Logistics outsourcing

The opening up of borders in industry and services has led to the definition of new strategies, and the implementation of new methods and procedures to meet the challenges of globalization. For more than a decade now, under the influence of intensifying competition and the emergence of multiple service providers specializing in all areas of services or functions, companies have been engaged in a vast movement to refocus on their "core business". The aim is to rationalize company management by reducing size and narrowing the range of activities, while benefiting from an increased division of labor that boosts productivity.

So, while the second industrial revolution was characterized by the emergence of the large oligopolistic company, usually vertically integrated, operating in a very specific sector, the 1990s saw the large company shrink to a smaller size, articulated in more autonomous structures that focus their activities on better-defined processes.

It is against this backdrop that the phenomenon of outsourcing has developed and multiplied. This reengineering of processes seems to concern almost all the players involved, from manufacturers to distributors to service providers.

The new rule of behavior for business leaders today seems to be summed up as follows: "If you're not outperforming your competitors with your in-house solutions, you can consider outsourcing to the best provider to increase your added value and reduce your costs".

While the practice of vertical integration is not new in itself, outsourcing is a recent and innovative phenomenon that has been developing over the past decade. In this article, we shall first define this phenomenon, which differs from simple subcontracting, as well as its context and evolution. Next, we will present the arguments that are generally put forward to analyze the drivers of the decision to vertically integrate, and those that encourage outsourcing instead. Finally, we describe the pitfalls and traps associated with outsourcing, before proposing a step-by-step approach to outsourcing.