Logistics outsourcing

In recent years the strategy of concentrating on core competencies of companies led to a vertical disintegration of processes along the value chain. Practical experience shows that companies focusing on their core competencies in first turn outsource logistics operations within their supply chain to external service providers. A fundamental question to ask in this work is whether outsourcing is really value enhancing and, in particular, whether the firm that undertakes outsourcing becomes more efficient as a result. It will be shown that in an attempt to increase efficiency by reducing expenses and turning fixed costs into variable costs, companies pursue restructuring procedures that include outsourcing of non-core activities to specialists having a lower cost base due to better economies of scale and scope. Anyone who wants to outsource a function, or who wants to know more about how outsourcing works, can find within this book a discussion of selected issues that may arise during this process, putting the main emphasis on the planning stage as it is considered to be the critical factor in a successful outsourcing project.