logistic business in india

8/13/2019 Logistic Business in India

1/75

A Dissertation Project report entitled as,

TITLE: RISKS AND SUCCESS FACTORS OF LOGISTICS OUTSOURCING

Author-

Ganesh Pathare

SR NO CONTENTSCOVER PAGE ACKNOWLEDGEMENTLIST OF TABLES AND FIGURES


2/75

ABSTRACTKEY WORDS

1 INTRODUCTION/BACKGROUND1.1 OBJECTIVES OF THE RESEARCH1.2 RESEARCH SIGNIFICANCE

1.3 RESEARCH LIMITATIONS1.4 RESEARCH OUTLINE2 LITERATURE REVIEW

2.1 LITERATURE REVIEW STRATEGY2.2 THEORETICAL FRAMEWORK OF THE RESEARCH2.3 INTRODUCTION TO LOGISTICS2.3.1 ORIGIN OF LOGISTICS2.3.2 LOGISTIC OUTSOURCING2.3.3 BENEFITS OF LOGISTIC OUTSOURCING2.3.4 TYPES OF LOGISTIC OUTSOURCING (3PL4PL!PL"2.3.# FUTURE OF LOGISTIC OUTSOURCING

2.3.$ LOGISTIC OUTSOURCING MANAGEMENT2.3.! KEY SUCCESS AND RISK FACTOR IN LOGISTIC

OUTSOURCING2.3.% LOGISTIC OUTSOURCING ACTIVITIES2.3.& TRANSPORTATION' LOGISTIC ACTIVITY2.3.&.1 TRANSPORTATION SERVICE MODES

A"ROAD B" RAILWAY C"SAE/PORT D" AIR3 RESEARCH METHODOLOGY

3.1 INTRODUCTION OF RESEARCH METHODOLOGY

3.2 RESEARCH PATHWAY3.3 METHODOLOGY OF SURVEY3.3.1 SURVEY AS RESEARCH APPROACH3.3.2 METHODOLOGY OF WORKSHOP3.4 STRATEGY OF RESEARCH3.# ETHICAL ISSUES OF RESEARCH4 EMPIRICAL DATA ANALYSIS AND FINDINGS

4.1 PARTICIPANTS IN THE SURVEY

4.2 FINDINGS OF SURVEY

4.3 SUB'CATEGORIES OF TRANSPORT RISKS


3/75

4.3.1 FIRST WORKSHOP

4.3.2 SECOND WORKSHOP

4.4 DISCUSSION

4.# FINDINGS

4.$ MANAGEMENT OF TRANSPORTATION RISK

4.! INTERIM CONCLUSION OF THE DATA ANALYSIS

4.% RISK MITIGATION

# #.1 RESEARCH CONTRIBUTION

#.2 RESEARCH CONCLUSION

$ BIBLIOGRAPHY/REFERENCES

! APPENDI

LIST OF TABLES

1. MOTIVES FOR LOGISTIC OUTSOURCING

2. TRANSPORT GROWTH IN DIFFERENT REGIONS OF INDIA

3. PREFERENCE MODE OF CARGO MOVEMENT IN INDIA

4. GROWTH OF CONTAINER VOLUME IN INDIA

5. ROAD FRIGHT IN INDIA

6. RAIL FRIGHT IN INDIA

7. SEA/PORT FRIGHT IN INDIA


4/75

8. AIR FRIGHT IN INDIA

9. PARTICIPANTS IN THE SURVE

1!. RESULTS OF FIRST WOR"SHOP

11. RESULTS OF SECOND WOR"SHOP

12. WOR"SHOP RESULTS

13. CLASSIFICATION OF GENERAL RIS"

14. RIS" MITIGATION

LIST OF FIGURES

1. RELEVANCE OF LOGISTIC OUTSOURCING

2. COST RATIO OF LOGISTIC ACTIVITIES

3. # TOTAL CARGO MOVEMENT

4. CONTAINER VOLUME GROWTH

5. ROAD FRIGHT INDIA

6. RAIL FRIGHT IN INDIA

7. AIR FRIGHT IN INDIA

8. WOR"SHOP $UESTION


1!. RELEVANCE OF TRANSPORT RIS"S




ABSTRACT)

