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Logistics outsourcing: a management guide
No full textLogistics Outsourcing-A Management Guide" by CLM past president Clifford F. Lynch, is CLM's latest "research book" (see www.clml.org). The book's purposes are to contribute to the understanding of logistics providers and buyers, and to provide a "useful tool for those who are contemplating or implementing a logistics outsourcing relationship." Lynch defines logistics outsourcing as "...an arrangement whereby a logistics service provider performs services for a firm that could be, or have been, provided in-house" (p. 2).After "a brief history" of outsourcing (Chapter 1), Chapter 2 asks "why outsource?" The reasons for outsourcing include improved return on assets, personnel productivity, flexibility, costs, customer service, and information technology (IT). The book also addresses labor, management, and political considerations. Lynch states: "It is far easier to manage one, or a limited number, of providers than it is to manage the individual functions internally" (p. 11). The strategic importance of managing supplier relationships must also be considered. Outsourcing creates opportunities for positive synergy by bringing the core competencies of two companies together. A special type of inter-organizational relationship is required. Thus, outsourcing can be seen as a means to configure logistics resources and competencies.Chapter 3 asks "what should be outsourced?" Lynch's answer covers many transportation and warehousing activities, but overlooks IT systems and capabilities specific to logistics. Chapter 4, "developing a strategy for outsourcing," is too brief (seven pages) given its promising title. Outsourcing is not seen as a strategy itself but as a "vehicle for achieving the strategy, whatever it may be" (p. 33).
AdvertisementWhile Chapter 5 provides lists of publications, associations, and directories, to help logistics managers identify potential logistics service providers, Chapter 6 explains in detail the "selecting a provider" decision. Provider selection criteria "encompass those strategic, tactical, and operational requirements that are critical to the company" (p. 57). The reviewer would have liked to see some "basic benchmarks" applicable to most outsourcing arrangements included. It might be valuable for managers to weigh the different criteria relative to their strategic vs. operational importance.Chapters 7 and 8 cover costs of outsourcing and "defining expectations," respectively. Lynch notes that both provider and customer expectations should be realistic if certain "points of friction" are to be avoided.Though normally standardized, "developing the contract" is the major concern in outsourcing, according to Lynch. Chapter 9 (48 pages) and its five appendices (52 pages) fill nearly a third of the book's total pages. The author aptly notes that contracts can stifle flexibility.A natural follower of contracting is "establishing policies and procedures" (Chapter 10), in which joint effort of provider and buyer is a must. A broad range of logistics providers are capable of participating at early stages in the outsourcing process, especially providers having supply chain design as part of their core competence.Chapter 12, "managing the relationship," is an inevitable successor to the outsourcing decision and its "implementation" (Chapter 11). The focus is on effective management and performance measurement. The book stresses quantitative measures to support relationship management. Managerial tasks can be facilitated with the CD-ROM which accompanies the book. The CD contains various forms and audits useful for data collection and analysis to support the outsourcing process.Honesty and loyalty fall beyond the contract but are traits of a "good partner" in Chapter 13. Important issues in "ending the relationship" are discussed in Chapter 14. Finally, Chapter 15 cuts across the previous chapters by summarizing ten basic rules of logistics outsourcing. These include both legal- ("develop a good contract") and relational- ("be a good partner") based rules.Logistics Outsourcing complements previous 3PL literature published by CLM, in books and in the Journal of Business Logistics. Lynch presents a rational sequence of decisions that can be summarized as ten basic rules of thumb. A valuable experience is shared! Through examination of aspects often not covered in detail by trade press success stories or academic research, Lynch demonstrates convincingly that logistics outsourcing is not to be treated as a plug-and-play arrangement. Managers from various functions and levels within a buying company are undoubtedly confronted with many topics in the book. Also, logistics service providers can use this book for helping present and future customers understand what logistics outsourcing is all about.<br/
From Industrial Marketing and Purchasing to Industrial Marketing Purchasing and Distribution - The Case of Supply Chain Management
No full textGuest editorial
