Integrating logistics in outsourcing decisions

Licentiate thesis, 2008

Outsourcing decisions are strategic and complex. Logistics can have a major impact on achieving cost-saving goals related to outsourcing and plays an important role when outsourcing but is seldom the focus when outsourcing processes are described and discussed in the literature. The aim of this thesis is to contribute to the understanding of an effective integration of logistics in the outsourcing process, i.e. effective in respect of improving the decision-making by including logistics in the outsourcing process. The thesis reports findings from four papers. The analysis is based on studies conducted at eight different manufacturing companies, four in-depth cases, one simulation study and a small questionnaire. A general outsourcing process has been derived mainly based on Momme and Hvolby (2002) with added parts from three other frameworks, including seven phases and between one and five activities in each phase. Areas of logistics important to include in an outsourcing process, logistics decision factors, have been categorised into: Strategic and structural factors associated with an organizations decision to reconfigure, Supplier and location evaluation factors and Logistics costs. Logistic decision factors have been developed based on how the supply network is affected by outsourcing and how these effects can be improved. The effects on the supply network are known first after outsourcing and already established outsourcing relationships have been studied to gain knowledge. The effects have thereafter been transformed to outsourcing decision factors to be considered in the phases of the general outsourcing process before making the decision of outsourcing. What is learned from already established outsourcing relationships can thereby be used to improve decision making process before the decision is made. The results show that it is possible to develop a general outsourcing process. To follow a process like the general outsourcing process including consideration of logistics could enhance the effectiveness of outsourcing projects, thereby improve the satisfaction with outsourcing relationships and decrease the time required for decision making.