Various sections are involved in the project to confirm the accomplishment of the decent

research. Overview of dissertation in accordance to the culture of organization,


5/75

framework of the research, detailed awakening of the principles of logistics and

transport, scrutiny of the research problem and the foundation of the logistics

outsourcing with risks management involved with it in Indian subcontinent. Detailed

doctrine gained by official data of the different companies through their websites or from

newspapers, articles provided from the related industries is concentrated in the

research. opic related secondary data is also elaborated in the research.

ransportation activity which is prime economic activity of logistics business within

fre!uent"changing regions of #sia that is India is also considered. $areful determination

of various books and literature is carried out with respect to reach set research

objectives. %rimary data collected with the aid of !uestionnaire generated to carry the

survey aimed towards target market and the approaches employed to collect the data is

well e&plained in the tertiary section. his section of the study canvasses merits and

demerits of a survey conducted, of work"shops and e&pert interviews. his section of

the study canvasses merits and demerits of a survey conducted, of work"shops. o

confirm success of the project ne&t part elaborates the outlook of research,

!uestionnaire designing and selection of research approach. %rintouts and emails are

the modes used for data collection directly from clients in the !uestionnaire format.

'pon selecting methodology of research dissection of primary and secondary data will

be carried out and concentration will be on speculative results generated from the

survey, the workshops conducted within the within the project.() e&pert interviews were

carried during workshops in supplement of the survey and the workshops. Interviews

conducted with respect to get the concept behind the implementation of risk

management and e&pectation of risks incidence in transport and logistics services.

*&planation of the research !uestion in direction of the research objectives is given in

this section. +e&t part continuous with the e&tent of the research objective achieved.

ast section is constructed to e&plain overall conclusion and suggested

recommendations towards the research problem. #chievement of the personnel

development during study period, enhancement needed in interpersonal skills and

assembling of risk corrective actions are summarized in this section. -irst, an overview

of available strategies and kinds of corrective measures is provided. o troubleshoot the

transport and other logistics risks, background of probable measures are provided


6/75

which enables company representatives to alleviate road transport risks and logistics

risks to ensure easy running of company outsourced it.

KEY WORDS) ogistic Outsourcing isks, ogistic outsourcing isk and /uccess

-actors, ransport isk in ogistic Outsourcing 0usiness.

INTRODUCTION/RESEARCH BACKGROUND)

his section is introductory topic of research. he concept and entire motive behind

issue of research and selection of the research is elaborated in this section of the study.

he Varying customer choices are coming from everywhere and anywhere increasing

the competition between organizations in world economy. his situation of huge

competition results in rapid competitive communization. Increased shareholder value

claimed with e&pected growth and portability. o sustain in competition focus diverted to

doing the right thing than doing everything. hese things forces organizations for better

concentrated approaches towards market. *valuation of each activity to wrap up its

efficacy to provide uni!ue competitive advantage in rapidly growing global market is

necessity for every organization. Increased internal investment is provided to preferable

areas while rest areas with less importance considered for outsourcing. 1ith respect to

2$orbett, 34456, outsourcing is a management tool which is used to move anorganization away from the traditional vertically integrated, self"sufficient structure7 one

that is increasingly in effective in today8s high"competitive, performance"oriented

environment. he organization draws near a business structure with the aids of

outsourcing where it is able to make more focused investments in the areas providing

its uni!ue competitive advantage. ogistics outsourcing is one of the double time

growing areas. 9igh number of outsourcing companies and logistics service providers

leads to intensive competition which puts up great troubles in their outsourcing

enterprise. o grab better advantage of the outsourcing opportunity outsourcing

companies must be aware of success and failure ingredients and the concerns involved.

/ince the decade of :48s all or some aspects of the logistic functions were outsourced

by high number of organizations and is the reason leads to research topic. Difference

between theory and practical implementation in outsourcing is audited in e&isting


7/75

research project. $umulatively, these studies suggest that outsourcing companies

should take great care in purpose, plan and personnel they choose to outsource an

activity.

