Case 1 description. Outsourcing Company 1 / Logistics Service Provider
1: The core business of the Outsourcing Company 1 (oc1) is the production
and sales of large household appliances. The company is one of the
eight largest manufacturers of household appliances in Europe. Logistics
Service Provider 1 (lsp1) is a Denmark based logistics company specializing
in the transport of packages rather than bulk goods. The company
has several distribution terminals located throughout Denmark and operates
its own trucks. Customer service and competitive prices had become
a key competitive differentiator, and lsp1 saw a clear opportunity
to gain an advantage by providing a better service at competitive prices
to foreign producers and importers of household appliances such as oc1.
The relationship between oc1 and lsp1 is one of the relationships with
third parties for warehousing and distribution of oc1 appliances to all
retailers (customers) of oc1 in Denmark. lsp1 is a logistic company in
Denmark that offers logistics services (warehousing and transportation)
to several producers/importers of household appliances in Denmark. In
the analyzed case, the logistics company lsp1 provides transportation of
goods and storage services for two Italian, one French and one Slovene
producer of household appliances. The transportation of goods is usually
executed for all producers simultaneously on the same transport route,
as the supply is being delivered to the end users, who are mainly the same
for all the producers (retailers-distribution centres). Both oc1 and lsp1
obtained a number of positive outcomes from this relationship. For oc1
there has been significant improvement in customer service levels. oc1
customers reported satisfaction. For lsp1 the most significant outcomes
have been profit stability and a competitive advantage.
Case 2 description. Outsourcing Company 2 / Logistics Service Provider
2: Outsourcing Company 2 (oc2) is part of a well-known French car
manufacturer and acts as a retail sales outlet in Slovenia. Logistics Service
Provider 2 (lsp2) is a prime contractor offering logistics services to the
whole organization (parent company) and to the market at large. lsp2
is a single provider that manages service delivery to the parent company.
It is an external service provider that delivers a set of services by engaging
other service providers to provide best-in-class capabilities. lsp2 is
one of Europe’s leading logistics groups and one of the top ten in the
worldwide logistics industry. lsp2 engaged ‘lsp2 subcontractor,’ which
is an internationally active family business, whose core service is vehicle
logistics. The company specializes in the preparation and distribution
of finished vehicles from production to delivery to the dealer. Within
50 years, lsp2 subcontractor developed into an international specialist in the field of vehicle outbound logistics. Releasing Agent responsibilities
are one of the main pillars of the lsp2 subcontractor’s international
range of services, in addition to vehicle transportation and a great variety
of Pre-Delivery Services. lsp2 subcontractor carries out the oc2 vehicle
distribution from the main branch in France to its distributors in Slovenia.
This service includes the collection of vehicles from themain branch.
The contractual capacity includes vehicle inspection (detection of damage
– visual inspection); transportation of vehicles to the warehouse in
Slovenia; storage of vehicles in lsp2 subcontractor’s warehouse; repair of
potential minor transportation damage; vehicle modification from private
vehicles to cargo carriers (owing to tax benefits); and distribution
(transport) of vehicles to authorized dealers. The full extent of these services
has been carried out since 2005 by lsp2, the authorized company
for the organization and transportation of vehicles for the oc2 parent
group. Both companies (and subcontractor) benefit from this business
relationship. oc2 improved its service level for customers and the reclamation
amount declined. lsp2 subcontractor profit margin increased as
well as their operating range and stability, as did their competitive position
in the market with the incorporation of additional services for their
clients.
Case 3 description. Outsourcing Company 3 / Logistics Service Provider
3: Outsourcing Company 3 (oc3) has been manufacturing stone wool
thermal insulation and has more than 30 years of tradition in the manufacture
of sealants. The company earns more than 70 percent of its
turnover in Western European markets. Logistics Service Provider 3
(lsp3) offers customers a variety of logistics solutions in the area of
continental, sea and air transport, in terminal services and in customs
broking. They organize door-to-door transport, express delivery and
courier services, warehousing and distribution. They also offer shipping
agency services and border dispatch in their range. oc3 is a successful
player in more complex logistics projects and the realization of
entire logistics services-logistics outsourcing. lsp3 has been given the
task of acting as a logistics service provider to perform the organization
and transportation required by oc3. lsp3 assumed control over the
following activities in the oc3 logistics process: the registration of orders
and coordination with the sales/purchase department of oc3; the
selection of transporting agents and transportation methods; and the
implementation of transportation in synch with the given disposition.
Regardless of lsp3 improved level of services and transport optimization, oc3 evaluated their business interaction with lsp3 as financially
unsound and terminated the contract, so this case is a case of outsourcing
failure.