No full textThis is the first of a two-part Special Issue. It contains four out of 104 papers presented at the 19th Nordic Logistics Research Network (NOFOMA) conference, arranged by the University of Iceland in Reykjavik, Iceland, in June 2007. Adjacent to NOFOMA were the Nordlog Doctoral Workshop (Getting published? making your work publishable) and Educator's Day (Executive programs management development), with more than 60 participants, both arranged by Reykjavik University. The review of abstracts and papers submitted to NOFOMA emphasized high quality and significance of contributions. A total of 165 abstracts were submitted and reviewed in January 2007, of which 39 abstracts were rejected after being reviewed by at least three members of the scientific committee. A total of 104 papers were presented at the conference, 72 full papers, and 32 categorized as work-in-progress. The former group of papers competed for the Schenker Best Paper Award in two categories, based on scientific rigor, contribution to the discipline, and practical implications: best paper involving a senior researcher's work, and best paper written by doctoral student(s), respectively. The competitive papers were all peer reviewed through a double blind process. After the first review, eight full papers were downgraded to work-in-progress on the basis of reviewers' recommendations and further scrutiny made by the scientific committee. The 72 papers were either “accepted as is” or “accepted with revision” and second submission encouraged. With the second submission, a report from the authors was mandatory. The report was reviewed by the scientific committee to ensure that the authors had improved the papers as requested by reviewers. Although, the conference has a Nordic flavor, we have been honoured by presentations and discussion of a growing number of scholars from countries all around the world. The large number of participants and papers presented is a record in the history of NOFOMA. We are proud to present four papers that were in particular acknowledged by peer reviewers and the scientific committee. The first paper, “Framework for characterizing the design of VMI systems,” received the Schenker Best Paper award in the first category mentioned above. It is a joint effort of researchers from two Nordic Universities, Elvander and Mattsson, Lund University, Sweden, and Sarpola at Helsinki School of Economics, Finland. The paper presents a framework that characterises the design of a vendor managed inventory (VMI) system that can be used as a tool to profile VMI system designs, but also compare different configurations. An important feature of the research design is that the empirical evidence is based on nine dyadic relationships; perceptions of both suppliers and customers in a particular VMI setting are used as a source of evidence. By this way, concepts such as VMI are given a distinct inter-organisational meaning. Johansson and Hellström, both at Lund University, Sweden, received the best paper award for doctoral students for their paper, “The effect of asset visibility on managing returnable transport items.” Increased asset visibility of these high-value items, that are vulnerable to theft and critical for production and distribution may result in significant cost saving for asset owners. A very interesting combination of case studies with simulations leads the authors to conclude that in order to release the benefits of this approach, visibility must be followed by management actions. In the third paper, Jonsson and Kjellsdotter, both at Chalmers University of Technology, Sweden, and Rudberg, Linköping University, Sweden, offer a planning approach with the supply chain “a holistic construct” as level of analysis: “Applying advanced planning systems for supply chain planning: three case studies.” Supported by comparative case study evidence, the authors explore the use of advanced planning systems at both tactical and strategic levels of supply chain problems. This application has influence on cost efficiency, capacity utilisation and service delivery, and supports furthermore, “... integration between different functions and commitment to a common plan throughout the supply chain.” The fourth paper in this Special Issue raises a critical but relevant question: “Supply chain integration improves performance the emperor's new suit?” Here, Fabbe-Costes, University of the Mediterranean Aix-Marseille II, France, and Jahre, Norwegian School of Management, Norway, conduct a comprehensive literature review, in particular of empirical studies. They observe that the relationship between integration and performance may not be as self-evident in practice as theory may suggest. Implications allow us to look ahead, but also urge scholars to make more use of prior research when studying this subject so as to improve measures of supply chain integration and performance. The authors want to acknowledge the contribution of the reviewers at the NOFOMA 2007 conference, and the support the authors have enjoyed from Chalmers University of Technology, University of Southampton, and the authors' hosting institutions in Iceland, University of Iceland and Reykjavik University. <br/
Role of intermediaries in reverse supply chains: third party logistics providers vs dedicated operators
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