Challenges of Outsourcing Transport Logistics

Abstract

Considering the fact that outsourcing logistics improves the operational efficiency of an entity, outsourcing leads to improvement in performance, outsourcing aims at improving a company’s focus, outsourcing is undertaken to access world class capability, outsourcing is used to free resources for other purposes, outsourcing is used to share and minimize risk and outsourcing infuses cash into the organization, one would have thought that outsourcing logistics would have been given the needed boost. However, outsourcing logistics is bedeviled with some challenges. Outsourcing leads to loss of control over the operation of the organization. Outsourcing leads to dissatisfaction among clients. According to Sang, outsourcing may lead to leakage of confidential information to competitors which brings about loss of business and lack of trust. By outsourcing certain business functions to external service providers, human resource engaged to undertake that particular business function may be retrenched. Outsourcing may bring about high switching cost. In the developed countries measures are put in place to address the challenges that outsourcing pose. Some of these measures include: entities agreeing on certain particular quality standards with the third party service providers, management refraining from outsourcing to service providers who are engaged in multiple contracts, low switching cost involved in outsourcing logistics and reassigning staff to perform other duties. However, in Ghana little has been done to address the challenges that outsourcing logistics pose. It is to address these challenges that this study to evaluate the impact of outsourcing transport logistics on organizational performance is being undertaken to fill the gap that exists.

Keywords:  Outsourcing Transport, Logistics, Organisational Performance

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