International Outsourcing: 3PLs

Abstract or Introduction

Increased globalization has led to the increased importance of Supply Chain
Management for most businesses involved both domestically and internationally.
Globalization has led to record levels of competition from competitors both domestically and
internationally. The underlying factors involved in competitive pressure due to globalization
are not only the trends of reducing the costs of procurement and decreasing the risks related
to purchasing activities, but also the need to develop competitive edge through core
competencies which allow businesses to differentiate themselves from competitors and stand
out in the market by offering not only a productivity advantage, leading to lower prices, but
also a value advantage which differentiates its products from its competitors’ products
(Sovereign, 2008). Within a domestic market, productivity advantage has been a linchpin of a
company’s overall competitive advantage, enabling them to offer lower prices on the end
product. However, the global market is more complex—often requiring a significant level of
cultural intelligence and a vast knowledge of varying regulations and social issues prevalent
within a company’s target market. Companies often find that the level of attention, expertise
and resources required for developing the relationships required to effectively manage
logistical complexities involved in a multi-national supply chain to be prohibitive to the
development of the very same core competencies required to maintain their productive
advantages, and experience significant difficulty balancing the two aspects of international
logistics management within their supply chains. Many have found the balancing act easier to
accomplish through the outsourcing of logistical functions to third-party logistics providers
(3PLs). [...]