Importance of logistics outsourcing

Logistics outsourcing is the process adapted for service quality improvement. The service providers of logistics are thought to be capable to do things often better due to their knowhow and experience as well as their superior equipment. Further several authors associate logistics outsourcing with development in flexibility.

Logistics outsourcing offers companies with access to up to date information technology and to global capacities some service provider maintain. The most necessary encouragement for logistics outsourcing is reduction of cost. The second most necessary motive is an alteration in the structure of cost. The major driver for logistics outsourcing after costs is the quality. Gaining extra flexibility as well as service level quality development is the 3^rd and 4^th most important drivers. In addition to the core competencies focus and the service providers know how are recognized as very similar motives for logistics outsourcing describes Farahani  et al (2011).

According to Frazelle (2002), in the developed economies logistics outsourcing tasks has been a major topic for several years and having motivated the continuously prospering logistics industry service providers. Different types of LSPs have aroused ranging from freight forwarders and 3 PL to supply chain management consultancies and specialized logistics providing a multitude of logistics services including basic tasks such as warehousing, transportation and managing up to complex and sophisticated network solutions including information processing. Nowadays logistics revenues show the economic importance of the LSP industry. In 2004, the whole logistics revenue in Germany is estimated to about euro Dollar 170 bn and for the region assumed Western Europe in this survey.

In the internalization context and the inherent dislocation of value added tasks, logistics outsourcing task becomes even more necessary. Hence the retailers and manufacturers depend increasingly on service providers of logistics for logistic management both domestic and abroad.

References

• Farahani R Z, Rezapour S and Kardar L (2011), Logistics Operations and Management: Concepts and Models, Elsevier Inc., USA, p 45-46.
• Frazelle E H (2002), Supply Chain Strategy: The Logistics Of S, Tata McGraw Hill, New York, p 8.