Coping Strategy for Outsourcing Services to Third Party Logistics (3PL) Providers

Logistics has been identified as a very significant factor that triggers business and the economy. Study investigates impact of logistics outsourcing on third party logistics (3PL). Increase in globalization and international competition, use of information communication technology (ICT) have triggered most firms to outsource their none competence to third party logistics so that they can focus only on their core competence with the purpose of achieving cost reduction, economics of scale production, quality improvement, maintain flexibility among others. Study was conducted using secondary data sourced from; journals, books, archival data among others to achieve study objective. Again, this paper attempts to explain reasons for outsourcing logistics services to 3PLs and conclude by pointing critical success factors necessary for outsourcing. Study found that critical success factor for outsourcing should focus on the following; customer establishing operating standards and monitoring performance against those standards; knowing the payback period, benefits expected by the firm, and the means to achieve those benefits. Factors, like being aware that outsourcing may require a longer term of service than the firm is used to and building information systems that will allow the firm to make ongoing cost/value comparisons, are also critical. Finally, primary business focus of outsourcing is also based on service, rather than cost. Based on conclusion, the author recommends further study to consider problems and prospect of outsourcing logistics services to third party logistics. It is also important for future researchers and practitioners to consider possible ways of managing logistics complexities with 3PLs. Again, young researchers can replicate this study using alternative research approach to see if similar or different result will obtained. Finally, the research approach adopted were mainly secondary data, based on this, study is limited to this