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Success Factors and Cost Management Strategies for Logistics Outsourcing
Abstract and Figures
In this wide-ranging collection, Professor Willcocks and Professor Lacity examine the economic determinants and outcomes of outsourcing and offshoring at both the firm and country levels. They provide a comprehensive overview of the topic, offering an interdisciplinary perspective, which covers the empirical and theoretical research not only of economists but also of researchers from other disciplines, most notably business strategy, information systems and international business.
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... Например Според KOT (1992) мотиви за фирмите да предоставят логистични дейности на външни фирми са достъпът до нови технологии, управленски капацитет, персонал. Kenyon, Meixell (2011) обобщават следните мотиви за аутсорсинг в допълнение на постигането на по-ниски разходи: подобряване качеството на продуктите, по-голяма гъвкавост, по-добро покритие на пазара, достъп до свободен капацитет. Интерес за изследователите представляват и дейностите, които най-често се аутсорсват (Langley and Infosys, 2019) и критериите за избор на логистичен доставчик (Aguezzoul, 2014;Marchet et al., 2018). ...
The research identifies problems during the initiation and planning stages of logistics
outsourcing projects, and their impact based on real business situation case studies from
the sector in Bulgaria. The study highlights possible problems and risks during the early
stages and planning when it’s still possible to mitigate them and increase the chances
for project success, the methodology is based on case study analysis comparing two real
outsourcing projects from Bulgaria.
With the rapid globalization of business activities, logistics has become incredibly complex and intricate. As such, managing logistics is more challenging than ever. One of the trendy solutions to deal with this challenge is logistics outsourcing. In this regard, Sub‐Saharan African firms are no exception. To help Sub‐Saharan African firms succeed in leveraging logistics outsourcing for their competitive differentiators, this article aims to investigate how the organizational capabilities of third‐party logistics service providers (3PLs) contribute to their users' logistics outsourcing success. Based on an empirical analysis of 211 food processing firms in Uganda, we found that the 3PLs' technological and innovation capabilities positively affected logistics outsourcing success. In contrast, the 3PLs' flexibility and integration capabilities had no bearing on the logistics outsourcing success. In particular, our importance–performance map analysis (IPMA) revealed that the 3PLs' technological capability was the most significant factor in logistics outsourcing success. The article also expounds on how the 3PLs' technical capability can bring logistics outsourcing success.
Logistics is an integral component for success of an organisation. So correct decision on express logistics procurement plays a critical role in success in delivering right product at right place and right time. Procurement of express logistics service is not very straight forward, instead it requires evaluation of multiple factors.The objective of this research is to create a framework of influencing factor on express logistics buying decision.
For the study, Researcher has adopted secondary research along with primary research with group of subject matter experts in field of Indian logistics sector. Framework shows that the decision making in logistics procurement should be highly driven by factors like network reach of Logistics Service Provider (LSP), technology followed by information sharing and strategic partnership. While service quality and cost of logistics remains as frontend factors in logistics procurement decision.The model output clearly suggests that final objective in buying process of express logistics is driven towards lower cost and improved service level, but it is driven by factors which directly adds value in supply chain like time to market and reverse logistics, technology and reach.
Background: The logistics sector is the backbone of today’s global trade, and is vital for the continuity of goods and services. The sector is gaining increased importance as logistics operate under the extreme conditions the world is passing through (COVID-19, earthquakes, wars). Methods: A comparative study is offered for Turkey and the EU27 and EA19 countries utilizing Eurostat database time series data for logistics turnover, based on regression analysis with and without COVID-19-affected data. General trends are identified regarding the logistics turnover and average turnover by different transportation modes in Turkey. Linear, exponential, logarithmic and polynomial regressions are fitted to the dataset to find the best fit. Afterwards, forecasting is performed based on the polynomial equation, which is identified as the best fit. A similar approach is repeated for the EU27 and EA19 countries to put forward the trends and forecasts as well as a detailed comparative discussion among countries. Results: Our study reveals the dramatic effect of COVID-19 on the turnover of different logistics modes and the radical shift that Turkey experienced from land transportation towards air transportation. Conclusions: Our study provides forecasting and a comparative picture for the logistics sector, shows the growth trends with respect to different transportation modes and reveals the effects of the pandemic on the logistics sector for Turkey and the EU27 and EA19 countries.
