Outsourcing Execution in Transportation and Distribution

Outsourcing can be a very effective strategy to increase operational performance and improve customer service; at the same time, that minimizes capital investment, freeing up capital to other important projects according to the company strategy that will increase revenue and profitability. However, when outsourcing is not performed in the right way, as there are several examples in the marketplace, it can also decrease performance and hurt customer service, reducing company competitiveness. Therefore, it is critical to establish a robust Outsourcing Execution Process to reduce risks of vendor failure due to lack of operational capability, performance management, and conflict of culture between 3PL and the company, just to enumerate a few possible real life problems. This chapter provides a broad and updated introduction of transportation and distribution operation, and based on literature review and practical experience from the authors, several best practices are reviewed to support outsourcing execution in transportation and distribution operation.