杜国玲Outsourcing of logistics functions 89
Outsourcing of logistics functions: a literature survey
Mohammed Abdur Razzaque
Department of Marketing, National University of Singapore, Singapore
and Chang Chen Sheng YCH Group of Companies, Singapore
Introduction
Management of logistics functions in modern organizations involves decision making for the complete distribution of goods and rvices in the marketing function (Watson and Pitt, 1989) with a view to maximize value and minimize cost. A growing awareness that competitive advantage comes from the delivery process as much as from the product (Muller, 1991a) has been instrumental in upgrading logistics from its traditional back-room function to a strategic boardroom function (Foster, 1994). The following reasons have been propod to explain this trend:
•There is a growing need to be more responsive to customer rvice and market demand (Horne, 1989)
. As an integrative concept that cuts across the traditional functions of the business (Christopher, 1993), logistics can deliver better customer rvice.
•Logistics activities involve a large commitment of capital.
•The logistics function can be the key facilitator in the cross-functional effort towards supply chain integration (Harrington, 1995a). Hence it is not surprising that concepts such as supply-chain management have now assumed strategic importance.
In order to handle its logistics activities effectively and efficiently, a company may consider the following options.
(1)It can provide the function in-hou by making the rvice.
(2)It can own logistics subsidiaries through tting up or buying a logistics firm (Candler, 1994).
(3)It can outsource the function and buy the rvice.
Currently, a growing interest in the third option, i.e., outsourcing has been indicated by the volume of writings on the subject in scholarly journals, trade publications and popular magazines. Although its
evolution is “one of the most widely discusd contemporary topics in the field of business logistics” (Lieb,1992, p. 29), efforts to organize them in an integrated broad-bad body of knowledge have so far been rather limited. With the exception of a very recent International Journal of Physical Distribution &Logistics Management, Vol. 28 No. 2, 1998,
pp. 89-107. © MCB University
Press, 0960-0035
Received June 1997钢笔书法
Revid April 1998
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90publication by Sink and Langley (1997), most other publications in the area either focus on specific aspects of third-party logistics, or are narrow in their scope and objectives. This paper makes an attempt to bridge the gap and aims at developing a comprehensive literature on outsourcing.
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Outsourcing: definition and evaluation
Outsourcing, third-party logistics and contract logistics generally mean the same thing (Lieb et al., 1993). Jon Africk of consultants A.T. Kearney has defined them as multiple logistics rvices provided by a single vendor on a contractual basis. They offer “at least two rvices that are bundled and combined, with a single point of accountability using distinct information systems that are dedicated to and integral to the logistics process” (Bradley, 1994c). It should, however, be noted that outsourcing “may be narrow in scope”and limited to one type of rvice (e.g., warehou) only (Lieb et al., 1993). According to Bradley (1994a) there is no difference between outsourcing logistical functions and any other procurement process. He asrts that like a reliable supplier of materials and parts, contract logisticians should also provide a high level of customer satisfaction so that their clients can become a tougher competitor.
Traditionally handled by the firms internally as support functions, logistics activities such as transportation, distribution, warehousing, inventory management, order processing, and material handling have been given low priority compared with the other business functions. However, the need for developing sustainable competitive advantage, the growing emphasis on providing good customer rvice effectively and efficiently, and the strategic value of focusing on core business and re-engineering (Hill, 1994; Lieb, 1992; Sheffi, 1990) resulted in the evolution of contract logistics which is very different from traditional logistics (e Table I).
Service considerations and outsourcing
Quality of a logistics system has often been equated with rvice quality (TM Staff, 1991). As part of its strategic positioning process, a company must choo its customer rvice strategy; and developing logistics excellence is an important option through which customer satisfaction can be achieved (Kearney, 1994; Schary, 1992). Consistent rvice at the appropriate level is the natural output of a strategically focud, well-designed and well-run logistics system. Such a system has extraordinary power in achieving goals such as high-quality rvice despite some cost constraints or low cost despite some rvice constraints. The logistics system of the company can be differentiated to produce its target rvice level (Byrnes et al., 1987). The clo relationship between logistics and customer rvice, and its effects on a firm’s competitiveness dictate that companies handle their logistics function prudently so as to achieve its full potential as a source of competitive advantage. Outsourcing the function appears to be an important mechanism to realize that objective.
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Outsourcing of logistics functions 91Drivers of outsourcing
Of the many factors that may act as driving forces behind outsourcing,globalization of business has been viewed by many (Byrne, 1993; Foster and Muller, 1990; Rao et al., 1993; Sheffi, 1990; Trunick,
1989) as the most prominent.The continued growth in global markets and foreign sourcing has placed increasing demands on the logistics function (Bovet, 1991; Cooper, 1993;Fawcett et al., 1993; McCabe, 1990; Whybark, 1990). Conquently, it has led to more complex supply chains (Bradley, 1994a) and has involved more transportation and distribution managers in international logistics. Lack of specific knowledge of customs and infrastructure of destination countries forces firms to acquire the experti of third-party logistics vendors.
The increasing popularity of just-in-time (JIT) principles is another major factor promoting outsourcing (Goldberg, 1990; Sheffi, 1990; Trunick, 1989).With the shift to JIT delivery, inventory and logistics control have become even more crucial to manufacturing and distribution operations. The complexities and costs of operating in a JIT environment are prompting many of its potential adopters to supplement their own resources and experti by using sources outside their corporate structure.
