An exploratory study of outsourcing 3PL services: an Australian perspective

Abstract

PurposeOver the last two decades, a large number of studies have been conducted in the field of outsourcing third‐party logistics (3PL) services and the field is growing. The purpose of this paper is to examine the extent to which 3PL services are outsourced by Australian firms. Specifically, it investigates the motivation for outsourcing, the average length of 3PL contracts, types of logistics services used and the impact of the use of outsourcing logistics services on customer satisfaction, logistics costs and employee morale of the user companies.Design/methodology/approachThis study is based on a questionnaire survey conducted in Australia. The sample was drawn from companies listed in Dun & Bradstreet's 500 largest Australian firms. Banks and other financial firms, insurance companies and real estate companies were excluded from the list of firms and a total of 210 firms were identified for this study. Data were collected against a number of items pertaining to the extent of 3PL use and its impact on performance.FindingsThe results revealed that the most frequently used logistics functions are warehouse management, order fulfillment and fleet management. The top three factors that motivated the firms to outsource are cost reduction, reduction in capital investment, and enhanced operational flexibility. The level of satisfaction with 3PL service providers is high at 86 percent and is reflected in the indication to continue their use in the future. However, employee morale has been adversely affected in 50 percent of 3PL users.Originality/valueThe paper contributes to the current 3PL practices and the trends in 3PL services for achieving improved business results.