Outsourcing of logistics

In the second case, of outsourcing of logistics services for selected functions only, the collaboration is limited to single and separate operations. The decision to outsource only some logistics operations (and not the whole package) may be based on two factors ... 

Rao and Young, 1994. Global supply chains factors influencing outsourcing of logistics functions. International Journal of Physical Distribution Logistics Management 24,11-19. 

The outsourcing of C and D customers, for example, allows producers to save sales, logistics, and administration costs. Furthermore, a focus on their core customers allows them to reduce their cost of complexity significantly and at the same time enhance the profitability of their overall customer portfolio. Further important added value arises from the distributor s in-depth knowledge of regional markets and ability to design tailor-made packages. As a result of their broader market access, distributors are often able to increase the sales of dedicated product lines outsourced by suppliers. New customers may be attracted and switch to products... 

Third-party logistics Third-party logistics (3PL) is the utilization of an outside firm to perform some or all of the distribution functions presently performed internally. As companies better understand integrated distribution and as distribution leadership better understands the costs of distribution, there will be an increasing trend toward the outsourcing of portions of the distribution function. 

Approximately 40 hUlion of logistics services in the United States are being outsourced. (Piper Jaffray Equity Research 1999). And there are significant opportunities to outsource additional logistics services. Some examples of outsourcing services that are available include ... 

As companies desire to get more and more lean, logistics will be one area that companies are outsourcing to logistics suppliers. I have seen cases where a customer will negotiate a contract with a trucking compare for all deliveries to a particular facility. With this type of agreement the suppliers are told to use this trucking comparer to get materials to the facility. In theory this should reduce the costs for the customer, but the performance... 

To recapitulate, in the area of offshoring, the companies mostly focus on prevention and improvement of relationships. On the other hand, in outsourcing, mainly logistics, such practices are of secondary importance. Admittedly, supplier assessment and risk monitoring are applied to a similar extent however, one can notice a considerable unwillingness to building relationships based on confidence and shared objectives. 

The next sections present complexities of FSCN (section 3), and the classification of logistics activities (section 4). Section 5 introduces several outsourcing approaches. Case study results are presented in the section 6. In section 7 and 8, results are analyzed and theoretical and empirical insights are discussed. The paper concludes with a summary of our main findings and suggestions... 

Internal salesman vs. outside Wide range of logistics functions Most commonly outsourced activities with more than 50% uses rate ... 

Figure 1. A preliminary decision making framework for level of logistics outsourcing in FSCN.

Damme, D.A.V. and M.J.P. van Amstel, 1996. Outsourcing logistics management activities. International Journal of Logistics Management 7,85-95. 

In addition, a reality of the pharmaceutical industry at present is the outsourcing of some of all of the synthetic chemistry for a project. To the list of existing questions must be added several others. Which contract research organization(s) will you choose, and what can they be expected to accomplish How will you handle electronic lab notebooks, documenting intellectual property issues and other legal issues How do you handle the logistics of quality assurance, shipping, and customs To help you address each of these, it is prudent to reach out into your broader network to get opinions from others not only in your company but also across the industry. 

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