-house cons are replaced with outsourced benefits. Now your warehouse does not need to hire, train, compensate, or pay additional workers to move freight. Your HR department’s workload decreases, and with it, the size of the HR team (if you have one). And in today’s tight hiring market, you eliminate the need to recruit and retain at least this function. The staff savings, in multiple areas, can be significant. You also reduce your worker’s compensation exposure.

You also gain the opportunity to protect your staff from surges in demand. You may not have the resources to flex your team up or down to meet increases or decreases in demand, but lumper services are prepared for those fluctuations. Additional staff can be sent in temporarily during peak traffic loads.

Lumper services are flexible, expert specialists who can help improve speed and therefore performance at the dock door.

Lumper Service Drawbacks

The key drawback to lumper services is the price. The cost of using a lumper service could outweigh the benefits.

Staffing, the greatest benefit offered by a third-party freight handler, can also present the biggest obstacle.

Reliance on an outsourced lumper could slow your productivity if the company cannot meet your staffing needs. While disruption is unlikely, the fact that there are many factors outside your control presents a worrisome issue.

In addition to staffing and payroll, the control you can exercise over your employees is far greater than that you can exert over those of another company. You do not set their policies, their hours, or their benefits. Their morale is outside of your control, but the work of any disgruntled employees can affect your warehouse.

As a manager, one of your chief duties is to solve in-house problems. However, to solve problems when you outsource, you contact your client liaison and hope the message passes up the chain. A hands-on manager prefers direct resolutions to conflicts and issues, and an agreement with a third party, by its very nature, slows that process.

You also face internal issues when you work with an external contract. Your employees will not share the same camaraderie or connection that they do with their team. Additionally, people in the industry understand the well-known friction between truck drivers and lumpers. All of this could hurt overall employee morale and therefore productivity at your warehouse

Finally, your revenue stream from accessorial fees is greatly reduced when you outsource unloading activities. And you lose visibility of some of the key drivers of productivity, which could impact your ability to positively affect overall warehouse efficiency.

How to Decide?

Outsource or in-house? There is no one right answer. Ultimately, you must make the informed decision that is best for you and your warehouse after you carefully weigh the pros and cons against an honest consideration of your own needs and business goals.

Regardless of what business model you chose to follow, RoadSync Checkout can handle the economic infrastructure you’ll need. Payments at the dock door are simplified and digitized regardless of who is charging the fees. Ready to learn more? Schedule a demo today.

 

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