*&planation with clear aim and objective behind the studies along with elaboration of

the scope, significance and limitations is provided in this research. *&amination of

identification of key success factors along with the risk factors in logistic outsourcing

business makes this research full of information. 0rief description of outsourcing and

logistics outsourcing included in content of the study. wo logistics activities that are

fre!uently outsourced in the supply chain that is transportation and distribution are

concentrated in the research topic. ;igration of components and raw materials to the

facility and shipment of finished goods to warehouses and other customer locations arethe activities run under transportation for manufacturing plant. 1arehousing is the

storage of components, raw materials and finished goods, while distribution involves the

management of goods on the physical path between production and consumption as

stated by 2$oyle


8/75

ogistics outsourcing with its advantages including reducing operating costs and

strengthening the core competitiveness, speeding up organization reconstruction, and

improving enterprises8 reaction speed introduced as new type of enterprises operation

strategy. 'ncertain e&ternal environment, market changes, and enterprise risks decision

and risks management ability produces harmful effects causing large number of

outsourcing risks. 9ence implementation of effective logistics outsourcing for

enterprises leads to a research subject with immediate corrective actions to identify the

success and risk factors. *valuation of logistics outsourcing risks ensures successful

completion of logistics enterprises8 outsourcing. *&amination of ways to identify key

success factors in outsourcing provided in this paper makes research full of re!uired

information. Detailed description of outsourcing and logistics outsourcing is provided in

the content of research followed by revising literature relevant to outsourcing. -or better

understanding of outsourcing relations and activities this research highlights the set of

key success factors for outsourcing with various models in support of these factors

proposed by various authors.

he significance of the theoretical models used in logistic outsourcing industries are well

e&plained with various case studies and e&amples from the logistics industry. his

research also signifies with a discussion of how outsourcing companies might better

define and develop successful logistics outsourcing relationships.

LIMITATIONS OF THE RESEARCH)

his investigational e&ercise directs tentative path for increased success probability of

outsourcing projects and raises many issues for further study of the outsourcing activity.

In comparison with large logistics business sectors and organizations sizes study is

limited. ;isjudgments and common method variances are the drawbacks of the survey

methodology utilized for the purpose. esearch contributes to development of

understanding of outsourcing in identification of areas re!uiring further research though

it has certain limitations. /tudy observations suggest that the effect of outsourcing on

employee morale and performance is the primary risks to firms. /tudy re!uires more

understanding of the specific alterations made to human resources, successful


9/75

implementation and contribution to the outsourcing effort. /econd important finding of

the study is that identification of the risk factors by the management of organizations is

necessary to ensure the highest level of success. ;ore e&planation of these factors with

their corrective measures is re!uired. 1ith time and money some other primary but

prompt limitation like project deadline, availability of the data and resources, word limit,

unavailability of primary data by companies are included in this section of the research.

STUDY OUTLINE'

C*+,-'1

$hapter one will resonates overview of the dissertation, including background of the

research, research problem analysis, background of the various logistic service provider

organizations and brief introduction of the logistic outsourcing industry.

C*,+-'2

/ection covers entire knowledge of the research problem based on secondary data,

which is obtained from the official data published on the websites, in daily news papers,

articles of the various organizations providing logistic outsourcing services and authors.

o reach the conclusion of the topic with respect to the objectives set in for the research

various literatures and books was critically analyzed.

C*+,-'3

%rimary data collected by carrying the survey in target market with help of !uestionnaire

is summarized in this section. he !uestionnaire designing, choice of research

approach, philosophy of the research with respect to confirm the success of the project

is e&plained in the section. %rintouts and emails are sources used for the data collection

from the customers directly.

C*+,-'4


10/75

%rimary and secondary data collected is scrutinized in this section. esearch !uestions

with respect to the objective of the research are well elaborated.

C*+,-'#

*&tent of achievements of research objectives are e&plained in this topic.

ecommendations provided for research problem along with the overall project

conclusion forms the part of same topic.

