Logistics outsourcing in the UK forecourt convenience retail sector : the supply chain role of third party service providers

Abstract

Outsourcing, where an organisation charges an external provider with the performance of an activity, has attracted growing interest in recent years as organisations have considered whether it is in their best interest to perform activities in-house or externally. Academic attention has also focused on the notion of supply chain management through effective Logistics management in organisations, as increased emphasis has been placed on the importance of seamiess supply chain processes for the achievement and sustenance of competitive advantage. Some academic theorists recommend that in order to achieve this, organisations should focus on their core, value-adding activities and outsource the non-core, non value-adding ones. In the UK, some petrol retailers have adopted Logistics outsourcing as a strategy through which supply chain solutions can be implemented within their petrol forecourt convenience retail operations. This research explores factors which influence these outsourcing decisions, the nature and supply chain impact of the outsourcing strategies and evaluates the supply chain role of Logistics service providers (3pls) and the implications of Logistics outsourcing in general for supply chain management and for the future of the 3pl industry. The study examines outsourcing from are source-based, transaction costs and supply chain perspective, highlighting the rationale behind organisations' decisions to outsource activities for which they lack in-house capability and which third parties can provide at lower costs. The study adopts an exploratory, theory building case-study approach in which data is gathered primarily through indepth interviews with informants from retailers and 3pls. Data analysis is carried out through a strategy of within- and cross-case evaluation of findings, highlighting key patterns and relationships in the data.