Examining logistics outsourcing practices in the United States: from the perspectives of third-party logistics service users

Abstract

Ongoing global recession forced many firms to change the direction of their business strategic thinking. This change in a strategic thinking includes the reassessment of current business practices that may not necessarily add the highest value to the supply chain process and may not bring the highest possible return from the allocated resources. As such, outsourcing strategy that allows the firm to focus on its core competency has gained popularity over the years. One of the supply chain activities that are often outsourced is logistics as evidenced by a continued growth of the third-party logistics (3PL) industry across the world. To help firms formulate wise logistics outsourcing strategy, this paper examines the common logistics outsourcing practices among the US firms and identifies key determinants influencing their logistics outsourcing decisions. It also explores the current logistics outsourcing trends in terms of customer value propositions. Examples of such trends that this study discovered were the increased outsourcing of global logistics practices and a short-term duration of the logistics outsourcing contracts. Furthermore, this paper identifies the best-in class 3PLs based on their users’ experiences with those 3PLs as guidance for future benchmarking efforts.

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