Revisiting critical factors of logistics outsourcing relationship: a multiple-case study approach

Abstract

PurposeThis paper aims to examine critical factors of successful logistics outsourcing relationship from the perspectives of both LSPs and shippers employing case studies in Singapore and Vietnam as examples of well-established and growing logistics outsourcing markets.Design/methodology/approachThe case study design is adopted to empirically examine logistics outsourcing practices. Data were collected through in-depth interviews with senior managers from four cases in Singapore and seven cases in Vietnam. These case organisations are engaged comprehensively in logistics outsourcing activities and encompass both international firms that have their local operations and those local firms whose operations expand internationally.FindingsResults suggest that the success of logistics outsourcing may depend on five strategic factors and five operational factors, with some of them being the same between LSPs and shippers in both countries and in line with the literature. There also seemed to be a difference between logistics outsourcing practitioners in a developed country (Singapore), and those in a developing country (Vietnam), in which factors, i.e. having the right people and management support, business processes integration and cultural intelligence, tend to be emphasised and practised more in the former. A strategy matrix of logistics outsourcing was mapped accordingly.Research limitations/implicationsThe generalisation of this study would require further empirical examination from more quantitative research, for example, the use of surveys with shippers who engage with LSPs.Practical implicationsFindings from this research can assist managers in charge of outsourcing to reflect on their practices and devise and implement appropriate strategies for successful logistics outsourcing. Especially for growing logistics outsourcing markets and not-yet-standardised practices like Vietnam, the findings of this research are significant as they provide policy and managerial insights into how logistics outsourcing can be performed successfully. Specifically, adequate guidelines and resources including training relating to strategic factors of logistics outsourcing must be provided.Originality/valueThis research is one of the first studies that categorise success factors of logistics outsourcing into strategic and operational factors and postulates their conceptualisation in a strategy matrix that can be applied in future research.

Evaluating logistics outsourcing: a survey conducted with Brazilian industries

“…The discussion on logistics outsourcing can be seen from the perspective of several theories, with the combination of transaction cost economics (TCE) (Williamson, 1985) and a resourcebased view (RBV) (Barney, 1991), which is the most used in the discussion on logistics outsourcing (Mageto et al, 2018;Solakivi et al, 2018;Marchet et al, 2018;Fadile et al, 2018;Thai et al, 2021). Other theories used are: the contingency theory (Bandeira et al, 2015), institutional theory (Bandeira et al, 2015); network theory (Fadile et al, 2018), social exchange theory (Zhu et al, 2017) and the concept of core competencies (Rintala et al, 2021), which is based on RBV (Thai et al, 2021). This study is grounded on RBV and TCE, inspired by Holcomb andHitt (2007), McIvor (2009), Neves et al (2014) and Gerbl et al (2015) who studied business process outsourcing by using a combination of both theories in the management operations context.…”

“…Outsourcing components have increased progressively over the years (Thai et al, 2021). However, over the last 25 years, outsourcing has been growing as one of the main key strategic points in supply chains (Akbari, 2018) and an important strategy to improve partner logistics performance (Silva et al, 2019;Marchet et al, 2018), mainly for small and mediumsized enterprises (SMEs) (Mageto et al, 2018).…”

“…The decision to outsource or not a given logistics activity takes into account the capacity to generate higher added value to end-product activities of a company (Samgam and Shee, 2017;Bandeira et al, 2015), as with better logistics performance (Thai et al, 2021) the perceived value by clients increases (Ali Syed and Siddiqui, 2019;Switała et al, 2019). However, it all depends on the sector in which the company operates and the way it operates (online or at work) (Buldeo et al, 2019).…”

“…When logistics activities are outsourced, a company can acquire multiple benefits, such as client satisfaction (Mageto et al, 2018), better operation efficiency (Silva et al, 2019), minimum operation investment, operating cost reduction, flexibility increase, customer service level improvement, risk reduction linked to the development of knowledge and new technologies, innovation capability improvement (Marchet et al, 2018), access to many distribution networks and many more (Zailani et al, 2017); and not necessarily will the reduction in cost be the decisive one (Huang et al, 2019;Langley and Infosys, 2021, p. 15;Khan et al, 2017). The decision in logistics outsourcing also depends on the macro environment (De Oliveira Neto et al, 2018), location and taxation (Gerbl et al, 2015), the cultural environment (Thai et al, 2021), economical environment (Bandeira et al, 2015;Franco et al, 2016), technology (Min et al, 2016) and well-established government rules (Thai et al, 2021). In addition to these critical success factors, in emerging countries, average growth rates are higher than in industrialised countries (Klose, 2018) with high variations in inflation and interest rates (Franco et al, 2016), which are also important factors to consider in logistics outsourcing decision-making.…”

“…The literature also refers to the integration of business processes from both parties (shipper and 3PL), and the cultural environment would positively contribute to the success of logistics outsourcing, which, in turn, may positively affect the logistics performance (Thai et al, 2021;Langley and Infosys, 2021). To integrate business processes and the cultural environment, we refer to "collaboration and process characteristics" (i.e.…”