The value creation characteristics essential in the strategic outsource to third party logistic providers within the automotive industry

Many companies are questioning the value created from logistics outsourcing. This isespecially evident in contract logistics (specialised warehousing), given the increasedcommoditisation of transportation and distribution today. A clear need emerged tounderstand the value creation characteristics at play between third party logistics (3PL)providers and clients, and this formed the basis for this research. More specifically, theresearch sought to identify the elements driving the quality and functionality of valuecreation. The research focused on the South African automotive industry limited to Original EquipmentManufacturers (OEMs) that had outsourced, were currently outsourcing or were planning tooutsource their specialised warehousing. The research consisted of a phased approach inwhich key industry players (clients and 3PLs) were interviewed to understand and expandon the nature of the problem. A questionnaire was then sent out to the OEMs andquantitative analysis was undertaken on the data collected to answer the stated researchpropositions It was found that client satisfaction was achieved through long term strategic relationshipswith 3PLs rather than a short term transactional approach. The value creation that wasdriving client satisfaction was being achieved through behaviour that sought strongerrelationships, cooperation and strategic partnering with each other. Although there was aclear understanding on what the value creation characteristics were, the execution wasunclear. Overall, the majority of OEMs that took part in this study indicated satisfaction withtheir 3PL providers. Copyright © 2008, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria Please cite as follows: Meredith, GA 2008, The value creation characteristics essential in the strategic outsource to third party logistic providers within the automotive industry, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03132010-170936/ > G10/52/mh