Abstract
Background: Logistics service providers (LSPs) are becoming increasingly involved in their clients’ businesses. Beyond just providing vehicles and buildings, LSPs are now becoming involved with knowledge-related work that is connected to the traditional services provided.Objectives: To investigate the likelihood and potential value of LSPs extending their range of services to their clients by means of a convergence of planning and execution activities.Method: In the research through a literature review and empirical study presented here, attention is given to the practical impact that convergence planning and execution functions have on business success, as well as how selected clients of an LSP (referred to in this article as logistics company A or LCA) perceive the impact of increased integration of LCA within its businesses. The results should assist LCA and other LSPs considering the same objective to ascertain the opportunities and key requirements associated with a strategy to converge planning and execution activities for their clients.Results: The study found that the vast majority of respondents see value in the convergence of planning and execution activities.Conclusion: Such convergence will be challenging, owing to the importance of the planning function for clients, as well as key collaborative and measurement requirements that will have to be put in place for successful business integration.
Highlights
Logistics outsourcing is a viable business strategy, because turning non-core functions over to external suppliers enables companies to leverage their resources, spread risks, and concentrate on issues critical to survival and future growth
One way of extending a logistics organisation beyond its boundaries is through the use of a third-party logistics service provider (LSP) or contract logistics services
The survey results show that the main benefit is cost-efficiency; secondary benefits that relate to business efficiencies, such as better planning and business simplification, were foreseen by respondents
Summary
Logistics outsourcing is a viable business strategy, because turning non-core functions over to external suppliers enables companies to leverage their resources, spread risks, and concentrate on issues critical to survival and future growth. For the purposes of this study an LSP is broadly defined as ‘an external supplier that performs all or part of a company’s logistics functions’, as per Langley et al (2009:119). Critical inputs to successful execution of the outsourced function, such as forecasting, planning and performance measurement, are controlled by the clients and are not openly shared with the LSP. This has often led to the misalignment of execution of operations between the client and the service provider. Logistics service providers (LSPs) are becoming increasingly involved in their clients’ businesses. Beyond just providing vehicles and buildings, LSPs are becoming involved with knowledge-related work that is connected to the traditional services provided
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