Gibson, Richard (2011) An evaluation of solution design in logistics outsourcing. Doctoral thesis, University of Huddersfield.

Outsourcing within the logistics and supply chain sector is perceived as a method to save money and improve client service levels. The outsourcing process exists within a highly stratified market of service provision and high value commercial arrangements may extend over many years.

The client has a responsibility to define the strategy for their supply chain and agree
distribution channel objectives which support the wider organisation’s brand delivery. There is a variety of solutions to satisfy these objectives of which outsourcing is one and should be accompanied by clear success criteria as well as a governance structure in order to yield a long term successful commercial arrangement.

It is perceived that organisations may not follow an iterative approach towards outsourcing
and that failing to adhere to these principles results in a lack of satisfaction for both parties
evidenced by high contract turnover rates.

This Phd thesis has investigated the issue of solution design within outsourced logistics
amongst a group of 400 senior logistics managers through case studies, interviews and a three round Delphi survey. The hypothesis for this investigation was ‘the length and stability of an outsourcing relationship is directly related to the amount of effort expended by the customer in designing their logistics solution’.

It was found that clients develop logistics strategy in varying degrees and over varying
timescales. Clients measure the cost of supply chain activities with varying frequencies and
few follow a straight forward method to define the parameters of a successful supply chain.

Within outsourcing arrangements, governance and the management of change were poorly interpreted and executed. The current and future stratifications of logistics service offerings
relied on a degree of collaboration between the pursuant parties and it was difficult to determine the effectiveness of these approaches when the balance of power between the
parties was so unequal.

Both clients and service providers were found to be poorly prepared to grasp the opportunities presented by the rising costs of energy and the future demands of reducing carbon intensity within the sector.

Contributions were defined in terms of service level stratification and likely risk, behaviours
and a toolkit for clients to observe when working within the outsourced environment as well as the opportunities presented by the changes currently influencing the sector.

In conclusion, the hypothesis was found to be valid and the important role the client has to
play in specifying and managing their logistics service provision was applicable across the
logistics and supply chain industry.

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