Logistics outsourcing and company performance of SMEs: Evidence from 223 firms operating in Finland

Abstract

Purpose

The purpose of this paper is to explore the current state of and future expectations concerning the usage of the outsourcing of logistics operations in small‐ and medium‐sized enterprises (SMEs), and to analyse and quantify the relationships between logistics outsourcing, costs and performance, financial performance, and the company context.

Design/methodology/approach

The data were 223 manufacturing and trading SMEs from the Finnish logistics survey combined with detailed financial report‐based data, both referring to the year 2008. Statistical analyses including ANOVA and factor analysis were applied.

Findings

Transport activities are excessively outsourced. Most companies report no outsourcing of order processing and invoicing, and half of them have not outsourced logistics IT systems. Outsourcing is expected to grow in all areas with strongest expectations in materials management, value‐added services, and in IT. The logistics costs for companies engaging in the medium level of outsourcing could be higher than those of other companies. Further research is needed to confirm this finding. No loss or gain in logistics performance due to outsourcing was observed. The more the companies are engaged in outsourcing, the more they monitor as well as collaborate internally and externally, or vice versa. In general, the results imply that management should not expect automatic gains from logistics outsourcing, and should rather analyse the company‐specific characteristics that support or in some cases suffer from the outsourcing decision.

Originality/value

The article explores logistics outsourcing in SMEs combining financial report data with self‐reported measures. It analyses and quantifies the relationship of logistics outsourcing to logistics costs, financial performance, logistics performance, and company context.

Citation

Solakivi, T., Töyli, J., Engblom, J. and Ojala, L. (2011), "Logistics outsourcing and company performance of SMEs: Evidence from 223 firms operating in Finland", Strategic Outsourcing: An International Journal, Vol. 4 No. 2, pp. 131-151. https://doi.org/10.1108/17538291111147982