Logistics Outsourcing
answer the following questions.
Apart from the obvious reasons for outsourcing (cheap labor, loosely enforces laws etc.) what could a
company and its employees possibly gain from the managing of resources outside of their domain?
According to Chen, Tian, Ellinger & Daugherty (2010), do you think much research has been done on
exploring the best practices surrounding outsourcing in China? Do you think they are correct in their
assumption?
2
LOGISTICS OUTSOURCING
Logistics Outsourcing
Reasons for outsourcing
Outsourcing can be termed as the strategic use of external resources to complete tasks
initially handled by the internal staff of the organization and resources. Companies conduct
outsourcing due to a number of reasons; to reduce and control operating costs, enhance
companies’ focus, gain world-class opportunities, to free resources held internally to perform
other functions, put to use resources maximumly and to share risks with a merger company
(Esper, et al, 2007).
Benefits for outsourcing
A company can gain some benefits out of managing its resources outside of its domain.
One of the benefits is increase in efficiency- when an organization chooses a company that
outsources a particular service that they required there are high chances that efficient results will
be achieved in the long run. Another benefit is increase in focus on the core business activities in
an organization- outsourcing can aid a company focus on its main strengths hence allowing the
employees to focus on their main appropriate tasks (Esper, et al, 2007). Further, with outsourcing
one can bet on access to capabilities and facilities that are not in normal situations accessible or
affordable. There is also a component of greater competitive advantage whereby outsourcing if
3
LOGISTICS OUTSOURCING
practiced well can help an organization leverage knowledge alongside skills in line with the
company’s complete supply chain (Esper, et al, 2007).
Outsourcing in China
According to Chen, Tian, Ellinger and Daugherty (2010), the growth of outsourcing in
China through the 3PL industry is still at its infancy stage. Scholars further argue that
outsourcing is still new and the learning curve that exists between the producers and users is
quite steep (Chen et al, 2010). The scholars are correct in their assumptions since the approaches
to be taken by logistic outsourcing companies to achieve performance are not yet established.
Most research on outsourcing focuses on the type of activity and reason for outsourcing.
4
LOGISTICS OUTSOURCING
References
Chen, H., Tian, Y., Ellinger, A. E., & Daugherty, P. J. (2010). Managing Logistics Outsourcing
Relationships: An Empirical Investigation in China. Journal of Business Logistics,
31(2), 279-299.
Esper, T. L., Fugate, B. S., & Davis-Sramek, B. (2007). Logistics Learning Capability:
Sustaining the Competitive Advantage Gained Through Logistics Leverage. Journal of
Business Logistics, 28(2), 57-82.