The contributions of logistics functions to the performance of an organization have been the subject of research over the years. Thus, this present study further examined the effect of outbound logistics functions on financial performance of quoted manufacturing companies in Nigeria. Panel data regression analysis was employed to test the effect of logistics functions on financial performance of the selected companies over a period of five years (2015-2019). Logistic functions costs and financial performance indicators were extracted from secondary data. The findings of the study showed that logistics function has a positive and significant effect on financial performance of manufacturing companies in Nigeria. Therefore, the companies are implored to pay more attention to logistics functions when aiming at a better financial performance.
The 2010 Journal of Information Technology (JIT) article, ‘A Review of the IT Outsourcing Empirical Literature and Future Research Directions’, analyzed 741 findings on the determinants of information technology outsourcing (ITO) decisions and outcomes from 164 empirical articles published between 1992 and 2010. Using the same coding method, the 2011 JIT article, ‘Business Process Outsourcing Studies: A Critical Review and Research Directions’, analyzed 615 findings on the determinants of business process outsourcing (BPO) decisions and outcomes from 67 empirical articles published between 1996 and 2011. Taken together, these two reviews found that the preponderance of evidence from both ITO and BPO research streams produced largely consistent results pertaining to the categories of independent variables that affected outsourcing decisions and outcomes. To investigate the most current research findings on business services, which comprise ITO and BPO, and to compare the results with the prior JIT reviews, we replicated the method used in the prior JIT reviews. In this update, we examined 174 newly published articles across 78 academic journals published between 2010 and 2014. We found that researchers have significantly expanded the variables of interest in the last 4 years. In all, researchers investigated 69 new variables. Compared with earlier research, this review of recent articles found a deeper exploration of the direct effects of transaction attributes, sourcing motivations, client and provider capabilities, and governance on sourcing decisions and outcomes. Researchers have also studied a broader variety of sourcing decisions, including shared services, captive centers, rural sourcing, and backsourcing. This update also found a more nuanced understanding of relational governance and its interaction with contractual governance. We assessed the research progress that has been made on 10 previously identified gaps in knowledge. We proposed a future research agenda that includes continued, incremental progress on ‘normal science’ research questions, as well as more ambitious research goals. We challenged researchers to investigate how sourcing clients, providers, and advisors can protect jobs, protect the environment, and ensure security in an increasingly automated world.
Organizations are increasingly sourcing their business processes through external service providers, a practice known as Business Process Outsourcing (BPO). Worldwide, the current BPO market could be as much as $279 billion and is predicted to continue growing at 25% annually. Academic researchers have been studying this market for about 15 years and have produced findings relevant to practice. The entire body of BPO research has never been reviewed, and this paper fills that gap. We filtered the total studies and reviewed 87 empirically robust BPO articles published between 1996 and 2011 in 67 journals to answer three research questions: What has the empirical academic literature found about BPO decisions and outcomes? How do BPO findings compare with Information Technology Outsourcing (ITO) empirical research? What are the gaps in knowledge to consider in future BPO research? Employing a proven method that Lacity et al. (2010) used to review the empirical ITO literature, we encapsulated this empirical literature on BPO in a way that is concise, meaningful, and helpful to researchers. We coded 43 dependent variables, 152 independent variables, and 615 relationships between independent and dependent variables. By extracting the best evidence, we developed two models of BPO: one model addresses BPO decisions and one model addresses BPO outcomes. The model of BPO decisions includes independent variables associated with motives to outsource, transaction attributes, and client firm characteristics. The model of BPO outcomes includes independent variables associated with contractual and relational governance, country characteristics, and client and supplier capabilities.
Purpose
– The purpose of this paper is to investigate the effectiveness of logistics and supply chain integration on firm competitiveness in manufacturing firms.
Design/methodology/approach
– Utilizing the resource-based view of competitive advantage along with the transaction cost economics theory, the authors address the critical role of logistics and supply chain strategy as the driver of logistics and supply chain integration and firm competitiveness. Structural equation modeling is used to determine the effect of two sets of logistics and supply chain integration practices (logistics/supply chain information integration and logistics/supply chain process integration) along with logistics outsourcing decision practices (logistics investment decisions and private warehousing decisions) on firm competitiveness.
Findings
– The results indicate that logistics/supply chain strategy is the main driver of logistics and supply chain integration and logistics decisions. Furthermore, the findings suggest that logistics/supply chain process integration is the most significant predictor of firm's competitive position.
