The effect of logistics outsourcing on the supply chain vulnerability of shippers. Development of a conceptual risk management framework

Pages122-141
DOIhttps://doi.org/10.1108/IJLM-03-2014-0043
Published date09 May 2016
Date09 May 2016
AuthorAlexander König,Stefan Spinler
Subject MatterManagement science & operations,Logistics
The effect of logistics
outsourcing on the supply chain
vulnerability of shippers
Development of a conceptual risk
management framework
Alexander König and Stefan Spinler
Department of Logistics Management,
WHU Otto Beisheim School of Management, Vallendar, Germany
Abstract
Purpose From a synthesis of literature, the purpose of this paper is to present a conceptual risk
management framework, showing the effect of logistics outsourcing on the supply chain vulnerability
(SCV) of shippers. The framework is designed to assist practitioners and academics in better
understanding the key research, management as well as operational aspects involved.
Design/methodology/approach A literature review is conducted and based on these findings a
conceptual framework developed.
Findings Logistics outsourcing is increasingly used by shippers, but the specific aspect of supply
chain risk management (SCRM) and SCV in this context is rarely covered in research and
implementation in practice is limited. Logistics outsourcing can have an ambiguous effect on the SCV
of shippers and is influenced by other internal and external factors.
Research limitations/implications Literature directly dealing with logistics outsourcing and
SCV/SCRM is rare and thus the framework is built on insights, compiled from the distinct research
areas. Further research should be performed on this nascent topic.
Practical implications Shippers may usethe framework to revise their risk management strategy
and actively use logistics outsourcing to decrease SCV. Logistics service providers can tailor th eirservi ces
specifically toward clientsand thus both can be better prepared for future supply chain disruptions.
Originality/value This paper looks specifically at SCV and SRCM of shippers with regards to
logistics outsourcing.
Keywords Risk management, Conceptual framework, Logistics service provider,
Logistics outsourcing, Supply chain risk management, Supply chain vulnerability
Paper type Conceptual paper
1. Introduction
When Icelands volcano, Eyjafjallajökull, erupted in April 2010, the cessation of air
travel in Europe for nearly seven days caused an estimated cost of US$5 billion
globally. Not only were approximately seven million passengers severely affected when
they were stranded at airports, but companies also missed important shipments. For
example, BMW and Nissan were forced to slow down or stop production (BBC, 2010;
Oxford Economics, 2010).
This recent example illustrates the vulnerability of todays global and highly
efficient supply chains, lacking buffers to protect against such disruptions. The supply
chain vulnerability (SCV) of companies is increasingly driven by developments in SCM
such as outsourcing, global supply chains, single sourcing, increased volatility of
demand, technological innovations and inventory reduction (Christopher, 2011;
Hendricks and Singhal, 2005a; Jüttner, 2005; Pettit et al., 2010; Zsidisin et al., 2005).
The International Journal of
Logistics Management
Vol. 27 No. 1, 2016
pp. 122-141
©Emerald Group Publishing Limited
0957-4093
DOI 10.1108/IJLM-03-2014-0043
Received 11 March 2014
Revised 7 November 2014
Accepted 2 March 2015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
122
IJLM
27,1
The role of logistics has become increasingly important for companies due to longer
and increasingly complex supply chains (Chopra and Meindl, 2009; Christopher, 2011).
At the same time, as companies are focussing on their core competencies, logistics is
one of the key areas being outsourced to logistics service providers (LSPs) (Lambert
et al., 1999; OMarah and Afghan, 2011). This puts LSPs not only in a strategically
important position for companies in their daily operations, but especially in emer gency
situations when they are required to mitigate negative effects on the supply chain .
For example, during the ban of air travel in Europe after the Icelandic volcano eruption,
DHL rerouted flights to Southern Europe where airports were still operating. They then
shifted many deliveries onto trucks and trains to limit their own and their customers
losses (DHL, 2010). This shows that LSPs have a crucial role in influencing the SCV of
shippers, serving as a potential strategic advantage in fulfilling customer dema nds
(Christopher, 2011), but leading to additional risks as well (Peck, 2006; Zsidisin et al.,
2005). However, to the best of our knowledge, the aspect of logistics outsourcing in
supply chain risk management (SCRM) has been covered only to a very limited extent
in the academic literature so far.
It is debatable whether SCV is a result of poor SCM or the downside of successful
SCM, but it is definitely inherent in every supply chain and a concern in its
management (Peck, 2006). SCRM is the managerial counterpart to address SCV and an
important area of research (Jüttner, 2005). This paper provides a synthesis of the effect
outsourced logistics has on SCV and its role in SCRM from an academic and practical
point of view. Therefore, we first present the applied methodology, consisting of a
literature review as basis to develop a conceptual framework (Chapter 2). Second, the
areas of the literature review including logistics outsourcing (Chapter 3), SCRM
(Chapter 4) and the role of logistics outsourcing in SCRM (Chapter 5) are explained.
Third, to foster future research in this area as well as support practitioners, we derive
the conceptual framework showing the effect of logistics outsourcing on the SCV of
shippers. Finally, we outline initial suggestions for potential future research in this area
and summarize key findings and implications (Chapter 7).
The positioning of this paper in the relevant research fields is illustrated in Figure 1.
SCRM goes partly beyond SCM as it covers additional risk elements, not normally
covered within SCM (Sodhi et al., 2012).
Supply Chain
Management
Supply
Chain Risk
Management
In-house
Logistics
Outsourced
Logistics
Focus of
this paper
Source: Authors
Figure 1.
Position of paper in
research areas
123
Effect of
logistics
outsourcing
on the SCV

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