Impact of Logistics Outsourcing Strategy in Oil and Gas Industry in Uganda

Abstract

The purpose of the study is to analyze the impact of logistics outsourcing strategy in the oil and gas industry in Uganda. The most outstanding benefit is that, companies outsourced their logistics activities to restructure their distribution networks and achieve competitive advantage. For this purpose purposive sampling method is used where qualitative data are collected and interpreted. Primary data are collected using research questionnaires where quantitative method is used in data presentation and analysis of the impact of logistics outsourcing strategy in the oil and gas industry. The research findings reveal that there are many benefits resulting from using logistics outsourcing strategy in the oil and gas industry and in the same way, challenges are faced by both oil and gas companies and logistics service providers in executing business contracts. Solutions are pursued to create an environment for the oil and gas industry and the third party logistics services providers to achieve a common goal. Findings show that it is very important to outsource full or part of logistics activities to logistics service providers in order to attain competitive advantage. Logistics outsourcing strategy plays an important role in the business especially in minimizing operating costs and spreading risk between the parties engaged in business contracts. Therefore it is necessary for company managers to check their strategies to make sure that logistics activities are in place.

Supply-chain management in the oil industry

“…This gives a clear description of real business gains as results of interdependence amongst firms characterized by increased trade in transitional goods or services and technical know-how as well as production network. The supply chain management is a decision process that not only integrates all of its participants but also helps to coordinate the basic flows: products/services, information and funds [7].…”

“…These firms are often called exploration and production companies. Refiners represent the downstream element of the oil and gas supply chain [7]. The upstream segment of the oil and gas business is also known as the exploration and production (E&P) sector because it encompasses activities related to searching for, recovering and producing crude oil and natural gas.…”

A Decision Making Tool for Selection of LSPs

“…The MCDM method of ELECTRE I type proposed in this research note makes it possible to meet such a need since, on the one hand, it clearly falls under the suppliers (of logistics services) selection problem, and on the other hand, it offers to any company producing goods or services, the opportunity to select a powerful set of partners via several criteria of different nature. The criteria considered in such engineering approaches are not just from economic rationality, based on minimizing costs, but can also refer to environmental and social/societal aspects, whose centrality is now emphasized in the current context of sustainable development; this is the case of reverse logistics in which LSPs play an increasingly important role, as indicated in the academic literature (Min & Ko, 2008;Colicchia et al, 2013;Muhindo et al, 2014;Guarnieri et al, 2015;Centobelli et al, 2017;Li et al, 2018).…”

“…2014; Muhindo et al, 2014;Sallnäs, 2016;Bask et al, 2018); and (4) LSP selection process (Aguezzoul, 2014;Tan et al, 2014;Alkhatib et al, 2015;Yayla et al, 2015;Kishore & Padmanabhan, 2016). This research note is particularly interested in the problem of LSP selection and in the application, to face it, of multi-criteria method ELECTRE.…”

Overcoming the Challenges of Logistics Outsourcing in Selected Oil and Gas Companies in Rivers State

“…They put too much focus on service levels and not enough on strategy. Muhindo et al, (2014) investigated the use of logistics outsourcing as a strategic tool of reducing cost in the oil and gas operations but did not show to what extent was this cost reduced. Denisa et al, (2013) did a qualitative study on use of logistics outsourcing by manufacturing companies and suggested a mixed system in-house and third party facilities.…”