Trunick (1989) suggests emerging technology and versatility of third parties as two other important drivers of outsourcing. Since it would be time consuming and expensive to develop and implement new technologies in-hou,firms can easily employ tho of a third-party. On the other hand, versatility of the third parties enable them to provide an improvement in control, technology,and locat
ion, turning fixed costs into variable costs. They have the ability to reconfigure the distribution system to adjust to changing markets or technological advances. Small companies tend to be more interested in third-party u (Maltz, 1994) since they are in greater need for experti and assistance in the area of technology (Harrington, 1995b). The KPMG Peat
Traditional rvices
Contract rvices Not tailored
Tailored Usually one-dimensional – trucking or
Are multi-dimensional, linking transportation, warehousing for example
warehousing, inventory management, systems and others Shippers aim to lower transportation cost
Goal is to lower total cost while providing through a contract
better rvice and more flexibility Contracts tend to run for a year or two Contracts are more likely to be of longer
duration, multi-year arrangements negotiated
at a higher management level
Require experti in, say, transportation of
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Requires broad logistics and analytical skills packaged materials
夜叉鬼Contracts generally take less time to negotiate Contracts generally take more time to negotiate Simpler arrangement and relatively low Complexity of arrangements leads to higher switching costs switching costs
Source:Adapted from Jon Africk of A.T. Kearney consultants, quoted in Bradley (1994c)Table I.Differences between traditional and contract transport rvice
IJPDLM 28,2
92Marwick’s third annual logistics benchmarking study shows that cost control, followed by information technology and inventory management are the major logistics concerns in respondent companies, and as such, have resulted in further emphasis in outsourcing (Bradley, 1995a). Many other logisticians have suggested various other reasons for outsourcing. A reprentative list of the reasons is prented in Table II.
写简历Importance of outsourcing
A recent survey by Lieb and Randall (1996) found that the CEOs of third-party logistics companies perceived growing customer interest in outsourcing as the top industry dynamics. This awareness of contract logistics’ role has been instrumental in compelling the logisticians to learn to adapt to this new intrusion into their territory (Gooley, 1994b). Since firms can often replicate or improve on a competitor’s offering with relatively little difficulty, gaining sustainable advantage through product differentiation is rare. Also, it is harder to compete on manufacturing excellence alone. Outsourcing can contribute to profits by enabling urs to gain competitive advantage, adding measurable value to products, enhancing customer rvice, assisting in opening new markets, and providing dedicated resources (Foster and Muller, 1990). Third party logistics providers can enhance value creation for customers leading them to become more competitive and profitable through speedy and superior Drivers of outsourcing Identified by Improved productivity measurements
Increa in cost-efficient foreign competition
Management demand for a financial contribution from all ctors of the1000米技巧
company
Mergers and acquisitions that require keeping asts off the books
Need to move inventory faster
Need for flexible production
Retrenchment to core business Muller (1992)
A company’s need to asss prent and future market prospects for its
product
Company restructuring
Development of supply chain partnerships
Increasing customer demands and
Increasing environmental awareness
To determine the products’ competitive advantage in the marketplace Byrne (1993) Change in management
Existing facilities and/or systems
Expanding into unfamiliar markets and
Taking on new product lines Maltz (1995) The success of firms using contract logistics Bradley (1994a) The focus on temporal aspects of logistics management Cooke (1994b) Trend towards centralized distribution systems Bence (1995)
Table II.
Some reasons for outsourcing
Outsourcing of logistics functions 93customer rvice (Daugherty and Pittman, 1995). Value creation involves the understanding of the dynamic interaction within the customer’s supply chain.One of the most important reasons for employing third-party logistics providers is their ability to provide their clients with experti and experience that otherwi would be difficult to acquire, or costly to have in-hou (Byrne,1993; Dillon, 1989; Goldberg, 1990; Richardson, 1990; 1992; 1993a; 1993b;Sheehan, 1989; Trunick, 1989). Their experti gained from working with other clients allows urs to benchmark against other companies and may lead to opportunities to lower costs and improve custo
mer rvice. It is believed that a contract logistics company with national and regional experti can even provide a customer a local image even though that company may have no local prence in asts and logistics employees (Bradley, 1994b; 1994c). With the contract logistics firms as their advisors and innovators, companies can gain since the former “add value that translates to profit” (Wood, 1993).
At the strategic or management level, companies lacking sophisticated information systems might look to outside sources for databa management techniques ud in forecasting or for handling the information flow loop (Richardson, 1990). U of contract logistics enables firms to spend more time to pursue strategic planning and management issues, and focus on their core business competency, rather than on logistics (Africk and Market, 1996;Foster and Muller, 1990; Lynch et al., 1994; Richardson, 1992; Saw, 1995;Sheehan, 1989; Trunick, 1989).
Types of contract logistics vendors
According to Goldsmith (1989), public warehousing may be the oldest form of outsourcing in logistics. Later, Richardson (1992) added marketing, packaging,transportation, distribution, import and export to this list. This is justifiable since third parties do have some role in determining where g
oods are stored,how they are packaged for shipment, and in choosing the best mode for transporting them to the customer (Hill, 1994). Since the third-party providers are also increasingly being utilized for value-added activities such as asmbly and quality control (Fawcett et al., 1993) the list is, however, expanding. Some companies are not involved in moving goods at all: they ll software and consulting rvices that help their customers develop their own efficient transportation networks. Others handle chores such as paying bills and tracking costs of transportation for their customers. Many third-party logistics companies have been found to offer rvices such as logistics information systems, shipment consolidation, warehou management/operation, carrier lection, rate negotiations, fleet management/operations, product returns,order fulfillment, customer spare parts, vendor lection and purchasing (Lieb and Randall, 1996).
Muller (1993b) appears to be the first to propo two basic types of contract logistics rvice providers, i.e., operations-bad and information-bad third-party logistics vendors. Later, Muller (1993a) himlf modified this classification scheme by suggesting the following four types of vendors:
