Abstract
As organisations find themselves in an increasingly dynamic and competitive world they are seeking new strategies to ensure their competitive advantage and profitability. Logistics presents an area in which these organisations can improve customer service and reduce costs, and strategies in support thereof such as the outsourcing of logistics activities, should be considered. However, it is critical that logistics outsourcing is done diligently to avoid potential problems for the organisation and to achieve the best possible benefits. In South Africa little research has been done regarding current outsourcing practices of local manufacturers. In this article literature on international logistics outsourcing as well as research on some of the logistics outsourcing practices of South African manufacturers is discussed. The findings of a questionnaire survey of South African manufacturers provided information on their logistics outsourcing practices and problems. Prominent issues seem to include inadequate managerial involvement in the logistics outsourcing process, as well as insufficient time spent on many of the important aspects of the outsourcing agreement, the transitioning of resources and ongoing management of the outsourced relationship. It is concluded that a thorough outsourcing process should be followed in order to achieve the benefits of logistics outsourcing.
Highlights
It is risky for an organisation to hand over its very connectivity to its customers to an outside organisation
It is critical for an outsourcing company to identify the benefits sought and reasons for undertaking such an initiative, the potential problems to be avoided, and the important steps that should be identified, planned for and followed in the outsourcing process
Reasons to outsource With regard to the expected benefits and listed reasons for their outsourcing, 77% of the respondents indicated that they outsourced logistics to a large or moderate extent due to a focus on core competencies, 76% due to geographical coverage, 73% outsourced logistics to a large or moderate extent due to the pressure to improve customer service, 57% due to market expansion, 56% due to the pressure to cut costs, 49% due to a lack of internal expertise and capability, and 25% due to BEE and labour relations considerations
Summary
It is risky for an organisation to hand over its very connectivity to its customers to an outside organisation This is what organisations outsourcing logistics activities are doing. Due to the fact that manufacturing organisations in South Africa are competing in an increasingly difficult market, many are seeking to outsource their logistics activities to a third party logistics provider (3PL) (Kujawa, 2004). South African organisations are geographically far removed from most of their international suppliers and customers, making their logistics more complex and costly. They are being forced to seek innovative ways in which to increase their competitive advantage and improve their profitability. There are many 3PLs in South Africa and many
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