Importance Of Outsourcing In Logistics

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Outsourcing in Logistics. The global use and importance of logistics outsourcing has increased dramatically in recent decades and will continue to do so. Indeed, a recent study shows that of the total logistics costs in 2005, 57% in Western Europe and 44% in the US headed for logistics outsourcing. For these data, we expect to see growth rates of 18% in Western Europe and 16% in the US in the near future (2008-2010). Similarly, the utilization rates for logistics outsourcing services in the United States has increased from about 40 per cent of Fortune 500 companies in the early 1990s to around 80% in 2004. It has also been estimated that about 40 percent of global supply has commissioned external partners. The ongoing world-of-use work will…show more content…
WEBER / Kummer 1998, pp 1-6.). Since then, it has evolved into a widely recognized discipline of great importance for both theory and practice. As Wallenburg (2004, p. 38) notes, this development is not yet complete, however, and the debate about the true meaning of logistics and exact specifications are still in progress. Especially in the logistics industry is evident that there is not a standard concept of supply nor a stable concept of logistics. While some reduce their understanding of simple transportation, handling, and storage operations, others consider it as a broader logistics management function. Logistics outsourcing. Having introduced the different phases of development of logistics, the question is how to organize the supply chain processes at the level of individual firms. The options for businesses is to either work alone or in a partially or fully outsource the form of a service logistics (LSP). Logistics capabilities are an important source of competitive advantage. As described previously, the configuration of the individual logistics processes depends largely on the current phase of the logistic growth. At the same time, the question is which parts are involved in the formulation and implementation processes. When approaching the concept of logistics outsourcing, offers some valuable information. According to them, a company can basically…show more content…
This can become manifest in many different ways. Logistics service providers can be more effective than one manufacturer, because logistics is the main activity. Therefore, the results of specificity and proper use of basic skills lead to a reduction in production costs. Furthermore, inefficiencies which have not become apparent as the service produced at home and hence not subject to competition eliminated. Lower production costs can also be achieved through economies of scale and scope that arise from similar or greater amounts equal logistics services and produces an LSP through the use of a higher proportion of assets used. In addition, service providers can supply various types of demand balance better than a single firm production through diversification of client portfolios and reduce labor costs by benefiting from lower salaries than those in
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