Outsourcing logistical services: Firm-specific usage patterns

Outsourcing refers to the purchase of products or services from external providers. The purpose of this research was to study the outsourcing of logistical services among United States manufacturing firms. More specifically, the objectives were to examine: the anticipated usage of external logistical services and factors influencing the outsourcing decision.; A mail questionnaire was sent to selected logistics executives within United States manufacturing firms. Three hundred eighty responses were received and analyzed. Analysis of variance (ANOVA) was the primary procedure used to identify and evaluate outsourcing behavior.; Two sets of dependent variables were used in the research. The first set was used to determine anticipated outsourcing for the five logistical services. Five types of logistical services: transportation; warehousing; order entry and processing; inventory management; and freight audit and payment were analyzed.; The second set of dependent variables was used to determine relative importance of factors influencing the outsourcing decision. The factors selected were: deregulation; type of service available; quality of service, data processing/communication services provided; vendor management quality; and customer service or attitude of the vendor.; The independent variables were: level of centralization; strategic orientation; level of formalization; size, industry, and an overall measure of logistics performance, the Common Attributes Index.; The major findings are indicated below: (1) Transportation and warehousing and, to a somewhat lesser degree, freight audit/payment services are more apt to be outsourced than are order entry/processing and inventory management services. (2) Outsourcing appears to be related more to managerial behavior than structure. Management style as well as strategic and tactical decisions influence a firm's usage of outside logistical services. Usage of outside logistical services was found to be independent of structural characteristics such as centralization, size, and industry in many instances. (3) External factors having the most influence on outsourcing decisions are associated with quality. Firms look at more than cost when evaluating service offerings. They are concerned with the service options available, the quality of those services, and the quality of vendor management.