Preventive measures can help build successful logistics outsourcing
partnerships. Different potential risks in third party logistics
can result in inefficient management, loss of internal logistics management
capability, latent information asymmetry, reduced contact with the
final customer, loss of logistics innovative capacity, hidden costs, coordination
costs, dependence on the third party logistics provider, loss of
control over the third party logistics provider, problems of evaluating
and monitoring provider performance and conflicts of culture.
Mayer Brown (2003) define a number of key factors for customer success
in outsourcing. Those factors are: top management commitment
and support, the right people on the outsourcing team, clear objectives,
fully defined scope, established financial baseline, rational process, the
right vendor selection, an agreed contract and definition of outsourced
services, acceptance of responsibilities, managing the transition phase
as a project, maintaining competitive pressure, open and honest information
flow, support and respect to individuals and personal development
opportunities for any staff who transfer, improved service levels
and commercial viability for both parties.While the kpmg study (2000)
identified the most important factor for success of the partnership as improved
service levels, the second and third most important success factors
are support and commitment from top management and a contract
specifying responsibilities and agreement on key performance indicators.
Gartner sourcing experts Cohen and Young (2006) argue that yesterday’s
ad hoc sourcing approaches are ineffective in today’s complex
world. They have introduced a new operational model called ‘Multisourcing,’
a model in which internally and externally delivered services
are blended seamlessly, governed closely, and evaluated continuously for
effectiveness and efficiency. They state that the root of the disconnection
between theory and practice in outsourcing can be traced to eight
myths that pervade current outsourcing management approaches: the
myth of sourcing independence, themyth of service autonomy, themyth
of economies of scale, the myth of self-management, the myth of the enemy,
themyth of procurement, themyth of the steady state, and themyth
of sourcing competency. Moving beyond outsourcing to multisourcing
requires dispelling these myths and taking a new approach to all sourcing
initiatives and actions.
Collectively, these studies suggest that outsourcing companies should
take great care in what, how and whom they choose to outsource an
activity. As outsourcing may have considerable impact on a company’s competitiveness over time