Research limitations/implications
– Further examination and testing of the proposed model across multiple contexts is necessary for validity of the findings.
Originality/value
– This is one of the first studies that provide an empirical analysis on the importance of different sources of integration (information and process) in logistics and supply chain and their impact on firm competitiveness.
This note has discussed e results of a 2007 survey of the CEOs of twenty-one of the largest 3PL service providers operating in the North American marketplace. Collectively these companies generated more than $30 billion in North American 3PL revenues during 2006. All but four of those companies met their revenue growth projections in 2006, and only one reported that his company was unprofitable during the year. That was the first time in four years that any of the participants in the North American survey had reported that his company had been unprofitable in that market. Sixteen of the companies provide 3PL services in Mexico, and on average they generate approximately 5 percent of their North American revenues in Mexico. The CEOs of at least two-thirds of these companies indicated that their companies have been very successful or successful in not only establishing their company brands in Mexico, but also penetrating the market, and generating operating profits in the country. As a group these companies are also quite bullish about the next three-year period for both their companies and the North American 3PL industry. On average, they projected that the revenue base of their companies would grow by 12.91 percent during 2007, and that their revenue growth rates would average 13.2 percent per year over the next three years. Their projections for revenue growth in the North American 3PL industry for the one- and three- year periods were estimated at 11. 1 percent and 11.4 percent respectively. It is interesting to note that the average company revenue projections were lower in both cases than last year, but the industry projections were slightly higher than those recorded in last year's survey. While slightly less than one-quarter of the CEOs reported their companies were involved in significant merger/acquisition activity during the past year, nearly all respondents believed that the consolidation movement will continue in the North American 3PL industry, and that the involvement of private equity companies in the industry will act as a further stimulus to that movement. Nearly two-thirds of the CEOs involved in the survey believe the involvement of PE companies in the 3PL industry is a positive development due to the related infusion of capital that it might bring into the industry. Those who think that PE involvement is a negative development are primarily concerned about the possible short-term focus of such companies and that the impact of a cost-focused restructuring of 3PL service providers might lead to a deterioration of service quality within the industry. Obviously, a continuation of the consolidation movement will not only lead to the emergence of even larger competitors in the marketplace, but will also bring with it significant integration issues post-acquisition. It is also likely that it will lead to niche market opportunities for smaller providers to service accounts that may no longer be of interest to the larger companies. Many of the companies involved in the survey have launched new branding initiatives to not only differentiate themselves in the market-place, but also to eliminate any brand confusion that might have developed in the aftermath of the many mergers and acquisitions that have taken place during the past several years. Half of the CEOs involved in the 2007 survey believe there is growing interest in the concept of fourth-party logistics in the North American 3PL marketplace, and that interest is directly related to the growing size and complexity of recent 3PL contracts. On average, 10 percent of the customers of these companies are "committed" to using conducting RFID technology in their logistics operations, and fewer than 9 percent of them are conducting RFID pilots. When asked why they believe the RFID adoption rate has lagged behind the rates projected several years ago, the CEOs generally cited cost considerations and the lack of demonstrated value associated with adoption of the technology. The CEOs continue to rank continuing downward pressure on pricing as the most important North American 3PL market dynamic. Based upon the results of our 2007 surveys in Europe and Asia, price compression in the industry continues to be a major issue throughout the world. This issue appears to be growing in importance as nearly all of the North American 3PL CEOs indicated that procurement professionals are increasingly involved in the 3PL selection process, and that they tend to be much more focused on pricing issues than the value being generated for their companies through the 3PL relationship. Among the other important dynamics discussed by the respondents were growing customer interest in outsourcing a broader array of logistics services, and ongoing pressures for 3PL service providers to internationalize their service offerings. The respondents, in recognition of the continuing globalization of the 3PL industry, again selected,further expansion of international services as the most significant opportunity for 3PL service providers in North America, followed by opportunities related to selling more deeply into their existing client base, and offering enhanced IT solutions to their clients. Not surprisingly, the CEOs identifiedfinding and keeping management talent not only as the major problem in the North American market-place, but also as the major management challenge facing the industry. This is a very important problem not only in terms of being able to manage growth effectively, but also in terms of being able to manage the customer interface in such a way as to support building long-term collaborative working relationships with key customers. Not surprisingly, more than two-thirds of these companies initiated new recruiting, training, and retention programs during the past year.
