Manufacturing Enterprise Logistics Outsourcing Decision-Making Analysis

Logistics outsourcing means the firm on demand side does not operate logistics by itself,but entrusts the third party logistics (TPL)providers with logistics service instead. Since 1990s, outsourcing has become the trend of logistics operation in firms. At the same time, many manufacturer of China no enough data to analysis whether in choosing the logistics self-support or logistics outsourcing, reveal the mechanism of the logistics outsourcing and economics.This paper begins with an overall view of literature regarding outsourcing. Then it discusses the theoretic foundation from the perspectives of economics, strategy and sociology with the demand side such as manufacturing firms as the object of study. It use the example instance of the writer's enterprise validating the validity and feasibility of the model.The main points included in this paper are as follows: A study is made on the basic theories of outsourcing from the perspectives of economics, strategy and sociology and integrated model is set up.Economics theories of outsourcing cover transaction cost theory. Strategic theories include core competence theory, resource-based theory and competitive strategy theory. Social theories involve social exchange theory.Transaction cost theory review logistics outsourcing from the point of costs. In other words, a manufacturer chooses to outsourcing logistics in order to achieve economics of scale by entrusting a professional TPL enterprise with logistics services, but they don't consider the effects that such factors as environment, structure and strategy may have an organization.Core competence theory, resource-based theory and competitive strategy theory review outsourcing from the viewpoint of strategy. According to these theories, firms outsource logistics just to obtain vital resource they lack so as to achieve or maintain their competitive advantage. Strategy theories emphasize the dependability between a firm and its outside organizations. However, they don't consider how to manage or control the relationship between them.Social exchange theory discuss logistics outsourcing from the aspect of society. They are intended to answer why it's necessary to establish close relations with TPL firms. They attempt to find out how to interact with TPL firms through a dynamic process and exchange valuable logistics resources with them. These theories believe that based on mutual rust and cooperation, the firms'economic objectives may be better accomplished.The paper points out that it is because individual theories are one-sided to some degree but meanwhile complementary to each other that it's important to combine them and set up an integrated model. By using such a model, the theories about logistics outsourcing are integrated to that all decisive factors about logistics outsourcing are fully, systematically considered. So the one-sidedness of a single theory can be avoided and the complementing feature between theories can be reflected.Although economic, strategic and social factors all affect a firm's strategic decision on outsourcing, it is believed in this paper that strategic factors should be first considered, then the economic factors and finally the social factors. On the base of the integrated model of the Logistics outsourcing, the paper discusses the decision-making procedure of the logistics outsourcing, applies the mathematic formula of the logistics total cost making decision in fix quantity ration for logistics outsourcing.