LITERATURE REVIEW

INTRODUCTION

his section involves revision of various literatures with respect to the resources of

information with noticing identification of the success and risk factors towards logistic

outsourcing services with various academic references, books, official publications of

organizations official websites or newspapers and articles. he abbreviations and

theories which further e&plained in direction of data to be collect related with the current

affair of the research are enclosed in the primary part. 2/aunders hornill ;, 344:6

STRATEGY FOR THE LITERATURE REVIEW

he literature search strategy is designed with reference of various libraries literature

and internet data obtained by browsing. he data is collected from the internet or from

various library materials in order to generate any finding of the research topic according

to the set subject standards. he data or information gained from internet and

vocabulary is distilled for its efficacy for the absolution of the topic. *ffectiveness of the

material is verified by checking the applicability material collected to the research topic.

-or current information awareness various logistic business outsourcing literature and

journals are reviewed from 344("34(=. ;anual searching of the latest database

available is carried to confirm further detail solidification of related material including

internet and academic data. >oogle search engine is utilized to access data from

internet. In accordance with /aunders et al 2344:6 the 0oolean ogic applied to search


11/75

the internet by generating the key words and linking them by using three logical

operators O, #+D, +O . 2/aunders hornill ;, 344:6

THEORETICAL FRAMEWORK OF THE RESEARCH)

Different fragments of reviewed literature subjected to critical analysis and e&traction of

information on the $ritical #nalysis of the effectiveness of logistic outsourcing business

in Indian continent are as follows.

INTRODUCTION TO LOGISTIC OUTSOURCING'

ORIGIN OF LOGISTICS

he >reek logos, meaning ?speech, reason, ratio, rationality, language, phrase?, and

>reek word logistiki, meaning accounting and financial organization derives the term

@logisticsA. he militaryBs need to assemble themselves with arms, ammunition and

rations during their forward movement from their base originates ogistics. ;ilitary

officers looking after financial and supply distribution matters are known as logistics in

ancient >reek, 0yzantine and oman empires. ?he branch of military science relating

to procuring, maintaining and transporting materiel, personnel and facilitiesA Is the

definition for the logistics by he O&ford *nglish Dictionary. 1ith respect to another

dictionary definition, logistics is ?the time"related positioning of resources.? In general

ogistics is commonly considered as a branch of engineering that creates ?people

systems? and not the ?machine systems?. #ccording to human resources management,

logistics means ?recruiting manpower8s?. $ouncil of ogistics ;anagement suggests

logistics as backbone including integrated planning, control, realization and monitoring

and the necessary information flow with in industrial and trading companies along the

complete value"added chain 2and product life cycle6 for the purpose of conforming to

customer re!uirements. ;anagement flow of goods from origin to destination point in

direction to fulfill the re!uirements of customers or corporations considered in logistic.

$onsolidation of information, inventory, warehousing, transportation, material utility,

packaging, and often security constitutes logistic. $hannel of the supply chain


12/75

contributes to ogistics and it adds the value of time and place e&pediency. 2D9 ,

34(=6

LOGISTICS OUTSOURCING

'prising 9igh competition in the world economy forces manufacturing and retail firms to

outsourcing of their logistics functions. Outsourcing directs the noncore activities to

e&ternal supplier and makes companies able to grease company8s resources, spread

risks and survival and future growth concern. 0y means of hird party supplier, or

contract logistics services companies are e&tending the logistics organization across the

boundaries. @he process of planning, implementing, and controlling procedures for the

efficient and effective transport and storage of goods including services and related

information from the point of origin to the point of consumption for the purpose of

conforming to customer re!uirement. his definition includes inbound, outbound,

internal, and e&ternal movementsA is the term coined by he $ouncil of /upply $hain

;anagement %rofessionals 2$/$;%6 in 34(3. 2$ouncil of /upply $hain ;anagement

%rofessionals,, 34(=6

he urgency to eliminate the number of warehouses, vehicles and e&cess inventories

and to run down shortage, and labor costs favors organizations to outsource theirlogistic functions. his brings down capital investment and $ompanies able to

concentrate on their vital business activities and contribution of the risks.

