Modeling the logistics outsourcing relationship variables to enhance shippers' productivity and competitiveness in logistical supply chain

The purpose of this paper is to model the key variables of logistics outsourcing relationship between shippers and logistics service providers (LSPs) and to study their influence on productivity and competitiveness of the shipper company.

In this paper, an interpretive structural modeling (ISM) based approach has been used to model the variables of logistics outsourcing relationship. Various variables, used by researchers and practiced by the shippers for effective management of logistics outsourcing relationship have been identified. These variables have been classified as enablers and outcome variable. Enablers are those variables that boost the “relationship bond” between shippers and LSPs, while outcome variables are the resultant variables arising out of outsourcing relationship between shippers and LSPs.

A key finding of this modeling helps shippers as well as LSPs to take various initiatives, in order to have prosperous, outsourcing relationship between shippers and LSPs. Top management from both shippers as well as LSPs should focus, on improving on the enablers such as trust or commitment, direct assistance, long term contract, evaluation of supplier performance, practices of TQM and JIT to add distinctive values, and top management support.

In this research, an interpretation in terms of driving and dependence powers has been carried out for enablers and outcome variables of logistics outsourcing relationship. Those variables found possessing strong driving power in the ISM model, need to be taken care on a priority basis because of their impact on dependent variables. A variable emerging with high dependence contributes to productivity enhancement and competitiveness in a logistical supply chain.