Key Success Factors in Logistics Outsourcing: Conceptual Frame Work

Abstract

One of the biggest emerging sectors in economics is logistics outsourcing. The number of outsourcing organizations and logistics service providers has exploded, resulting in a fierce competition.

Both outsourcing firms and service providers faced profound challenges in their outsourcing endeavors. To take full advantage of the outsourcing potential, outsourcing organizations require a deeper awareness of the success and failure elements, as well as the risks that go along with them.

On a financial, organizational, and operational level, the benefits of outsourcing logistics activities are diverse and complex. However, it is equally true that it conceals considerable dangers that businesses must consider before making a decision. Indeed, this decision-making causes significant long-term organizational and structural changes to the company that makes it, and even if resumption of operations is still possible, the corporation will have to pay very expensive "reintegration costs".

This requires making in-depth research into the suitability of this strategy as well as the circumstances for its success prior to making a decision in order to get a good return on investment.

In this context, the purpose of this paper is to provide a general overview of logistics outsourcing by identifying the factors that influence the success and performance, drawing on transaction and resource cost theory and other empirical studies.

JEL Classification: D21, L21, L25, P17

Paper type: Theoretical Research