Experience and reference of logistics outsourcing

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Experience and reference of logistics outsourcing third parties in developed countries

outsourcing has become a major trend in the business field since the 1980s. Enterprises are paying more and more attention to concentrating their main resources and businesses, and outsourcing auxiliary functions to other enterprises. Because logistics is generally regarded as a supporting and auxiliary function by industrial and commercial enterprises, it is a candidate function for externalized business. Over the years, logistics in developed countries in Europe and the United States is no longer an activity directly managed by industrial and commercial enterprises, but often purchases logistics services from external logistics professional companies. Some companies still retain the function of logistics operations, but increasingly begin to be supplemented by external contract services. These service procurement methods have a great impact on the quality and efficiency of the company's logistics system. This paper analyzes the practices and trends of logistics outsourcing in developed countries in Europe and the United States since the 1980s, which can be used for reference for the development of China's third-party logistics industry

I. factors promoting logistics outsourcing

in developed countries in Europe and the United States, the externalization trend of logistics services is related to the pressure faced by both supply and demand sides of logistics services. Although different countries have different situations, the basic aspects are the same

(1) the demander of logistics services

in foreign literature, general management scholars emphasize the potential cost savings of outsourcing, while procurement and marketing experts believe that the importance of cost and service is equal. Many logistics experts believe that the demand for high-level services is the main driving force of outsourcing. Recently, cost saving, service improvement and flexibility are considered to be equally important for outsourcing decision-making

Another important factor of logistics outsourcing is to avoid investment in logistics facilities. This factor was the main benefit of outsourcing in the 1980s. In particular, the adjustment of the UK's corporate tax system has turned the desire to own assets into a focus on the contribution of assets to profits. This has led the company to concentrate its capital on major businesses that can produce high efficiency and achieve major competitiveness. Nearly 60% of companies believe that logistics is not their main business. The use of external logistics contract contractors not only reduces the new investment in logistics facilities, but also frees up the funds occupied in warehouses and fleets. They can be used in more efficient places

outsourcing also enables the company to obtain the professional skills of a professional company whose main business is logistics management. With the improvement of customer expectations, the strengthening of vehicle operation regulations, the rapid development of technology and the uncertainty of economy and environment, the demand for logistics management is growing. Outsourcing logistics by contract can also help companies overcome the problem of low internal labor efficiency. For companies that have established and carried out their own logistics operations, logistics outsourcing naturally resists the existing solutions. The inertia of adopting our own logistics system mainly comes from the unwillingness to give up the control of logistics functions and worry about the operation quality of logistics companies. In recent years, these have not become a problem, because confidence in contract logistics operations has been established, and the progress of information technology is also a major reason. The development of information technology has made the monitoring of contract logistics operations very similar to the management of logistics. According to the survey, in fact, half of the companies have improved their logistics control due to outsourcing

in some countries, especially the UK, the structural adjustment of retail supply system has promoted the adoption of contracts. Large retailers have greatly increased their control over purchasing logistics and outsourced their daily management to third parties. In 1997, major UK retailers controlled 94% of engineering distribution (from distribution centers to stores), and nearly 47% of distribution was outsourced. The "quick response" (QR) pressure in the retail supply chain has led to an increase in the frequency of delivery and a reduction in the size of orders, which also forces suppliers to increase the use of external logistics suppliers to reduce costs in the form of shared services. In some industries, such as automotive and electronic industries, the demand for third-party centralized transportation services is similar, and the "zero inventory" supply of raw materials in these industries has been widely used

there is a similar trend of logistics service externalization in international logistics. Manufacturers' international transportation and product distribution are highly dependent on contract logistics suppliers. According to the survey of the Netherlands International Distribution Association (hidc), two thirds of European distribution centers in the United States, Japan, South Korea and other countries are managed by third-party logistics companies

(2) the supplier of logistics services

in the past two decades, the third-party logistics services in European and American countries have been greatly improved. The standard of providing services has been greatly improved, and the operation efficiency has also been greatly improved. Various new services customized for customer needs have been developed. The marketing of logistics service companies is also more powerful and skilled

many transportation and warehousing companies in Europe and the United States have evolved into suppliers of a wide range of logistics services. In most countries, the road transportation industry has become an increasingly competitive industry, with declining capital returns and lower profit margins. Through transformation 2, we attach great importance to the construction of the new material industry system into an integrated logistics company, so that large carriers can add value to services and form market segments with high entry barriers to ensure long-term contracts with customers. This enables them to increase profits and growth. The following table shows the types of value-added logistics services provided by large logistics companies

