The business world offers numerous examples of companies sourcing their activities out. This
literature review will put emphasis on companies that engage with a third-party that provide
logistics services to them. Third-party logistics (TPL), which can be perceived as outsourcing
logistics, has been receiving considerable amount of attention within the academic world (e.g. Lieb
and Bentz, 2004, 2005; Lieb and Randall, 1999; Cooper and Johnstone, 1990; Fernie, 1989;
Marasco, 2007). This trend has been dominating both the business world and the academic world
since the 1980s (Stalk, Evans and Shulman, 1992; McKinnon, 1999) and yet, this topic doesn’t
seems to be exhausted. While Porter (1985) illustrate the Value Chain, he argues that
organisations need to assess their activities in their value chain and evaluate whether they create a
competitive advantage by executing this activity in-house. If they do not achieve so, he continues
by suggesting outsourcing that activity. Hsiao et al. (2009) distinguish between core business
outsourcing and non-core business outsourcing. A firm’s core business or core competencies can
be designated as “the collective learning in the organization, especially how to coordinate diverse
production skill and integrate multiple streams of technologies” (Prahalad and Hamel, 1990).
Core business outsourcing can be understand as activities such as product design, development,
manufacturing, marketing, and sales (Facanha and Horvath, 2005), and research has proven that
this business conduct may have positive effects in order to be responsiveness to inconsistencies in
demand (Dabhilkar and Bengtsson, 2008; Jiang et al, 2007). The non-core business in
manufacturing industry incorporates activities such as IT, HRM, accounting and logistic services
(Hsiao et al, 2009). However, this literature review will not focus on outsourcing core business but
will concentrate on outsourcing non-core business; in particular outsourcing of logistics activities to
TPL. Initially, this paper will draw attention to essential definitions that have been published over
the years. This will be followed by an examination to discover the driving forces for this field. The
main body will be closing with the highlighting the risk that are associate with outsourcing.
Table of Contents
1. INTRODUCTION
2. DETERMINE KEY TERMINOLOGY
3. DRIVERS OF OUTSOURCING
3.1. WHY OUTSOURCE?
3.2 WHAT LOGISTICS FUNCTIONS SHOULD BE OUTSOURCED?
3.3 HOW TO MANAGE SATISFACTION WITHIN A 3PL PARTNERSHIP?
4. MANAGING RISKS AND PROBLEMS WITHIN AN OUTSOURCING-RELATIONSHIP
5. DISCUSSION AND CONCLUSION
Research Objectives and Core Themes
This paper serves as a comprehensive literature review exploring the strategic practice of logistics outsourcing. It examines the fundamental definitions of third-party logistics (TPL), analyzes the primary drivers leading companies to outsource non-core business activities, and investigates the critical risks and relationship management challenges inherent in these partnerships.
- Theoretical definitions and concepts of TPL.
- Key motivations for outsourcing logistics functions.
- Strategic classification of different logistics vendor types.
- Management of satisfaction and long-term partnership success.
- Identification of risks such as loss of visibility, asset risk, and competence risk.
Excerpt from the Book
3.2 WHAT LOGISTICS FUNCTIONS SHOULD BE OUTSOURCED?
The definition review in chapter 2 provides the plethora of logistics activities that might be outsourced by the focal firm. Widing and Juriado (2004) have conclusively investigated the different types of logistics activities that have been highlighted by different scholars. These findings, which refer to different industries, have been summarised and can be gathered from Table 1. It must be noted, that the given percentages in brackets refer to the amount that they have been using by the outsourcer. Due to limitations, this literature review will not focus on each finding but will be analysing these findings in a generally way.
According to Table 1 it is evident that some logistical activities were outsourced to a considerable amount. However, these findings also highlight the fact that there are paramount divergences to which extend providers of contract logistics were used on warehousing. Surprisingly, although, many third-party logistics service providers (TPLP) anticipated a lot of demand for their Information Systems (Piplani, Pokharel and Tan, 2004; Marasco, 2008), moreover, these results are proving low priority for contract logistics. In addition, Wilding and Juriado (2004) have proven with their study that the prevailing opinion within the business sector is, that outsourcing information systems seems to be the worst suited activity to be externalised. The last point to mention in regards to these findings is that nearly any logistics function seems to be possible to be outsourced and accordingly is offered by TPLPs (Widing and Juriado, 2004).
It has been demonstrated in literature and also been seen in the business world, that contract logistics should not been perceived as an ‘all or nothing’ business. Consequently, it is not mandatory to outsource the complete facilities but it can be observed as a mixed system. Thus, this combines the use of remaining in-house facilities with complementary third-party activities (Millen et al, 1997).
Summary of Chapters
1. INTRODUCTION: Provides an overview of the prevalence of third-party logistics and sets the academic context for the study by defining the scope of non-core business outsourcing.
2. DETERMINE KEY TERMINOLOGY: Examines various academic definitions of outsourcing and third-party logistics to clarify the conceptual framework of the research.
3. DRIVERS OF OUTSOURCING: Analyzes the primary reasons organizations choose to outsource, investigates which specific logistics functions are typically externalized, and discusses strategies for maintaining satisfaction within partnerships.
4. MANAGING RISKS AND PROBLEMS WITHIN AN OUTSOURCING-RELATIONSHIP: Evaluates the inherent risks in outsourcing, including relationship, asset, and competence risks, and addresses the critical challenge of maintaining control and visibility.
5. DISCUSSION AND CONCLUSION: Synthesizes the findings of the literature review and suggests areas for future research, specifically regarding the impact of e-commerce on TPL relationships.
Keywords
Third-party logistics, TPL, outsourcing, logistics management, supply chain management, contract logistics, strategic decision, core competencies, vendor types, risk management, relationship satisfaction, information systems, transport, warehousing, value creation.
Frequently Asked Questions
What is the primary focus of this research?
The research provides an extensive literature review on logistics outsourcing, focusing on why firms outsource, which activities are involved, and how to manage the risks and relationships associated with third-party providers.
What are the core themes addressed in this paper?
The core themes include the definition of TPL, the drivers for outsourcing, the classification of logistics vendors, the behavioral aspects of partnerships, and the identification of potential risks like the loss of control.
What is the ultimate objective of this study?
The objective is to synthesize existing academic knowledge to help organizations understand the strategic benefits and potential challenges of outsourcing non-core logistics activities.
Which methodology is employed in this work?
The work utilizes a literature review methodology, analyzing a wide range of academic sources, studies, and frameworks published by scholars in the fields of logistics and supply chain management.
What topics are covered in the main body of the paper?
The main body covers key terminology, drivers for outsourcing (such as cost and flexibility), types of logistics vendors, the management of partnership satisfaction, and risk management strategies.
How can this paper be summarized by its keywords?
It is best characterized by terms such as Third-party logistics (TPL), outsourcing, supply chain management, relationship management, and risk perception.
What is meant by the "all or nothing" business approach in outsourcing?
The text argues that outsourcing does not have to be an all-or-nothing decision; rather, companies often adopt a mixed system that integrates remaining in-house facilities with external third-party services.
How does the author categorize logistics vendors?
Logistics vendors are categorized into four types: asset-based, management-based, integrated, and administration-based vendors, each differing in their reliance on physical assets and service scope.
What significant issue regarding risk is highlighted in the text?
A fundamental risk identified is the potential loss of visibility and control, with the author noting that transport and warehousing are the backbone of supply chains and therefore require careful monitoring even when outsourced.
- Arbeit zitieren
- Sebastian Kress (Autor:in), 2012, Literature search and literature review - Outsourcing logistics activities , München, GRIN Verlag, https://www.hausarbeiten.de/document/192534
