Gaining Competitive Advantage Through Outsourcing

Topics: Logistics, Supply chain management, Third-party logistics Pages: 28 (8401 words) Published: May 18, 2005
Gaining competitive advantage
through outsourcing
Authors:
Sarah Tagliapietra
Peter Platan
Ng Seow Li
Ralph Schneider
Executive Summary
Today's escalating, competitive and demanding environment has forced players in the marketplace to be more efficient, to emphasize on a leaner organization and continuously innovate new procedures to keep ahead of competitors. Adding final consumer value to the product or service in the form of lower prices, quality and better service has become an essential requirement in the global marketplace.

Logistics outsourcing has become an attractive option in order to take advantage of global opportunities, to acquire state of the art logistics capabilities, significantly improve customer service and to enable focusing on core competencies.

The purpose of this study is to present a theoretical framework for outsourcing actions as a guideline for companies on why and how to outsource. It gives a deeper insight on logistical outsourcing as a new and promising trend in the global environment while presenting the main logistical areas of outsourcing as well as the advantages and disadvantages. In order to effectively implement outsourcing, commitment from top to down management and a wide understanding of all the stages and implications of outsourcing are required. In order to achieve these prerequisites and a successful implementation process, a model integrating the third- party logistics buying process and relationship improvement process is presented. It emphasizes the importance of carefully identifying alternatives, the overall analysis of partner selection with the help of specific criteria, mutual relationship building between logistics service buyer and provider through joint team building and continuous improvement and performance measurement. The relationship positioning tool model can be used for the continuous enhancement and improving of the supplier-customer relationship. The results and overall reasons of outsourcing should focus on adding value to the final consumer of the product or service. By achieving lower logistical costs and a higher level of quality and expertise these results can be used to add value to the consumer. The study points out that there is an increasing need for logistical outsourcing as a way to gain competitive advantage and as an instrument to meet the requirements of the company's complex environment.

TABLE OF CONTENTS
1.0 INTRODUCTION.............................................................................................................. 1 1.1 OUTSOURCING TODAY....................................................................................................... 1 1.2 LOGISTICS OUTSOURCING ................................................................................................. 1 2.0 APPROACH ....................................................................................................................... 2 2.1 PURPOSE........................................................................................................................... 2 2.2 METHOD........................................................................................................................... 3 3.0 THEORETICAL FRAMEWORK ................................................................................... 3 3.1 LOGISTICS OUTSOURCING DRIVERS................................................................................... 3 3.1.1. Advantages and disadvantages ................................................................................ 4 3.2 THE IMPLEMENTATION OF OUTSOURCING .......................................................................... 6 3.2.1 Model for outsourcing............................................................................................... 6 3.2.2 Relationship positioning tool .................................................................................... 9 3.3 AREAS OF...

References: Literature:
Andersson, (1997) Third party logistics: outsourcing logistics in partnerships, Linköpings
Universitet
Coyle, Bardi, Langley, (1996) The management of business logistics, West Publishing
Company
Macbeth and Ferguson, (1997) Partnership outsourcing
SCMG Increasing The Potential for Local Sourcing to OEMs, Report of SERC/ACME grant
GR/F68119, Glasgow, 1991
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