Outsourcing of logistics activities in a complex supply chain: a case study from the Norwegian oil and gas industry

Abstract

This paper argues that the evolution of gradually more complex supply chains makes the logistics outsourcing decision more difficult and that a main reason for this is the increased number of interorganisational links that appear in complex supply chains. A wider Supply Chain Management (SCM) consideration seems to be warranted and the dyadic approach frequently taken in the outsourcing literature is not sufficient to provide adequate decision support in outsourcing decisions. The paper reviews the current literature on how interorganisational links should be regarded in an outsourcing decision process. A business case from the Norwegian oil and gas business is used to illustrate and analyse the broad problem scope and the complexity associated with the decision of possible outsourcing of the Supply Terminal Management (STM) within the framework of Transaction Cost Analysis (TCA) and SCM theory. The outcome of the empirical analysis shows that it is not beneficial to outsource the function when both economic and organisational factors are brought into consideration.