Table 1 types of value-added logistics services

transportation vehicle maintenance and storage palletization

sub packaging/re packaging and centralized transportation labeling

order sorting quality control/product test inventory control

customized sorting and packaging after-sales service Cargo Tracking and consulting service

in developed countries in Europe and the United States, the company uses a variety of ways to outsource its logistics. The most thorough way is to shut down their own logistics system and transfer all logistics responsibilities to external logistics contract suppliers. For many companies that manage their own logistics, this choice has changed too much. They are unwilling to dispose of the existing logistics assets and personnel, and risk the interruption of operations in the transition phase. Some companies are willing to adopt the process of gradual outsourcing, and implement the handover step by step in geographical areas, or step by step in business and products. European and American companies generally adopt the following methods to stabilize the handover:

(1) there are countless examples of systems taking over

large logistics service providers buying the logistics system of customer companies. They take over and own vehicles, stations, equipment and accept the employees of the original company. After taking over, the system can still serve this enterprise alone or share with other companies to improve utilization and share management costs

(2) joint venture

some customers prefer to retain part of the property rights of distribution facilities and maintain their participation in logistics operations. For them, joint ventures with logistics contractors provide a way to inject capital and expertise. For example, in the UK, IBM and tibbett&britten formed hi tech logistics

(3) system divestiture

there are also many examples of companies that take care of their own logistics operations divestiture their logistics departments into an independent profit center, allowing them to undertake third-party logistics business. Parent companies provide their basic business, and then increasingly rely on third-party business

(4) management contract

for companies that want to own logistics facilities (assets), management can still be outsourced. This is a strategy often adopted by large retailers. The extensometer is a sensor for measuring the deformation of the specimen, which is mainly used for the corresponding performance indicators when the specimen deformation is small, such as the impact testing machine to determine the specified non proportional extension strength and elastic modulus. If these items do not need to be measured, it is not necessary to install the extensometer in the EU countries, and the contract outsourcing is regarded as a method to improve the logistics operation management. Because this form of outsourcing is not asset-based, it gives the party using the service great flexibility in business negotiations. If necessary, they can terminate the contract

III. The trend of logistics service procurement

the increase in the diversity of external logistics services of enterprises has changed the way enterprises purchase logistics services and the relationship with external contractors. The following aspects are particularly obvious:

(1) the proportion of logistics services purchased in the form of contracts has increased

transportation and warehousing services are traditionally carried out on a transaction basis. These services are fairly standardized and purchased at the lowest price. The dispersion and competition of the road transportation industry makes many small carriers in the industry provide low-cost services. Purchasing transportation services in this way has great disadvantages. It requires daily contact with a large number of independent carriers, which increases transaction costs and makes high-quality delivery services difficult. Even in this market, enterprises must use several relatively stable transportation carriers to reduce trouble. Even in the absence of formal contracts, manufacturers show "loyalty" to specific carriers. When the company has some special requirements, needs some customized services and partially participates in the carrier's investment, they must be prepared to enter into a long-term contract. When the transportation exclusively serves the special order owner, the contract should preferably cover at least the length of the vehicle's life cycle

(2) decrease in the number of contracting parties

in developed countries in Europe and the United States, the average number of contracts adopted by a single enterprise has decreased, whether in the trading market (short-term, unstable) or the contract logistics service market. Purchasing logistics services in this way enables both parties to reduce transaction costs and improve service standards

transaction costs

in some European countries, many domestic road transportation is carried out through freight forwarders, who act as intermediaries in the freight market. This greatly reduces direct transactions between shippers and transportation companies. In the United States, since the liberalization of transportation in 1980, the number of freight intermediaries has also soared. In the UK, middlemen are only used for international logistics. The tradition of domestic transportation operations is to directly deal with a large number of transportation companies. This enables shippers to get a lower freight rate, but the transaction cost is relatively high. When pursuing a low freight rate, many companies do not consider the total cost of purchasing transportation in this way. However, it is possible for enterprises to obtain low freight rates and purchase transportation services stably. Under the arrangement of "freight management", some large contract suppliers, such as Exel logistics, will subcontract road transportation operations to smaller carriers on behalf of customers. Similar "one-stop transportation" services are provided by many third-party logistics companies in the United States. In recent years, electronic middlemen for road transportation services have emerged in the United States. They mainly provide an electronic trading center for road transportation services, through which companies can trade transportation capacity at a specific time on a specific route. Recently, an American electronic middleman (GEP) established a similar business in Europe. This is a supplement to the current loading matching service in Europe, which is used to help carriers find return goods for international transportation. Some of these companies provide credit system services to provide logistics companies with the latest financial status of potential customers. The development of such electronic intermediaries can lead to the form of "virtual market", through which many logistics assets can be traded at different times. Institutions operating such businesses can quickly become the main role of the logistics service industry

standard services

the more transportation and logistics companies a single company adopts, the more time it takes to familiarize itself with and monitor its performance. Concentrate transportation business on a few reliable transportation companies

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