The logistics services outsourcing dilemma: quality management and financial performance perspectives

Abstract

Purpose

Logistics has become an essential service for synchronous companies. Many companies have recognized the potential benefits gained through a high quality system of logistics services, which are provided either internally or externally by a third party logistics company (3PL). The 3PL is positioned between the company and its customers, in a new‐shaped logistics triad, having a crucial role in handling end‐customer information and feedback. Thus, service quality becomes one of the most important criteria for a decision to outsource logistics services and further to select a provider. This paper aims to evaluate the dilemma to outsource logistics services and the decision to select a provider based on quality management and financial performances criteria.

Design/methodology/approach

A survey instrument was provided to a sample of 66 manufacturing and 3PL companies. This instrument explored quality management issues and achievements in logistics services. Statistical inference tests and cluster analysis were employed in order to test the research hypotheses which were built and reflected the basic purpose of the paper.

Findings

3PL providers are ahead of manufacturing companies that operate logistics departments on quality implementation and improvement issues in logistics services. Furthermore, the research proved a positive relationship between quality performance and financial performance for 3PL providers.

Research limitations/implications

The research is based on a single country data. Further multi‐country studies will enable the generalization and validation of the findings.

Practical implications

The paper helps managers evaluate the logistics outsourcing dilemma in terms of quality management and quality service. Also the paper proves the strong relationship between effective quality management and sound financial performance for 3PL providers.

Originality/value

The paper presents substantive evidence supporting: the logistics services outsourcing decision based on quality management and performance criteria, and the importance of quality as a criterion to choose a 3PL provider, based on the positive relationship between effective quality management and financial performance for 3PL providers.

Citation

Gotzamani, K., Longinidis, P. and Vouzas, F. (2010), "The logistics services outsourcing dilemma: quality management and financial performance perspectives", Supply Chain Management, Vol. 15 No. 6, pp. 438-453. https://doi.org/10.1108/13598541011080428