Logistics and supply chain management are an integral part of business activity today. They are crucial drivers of globalization as well. As such, these activities are responsible for a large share of greenhouse gas emissions. In fact, transportation in the United States is the business sector which contributes the most human-generated greenhouse gas emissions. This chapter will discuss the role of logistics and supply chain management in the generation of such pollutants and examine methods to mitigate this byproduct of modern business activity. It will be shown that a series of trade-offs exist which are complex in nature and require careful consideration when confronting environmental concerns.
Manufacturing outsourcing is a fast-growing phenomenon in the business world and is expected to represent nearly one quarter of manufacturing expenditure by 2002. The payoff from outsourcing, however, has fallen far short of expectations, because of a tendency for companies to emphasize tactical, cost-cutting outsourcing decisions, and the inclination to view outsourcing contracts as adversarial relationships. A better strategy would be for a company to concentrate on its core competence while outsourcing noncritical activities. This article examines some of the issues that must be considered if a company's outsourcing decisions are to result in its realizing a strong competitive advantage.
As executives acquire more experience with outsourcing, they are discovering its strategic potential. By working with partners on core activities, companies are able to gain the expertise needed to transform themselves. The author illustrates this approach to change with examples from TiVo, bookstore chain Family Christian Stores, BP, and U.K. agency National Savings and Investments.
Purpose
To explore the key factors that motivate organizations in China to outsource and the obstacles these companies are facing in comparison with the situation in Western developed countries.
Design/methodology/approach
A case study approach was adopted with primary data collected through in‐depth interviews with six companies in China and secondary data aggregated from company reports and documents. Research findings were analyzed within and across all case studies to identify key drivers and obstacles of outsourcing.
Findings
Economic factor is a strong motivation for outsourcing in China, of which cost reduction, cost saving, and capital investment reduction are the main concerns. Strategic considerations, such as the use of outsourcing to accelerate re‐engineering benefits, to focus on core competence, to increase flexibility, and to facilitate market penetration, are identified. Environmental factors like information technology (IT) development and capability of supplier can influence organizations' decisions to outsource. Meanwhile, companies in China have encountered obstacles and problems in the outsourcing process. They include the lack of capable service providers, loss of control, poor transportation and IT infrastructure, presence of local protection regulations, and lack of overall post‐outsourcing measurement.
Originality/value
This paper presents a systematic exploration of the drivers and the obstacles of outsourcing in China and provides a framework that may guide business organizations to make better outsourcing decisions. It may assist organizations to clearly define their expectations, develop strategic outsourcing plans, and make appropriate decisions to achieve outsourcing objectives.
In 2004, the Theory of Constraints celebrated its Silver Anniversary. In twenty-five years, what started out as a scheduling software has evolved into a management philosophy with practices and principles spanning a multitude of operations management subdisciplines. As the Theory of Constraints has grown, so has its acceptance by both practitioners and academicians. At this point in its development, as it transitions from niche to mainstream, it is important to review what has been accomplished and what deficiencies remain so that both the promise and problems impeding greater acceptance can be examined. To that end, we review the evolution of principal TOC concepts and practices in an objective fashion.
The need to empirically test and validate typologies and frameworks that are derived deductively has been echoed repeatedly in the operations management literature. This paper reports on an empirical comparison of two configuration‐based typologies: the Product–process matrix and the more recent generic manufacturing strategies model. Since there is substantial conceptual overlap between these models, a simultaneous examination provides insights about both models, and in particular, about the value‐added of the generic manufacturing strategies model.
We examine hypotheses derived from these typologies using data from manufacturing plants in the United States, Italy, United Kingdom, Japan, and Germany; and from the automotive, machinery, and electronics industries. The data were analyzed using multiple analysis of variance (MANOVA) and hierarchical regression techniques. Our results indicate support for the Product–process matrix — lending further strength to a growing base of empirical research on this model. Our findings also provide support for the generic manufacturing strategies model with respect to various measures of cost, cycle time/inventory, quality, and innovation performance. Furthermore, our findings suggest that the generic manufacturing strategies model is a useful augmentation to the Product–process matrix. These findings suggest that the generic manufacturing strategy model has merit but deserves further empirical and theoretical attention.