A7 Andersson Outsourcing Flashcards
What is a logistics partnership in the context of outsourcing?
A logistics partnership is the outsourcing of multiple logistics services in an integrated relationship between a shipper and a logistics service provider, often called third-party logistics (3PL).
What are the main driving forces behind outsourcing logistics?
The main drivers are cost reduction, service improvement, investment reduction, restructuring of supply chains, and focusing on core business.
How does outsourcing logistics help a company focus on its core business?
By handing over logistics tasks to specialized providers, companies can concentrate on their primary competencies rather than managing logistics operations.
Example: A retail company outsources its warehousing and distribution to focus on marketing and product development.
What cost-related benefits do companies achieve through logistics outsourcing?
Reduced warehousing and inventory costs, lower transportation expenses, and converting fixed costs into variable costs.
How does outsourcing logistics impact service levels?
It can lead to faster order fulfillment, reduced order-cycle time, more reliable deliveries, and overall improved service performance.
What are the restructuring benefits of outsourcing logistics?
Companies can make fast and significant changes to their supply chain with minimal investment, leveraging the provider’s infrastructure.
Example: A manufacturer enters a new market without building its own distribution network by using a 3PL.
How does logistics outsourcing improve cost control?
Costs become more transparent and measurable since they are directly associated with an external service, improving cost awareness.
What operational factors drive cost savings and efficiency in logistics outsourcing?
Efficient operations, economies of scale, and provider expertise all contribute to cost reductions and better service.
Why is provider knowledge an important factor in logistics outsourcing?
Experienced providers bring operational expertise and industry best practices, improving service efficiency.
What are the transaction cost considerations in logistics outsourcing?
While outsourcing reduces operational costs, it may increase transaction costs due to managing contracts, coordination, and potential risks.
How does a long-term partnership benefit logistics outsourcing?
Long-term relationships reduce uncertainties, build trust, and enable better collaboration for continuous improvements in logistics operations.
What challenges can arise when outsourcing logistics?
Initial cost increases, inefficiencies due to inexperienced personnel, and the need for effective contract management.
What skills should a company retain in-house when outsourcing logistics?
Companies should maintain logistics knowledge to set clear goals, evaluate providers, and ensure alignment with strategic objectives.
What role do IT systems play in logistics outsourcing?
Advanced IT systems are crucial for integration, real-time tracking, and seamless coordination between shippers and service providers.
