The key theme in the logistical literature is that firms contract
out their physical distribution function to reduce
operating costs, while at the same time improving the
customer service level[17]. The logistics service provider
can have a cost advantage over potential clients, because
of consolidation economies (offering a full truck-load
transportation system and balancing the seasonal variations
in different clients' demands). Unforgiving customers
are demanding higher levels of customer service,
regardless of order size. Logistics managers need to improve
distribution information systems and more flexible
delivery options and networks. These imperatives require
major new investments in IT and distribution assets. Third
parties are able to offer these systems, and spread
development and operation costs over a large customer
base. Other cost advantages are created by the possibility
of renegotiating labour wages and spreading the cost
of a professional staff over a large distribution operation.