outsourcing the logistics services brings out many benefit to the company,
there are some issues that discourage. Here below are the most faced problems:
Partial or complete loss of some logistics
When a company
delegates its logistics functions to 3PL, the ability to maintain the control
of the process and the flows becomes restricted. Though, it enhances
difficulties to identify the key performance metrics, special when it concerns
impalpable products that cannot be quantified. (Sanders, Locke, Moore, &
Ambiguity in the
service level expected
The companies in general outsource because their ability to
provide a good transportation network and appropriate tools is poor, besides
the non-efficiency of the staff and the inability of the frequent IT update.
However, there is a probability that the service provider will meet the
company’s requirement and fulfil the customers’ expectations.
Exactitude of the
true outsourcing cost
The real cost of outsourcing is never clear and precise. In
fact, service providers can forget, overestimate or underestimate the cost of
the services due to variable factors.
while establishing the contract between the firm as a customer and the 3PL,
there might be a specific task that can be forgotten to be mentioned. In that
case, the service provider will accomplish at but at some additional fees.
Furthermore, if we take into consideration the forecasts, there might be some
differences with the final demand, here the 3PL with will act accordingly but
it will be charges as some extra expenses. (Sanders, Locke, Moore, & Autry, 2007)
Acquiring the proper logistics tools by the
Not choosing to
deal with a 3PL by a company can be also justified if this firm has acquired
all the necessary tools, equipment and expertise needed to meet her customers’
expectations, without neglecting the continuous improvement of her core
In that case,
the reason justified the choice.
Complication for the
company to get the general administrative approval
have been done previously in USA, Europe and Middle East, have proved that the
approval of the top management and other influencing departments such as the
market has a major role in the process of taking the decision of outsourcing or
not. Moreover, companies, afraid to lose partial control of the processes and
delete job position, they prefer to review the decision of outsourcing with
several services before the commitment.
Absence of mutual
Sharing the same
goal between the company as a consumer and the service provider is a basic
condition. Nonetheless it can represent a serious problem when it concerns the
financial results and when it is related to the final establishment of the
After that, the
profit generated by the 3PL starts to decrease if the contract clauses are not
well established, leading to a win-lose situation.
direct contact and the feedback from the customer represent important factors that
are highly required by companies. Being a source of information and improvement
along with the sharing of data and goals, if all this factors are not taken
into consideration the collaboration becomes hard to manage and last.
1. The general trends and geographical
All over the
world, Capgemini has shown in its 9th and 12th annual
report on 3PL trends, that the outsourcing industry is growing very fast, and
this between 1996 (creation of the 3PL to the 2010).
During the first
6 years of development, more than 70 percent of the logistics service providers
designated themselves as 3PL services, a percentage that increase by more than
10 percent in the last decade.
Multiple are the
latest studies that have investigated on how the 3PL are spread across the
globe. Yet, the companies that responded to the survey are located as follow :
USA, Mexico, Australia: 80% – 70%
Saudi Arabia, Malaysia, Singapore: 70% – 60%
Western Europe, India: 60% – 50%
Turkey: < 50% Different are the purposes of use of 3PL, it can have as an aim a domestic logistics or an international expansion. However, it majorly depends on the strategy and management of company but also on the economy of the country. (Gordon, 2008) (Sohal, Millen, & Moss, 2002) have proved in their study that the collaboration with a service provider in Australia that have lasted at least 3 years represent 66 of the companies, while more than 80 percent of the respondent in America of his survey were negotiating contract services for less than one year and a half. Regarding the survey that has been done in Singapore by (Sohail & Al-Abdali, 2005), showed that also more than 80 percent of the involved companies deal with a service provider for at least 3 years.
The results of
the above-mentioned studies reflect that the experience vary from one strategic
company to another but specially from one country to another, given the 3PL
industry a significant experience through its evolution.