Developing a decision‐making framework for levels of logistics outsourcing in food supply chain networks

The purpose of this paper is to present a decision‐making framework for outsourcing levels of logistics activities. These are: execution level of basic activities (such as transportation, warehousing); value‐added activities; planning and control level of activities (such as transportation and inventory management); and strategic decision‐making level of activities (distribution network design).

The research design comprises three stages. Literature review was undertaken to study outsourcing theories. Successively, case studies on three food manufacturers were conducted resulting in a framework for make‐or‐buy decision. Finally, an exploratory survey was undertaken to examine the determinant factors for outsourcing the different activities.

Results indicate that logistics activities at different levels are outsourced for different reasons. Three main determinant factors are identified: asset specificity, core closeness and supply chain complexity. This implies that the evaluation of outsourcing different activities requires insights of three theories, namely transaction cost, resource‐based and supply chain management theory.

The research and resulting framework are based on three small cases. Furthermore, there are few companies that outsource higher levels of activities, which limits the statistical assessment of the survey results.

The framework can support the decision‐making process for outsourcing different logistics activities in food industry.

The key contribution of this paper is that it creates a comprehensive framework for outsourcing of both basic and advanced logistics activities specifically for the food industry.