Logistics Outsourcing: Lessons from Case Studies
Logistics Outsourcing: Lessons from Case Studies
Aldo Srabotiˇ c Mitja Ruzzier
This paper investigates key success factors in logistics outsourcing. A model is used to illustrate outsourcing relationships and then applied to three examples from the logistics sector. The model is presented as a tool which can help managers to minimize the chance of failure by explicitly addressing key issues prior to the implementation of a partnership. In order to fully capture the complexity of the outsourcing process, the model is refined by the analysis of implementation of outsourcing methodology and the analysis of the presence of outsourcing myths in each case. We find that the implementation of outsourcing methodology is critical to successful outsourcing. Overall, we find that the main common factors leading to logistics outsourcing success, after the right third party service provider has been selected, are improved service levels and commercial viability for both parties, joint vision and objectives of the partnership, clear roles, top management commitment and support, communication and trust. The results of the case analysis shed light on what is the key to a successful outsourcing relationship and indicate how the architecture of logistics outsourcing can be analyzed and improved.
Key Words: third-party logistics, outsourcing, transportation service, service provider, partnership jel Classification: l24
Introduction
In the global economy, every company must compete against customer choices coming from everywhere and anywhere. The single most visible result of this hyper-competitive environment is rapid commodization. Growth and profitability are expected and increased shareholder value is demanded. Doing the right thing is becoming more important than doing everything. Therefore, organizations are becoming better focused and more specialized. They evaluate each activity to determine if and how it provides a unique competitive advantage. The arAldo
Aldo Srabotiˇ c Mitja Ruzzier
This paper investigates key success factors in logistics outsourcing. A model is used to illustrate outsourcing relationships and then applied to three examples from the logistics sector. The model is presented as a tool which can help managers to minimize the chance of failure by explicitly addressing key issues prior to the implementation of a partnership. In order to fully capture the complexity of the outsourcing process, the model is refined by the analysis of implementation of outsourcing methodology and the analysis of the presence of outsourcing myths in each case. We find that the implementation of outsourcing methodology is critical to successful outsourcing. Overall, we find that the main common factors leading to logistics outsourcing success, after the right third party service provider has been selected, are improved service levels and commercial viability for both parties, joint vision and objectives of the partnership, clear roles, top management commitment and support, communication and trust. The results of the case analysis shed light on what is the key to a successful outsourcing relationship and indicate how the architecture of logistics outsourcing can be analyzed and improved.
Key Words: third-party logistics, outsourcing, transportation service, service provider, partnership jel Classification: l24
Introduction
In the global economy, every company must compete against customer choices coming from everywhere and anywhere. The single most visible result of this hyper-competitive environment is rapid commodization. Growth and profitability are expected and increased shareholder value is demanded. Doing the right thing is becoming more important than doing everything. Therefore, organizations are becoming better focused and more specialized. They evaluate each activity to determine if and how it provides a unique competitive advantage. The arAldo