A New Paradigm in Logistics Outsourcing

In recent years there has been a significant evolution in the use of logistics outsourcing in supply chain management. What was formerly an ad hoc decision to hire a transportation provider or 3PL is now a transformative business practice. What was a business transaction is now a strategic business decision. What used to be ”contract logistics” has become Outsourced Logistics.

This magazine, Outsourced Logistics, is evolved from Logistics Today, and is edited to reflect the new paradigm in logistics outsourcing. Content of Outsourced Logistics is a mix of articles, features and stories about operations and strategy, logistics services and global markets. Our intent is to deliver useful content and to stimulate conversation among the community of logistics management decision makers. Our message to our fellow community members is not as much the “how to” of global logistics outsourcing, but the “why” these are sound business practices.

Our decision to re-focus our magazine and website is based on an analysis of over 15 years of data, extending back at least to the early 1990's. References like Cap Gemini, Armstrong and Associates, our own “Strategic Decision-Making in Supply Chain Management” and other sources document clearly the movement of companies in three important areas. The first indicator is the growing number of companies the data showed were and are using outsourcing to replace existing services. These companies use outsourcing not only as replacements but also as a way to enter new markets or to support new product introductions. Outsourcing is more than just cost savings.

A second indicator is the hundreds of billions of dollars being spent annually on outsourcing. In 2008 the number is forecast to be well north of US $130 billion. And while that number is significant, indicators are that we are at an inflexion point and that this is the beginning of an explosion in spending on logistics outsourcing.

A third metric is the breadth of spending on logistics services. For years, “transportation services” was the principal candidate for outsourcing. In recent years there has been dramatic growth in spending on third party providers and on warehouse services. It is clear that as companies make the move to outsourcing their decisions impact an array of Outsourced Logistics options.

Our research also shows that outsourcing knows no geographic boundaries. It is no secret that companies source raw materials, finished goods and services from around the world. Our new editorial lineup reflects the global nature of outsourcing in several ways. We have contributors who offer a Euro-centric, Sino-centric or Latin American view of outsourcing. We have features dealing with 3PLs in China, compliance issues in the European Union and transparent global Outsourced Logistics networks, to name a few. When we speak the language of logistics outsourcing, we may communicate in English, but be speaking in the tongues of the global market.

The market is changed and so is our magazine. We continue to write and editorialize about traditional logistics and SCM topics, but now we take a broader view. Our intent is to provide the community of manufacturers, 3PLs and logistics services providers with reliable information, useful case studies, and a forum for the discussion of best practices.

There is indeed a new paradigm, in the market and in our magazine. It is called Outsourced Logistics.

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