The purpose of this article is to indicate the directions of development for outsourcing and the logistics services market. In this regard, the evolution of outsourcing against the background of the development of logistics functions in a company will be presented, and an outline of the most important features of the contract logistics market will be provided. Outsourcing of logistics functions is becoming an increasingly strong alternative to the traditional, vertically integrated company that independently organizes and carries out transport and
warehousing tasks.
The growing number of outsourcing partnerships worldwide contributes to the development of more flexible organizations based on core competencies and mutually beneficial long-term business relationships. More than 60% of companies on the Fortune 500 list indicate that they have at least one contract with a so-called third party for logistics services (so-called third party logistics –
3PL). In many economic sectors, an increase in the number of outsourcing cooperations per single company has been recorded over the last few years. Leading corporations, such as General Motors, DaimlerChrysler, or Wal-Mart, use 30 or more external logistics operators. It is estimated that in Poland, about 50% of companies have already decided to outsource part or all of their logistics services to external firms, while in other European countries, up to 90% of enterprises do so. On one hand, there is a tendency for business entities to outsource an increasing range of logistics functions, while on the other, there is a clear development of the logistics services market. It is estimated that the Polish contract logistics market is growing at a rate of 15% to 30% per year. The current demand in this market is estimated at 5 billion euros, while the potential demand is even twice as high. The dynamic development of the transport-
forwarding-
logistics (TSL) sector is being recorded in many regions of the world, and despite periodic declines in the growth rate of demand, justified by the sector’s enormous sensitivity to any fluctuations in the general economic situation, the TSL services market should be considered extremely promising. For comparison, in the United States, according to Armstrong & Associates, the average annual growth of the 3PL industry in the last decade was about 14.2%, with a 16.3% increase in logistics sector revenues recorded in 2004, which is a very high indicator for such a developed market (for detailed data broken down by 3PL market segments, see Table 1). It is believed that the rapid development of logistics outsourcing in that region is primarily a consequence of production outsourcing and global sourcing of raw materials, which is associated with the expansion of many companies’ operations beyond national and continental borders.
Such internationalization leads to increasing complexity of supply chains, and consequently –
the demand for specialized, comprehensive logistics services is growing. Of course, this is not the only motive for logistics outsourcing. The premises should also be sought in the contemporary management concept creating the so-called “new decentralization” paradigm (lean production, business process reengineering, core competence), which mandates that enterprises focus on core competencies and outsource secondary functions. The effectiveness of this approach is justified in the context of contemporary changes in the business environment.
The article comes from the magazine “Logistyka”, No. 3/2006.