Journal Article Review 1 - BUSI - 613.docx

Important drivers like quality of service surge

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Important drivers like quality of service, surge capacity, information sharing and trust, optimum cost, geographical spread and range of services, financial stability, operational performance, and delivery performance help logistics managers to select the right drivers for the selection of potential third-party logistics services providers for their logistics needs (Quereshi, Kumar, & Kumar, 2008). As markets become more global, logistics is an important area where industries seek the opportunity to reduce costs and improve the quality of service to their customers[ CITATION Sae09 \l 1033 ]. “The most frequently cited benefit of using third-party logistics providers is that it allows a company to focus on its core competencies” (Liberty University, 2019, p. 179). Consequently, many manufactures understand their core competencies do not include logistics and seek to buy logistic services and functions from third-party logistic providers (Bottani & Rizzi, 2006). 3
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Background of the Issue Logistics outsourcing, or third-party logistics, involves the use of external companies to perform some or all of the firm's logistics activities (Li, Li, Jin, Wang, Wang, & Yang, 2012). Because of an increasing trend toward the outsourcing of logistics activities, shippers face a dilemma of the inevitable need to select the best suitable third-party logistic providers. Research demonstrates the use of third-party logistic providers can provide benefits to the supply chain, such as, improved order fill rates, reduced logistics costs, and shortened average order- cycle lengths and cash-to-cash cycles[ CITATION Soh10 \l 1033 ]. In addition, if the wrong third-party logistic provider is not selected, serious problems can occur within the supply chain, such as, contract noncompliance and low-quality logistics services. This may then lead to the damaged reputation, image, and trust of the shipper. Hence, the selection of a suitable third-party logistic provider is an important factor that determines the logistics performance. The authors in this article suggest that buyer-supplier relationships involve two aspects, such as, selecting the correct supplier for the supply chain activities and which activities the company chooses to outsource. Research demonstrates that increasing interaction between buyer and provider would be beneficial to the outcome of outsourcing (Gadde & Hulthen, 2009). The article suggests that transaction cost economics (TCE) leads customers to choose a provider that offers them efficiency in the terms of monitoring, adapting, and planning costs[ CITATION Wil08 \l 1033 ]. With the widespread expansion of the internet, it has led to the technological advancements, which opened the doors for third party providers to offer solutions to connect contrasting functions within the supply chain. The authors’ in this article establish an economic perspective to form the basis on how to evaluate third-party logistics activities. In particular, the study investigates whether third-party logistics relationship outcomes (e.g., customer retention, 4
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service recovery) receive influence from select relationship attributes (e.g., reduced cost, faster delivery, and improved reliability (Voss, Page, Keller, & Ozment, 2006).
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