Expediency of Transition to Logistics Outsourcing in the Manufacturing Industry
Today, many enterprises involved in the manufacturing industry transfer the authority to perform their key logistics functions to outsourcing firms. According to Cortinhal, Lopes, and Melo (2015), this trend is due to the fact that such companies are ready to provide an extensive list of services at affordable prices, thereby helping to develop a specific business. The expediency of the transition to this principle may be explained by several advantages. In particular, the governing apparatus has more time to concentrate on its key functions. The staff of outsourcing firms, in turn, deals with the assigned tasks exclusively and is not distracted by the solution of related problems, which increases the productivity of work. In addition, new ideas emerge constantly, which can lead to fundamental changes in the structure of industrial enterprises and their organization of supply chains. Finally, if there is a need to optimize the logistics department without losses, specialists will make it possible to avoid reducing the overall profitability (Tjader, May, Shang, Vargas, & Gao, 2014). All these aspects are significant bonuses in logistics outsourcing and allow increasing the productivity of a specific business at no great expense.
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Key Opportunities in Logistics Outsourcing
Logistics outsourcing has many opportunities, including those in the manufacturing industry. Since enterprises of such a profile are involved in the transportation of raw materials in large volumes, responsible persons need to establish supply chains competently in order to prevent the loss and damage of valuable cargo and, at the same time, not to lose credibility among customers. Outsourcing can be a solution to a number of problems due to the possibilities that enterprises may obtain in collaboration with relevant firms.
All logistical processes that a certain enterprise is forced to control are transferred to the company that provides outsourcing services. This measure contributes to reducing all the risks significantly, which is a benefit. Also, as Akbari (2018) notes, the study of the market and the wishes of consumers are carried out more qualitatively. Specialists involved in such activities are well aware of all the features of the organization of supply chains. Therefore, threats associated with transportation and client communication are minimized.
The degree of customer focus is increased due to efficient logistic outsourcing. According to Mathien and Chow (2018), it is possible to coordinate enterprises’ working activity in relation to client decisions regarding the procurement and distribution of raw materials. As a result, manufacturing ventures can meet the needs of all customers, thereby maintaining high demand for specific products. Finally, the responsibility that executing firms bear for organizing logistics cycles is high, and the representatives of this sphere are interested in ensuring the high quality of the work assigned to them. Thus, logistics outsourcing is a potentially successful strategy for the development of manufacturing enterprises and their recognition in the target market.
Opportunities in logistics outsourcing allow enterprises involved in the manufacturing industry to maintain consistently high-quality supply chains and avoid the threat of product damage and loss. Some risks may arise, but in general, the benefits of the transfer of responsibility for planning and monitoring supplies reduce managers’ workload and help them focus on other essential tasks. Competent specialists are able to maintain the flexibility and adaptability of the work process, thereby contributing to the recognition of manufacturing enterprises in the target market.
Akbari, M. (2018). Logistics outsourcing: A structured literature review. Benchmarking: An International Journal, 25(5), 1548-1580. Web.
Cortinhal, M. J., Lopes, M. J., & Melo, M. T. (2015). Dynamic design and re-design of multi-echelon, multi-product logistics networks with outsourcing opportunities: A computational study. Computers & Industrial Engineering, 90, 118-131. Web.
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Mathien, L., & Chow, Y. W. (2018). An empirical investigation of resources and dynamic capabilities in logistics outsourcing decisions. Academy of Business Research Journal, 3, 29-54. Web.
Tjader, Y., May, J. H., Shang, J., Vargas, L. G., & Gao, N. (2014). Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model. International Journal of Production Economics, 147, 614-623. Web.