BENEFITS OF LOGISTICS OUTSOURCING

• # strategic solution to improve the !uality of service and reduce the cost of

important non"core processes.

•

he firms are able to focus on their core competencies.

• 9elps the firms to overcome resource constraints.

• %rovides for cost saving resulting from better management of the supply chain.


13/75

• # platform for cross pollination of better available practices. It provides wider

geographical coverage.

TYPES OF LOGISTIC OUTSOURCING SERVICES PROVIDERS'

T*0 P+- L05-065 (3PL"

#ll or part of the company8s logistics functions are carried out by e&ternal supplier

known as # third"party logistics 2=%6 firm. %roviders of services such as transportation,

warehousing, distribution, financial services and so on are defined in =%. hird party

logistics have become useful to reduce costs and spread risks for routine, vertically

integrated firms favoring =% provider8s growth.

T* 67806 +9+7-+5 : ;507 3PL 5;,,


14/75

• %ick and pack

• ;arking, tagging, and labeling

• %roduct returns and reverse distribution

• %ackaging and repackaging

• /alvage and scrap disposal

• elemarketing

=% is central provision of products like trucking, warehousing, and distribution, targeted

to take over some of the related functions as stock keeping and documentation. =%

holds physical activities such as transportation, warehousing, line haul and the rental of

material handling e!uipment.2/angam VC, 344)6

4PL S906 P905

he ne&t stage of development of logistics service providers is the 5% services. his

includes, one =% handling rooted activities of warehousing, inventory management and

transportation, and other =% does processes like 9D, security and product

development. his shifts the work of internal departments to the set of =%s.

Organizations now have to transact with a whole set of =%s and each needs to be

correlated with and associated via personnel and I. he advantage is that the number

of transactions and costs are reduced to greater e&tent with the help of this process.

Important characteristics that show uni!ueness and set apart the concept of 5%

compared to supply chain outsourcing options available in the market today are as

follows.

• # 5% delivers a comprehensive supply chain solution

• # 5% delivers value through the ability to have an impact on the entire supply

chain.


15/75

e!uired results are generated through 5% operators by carrying out the client8s entire

logistics function. his activity involves reduction in cost of physical activities and

manages logistics functions and achieving hikes. #nalysis of certain areas advisory

solutions where processes can be utilized are provided by 5%s. Direct involvement in

the business processes and strategies of 5% services providers makes them long"term

partners. 2%atric 0urnson, 34((6

3PL ? 4PL @ !PL

he Value ogistics >roup with concept describing the advanced trend of =% and 5%

combined is termed as %. *ntire logistics chain of the client comes under one service

provider through this service.

T* !PL 676,-

$ombination of =% and 5% into one is the % 2=% E 5% F %6. % provides

central services of =% and 5% and can commence correctional projects of all services

and activities to the clients. GOne contract, one bill8 concept is utilized by % as central

provision in which on behalf of dealing with several people for different services like

outbound, inbound and warehousing, clients now are re!uired to transact with one

individual and becomes turnkey solution. 2H$9 >roup,, 34436

THE FUTURE OF LOGISTICS OUTSOURCING

C0-0+ 06-07 -* L05-065 O;-5;607 07 I70+ + +5 :


16/75

providers. $hanging nature of these alliances allows companies to construct

alliances and discontinue when not re!uired.

• I795-87-) ;oney is essential for infrastructure, I, people, to fulfill liabilities

comes out from failure, to repute commitments and insurance claims by

sustainable %. today, financial institutions and banks are available for that

purpose. , (J"34K returns offered by supply chain which among few

investments7 result in welcoming of -oreign Institutional Investors and banks.

• R;


17/75

F $oenenberg # > Crapp ;, 344M6. ;easurable uncertainty, known as risk,

is already differentiated from non"measurable uncertainty.

here are different ways between the regiments to recognize risk in direction of its

effect. -ield of mathematics defines @outsourcing riskA as value"free, and business

economics field recognized it as opposite of a @chanceA, thus a potential loss or harm

e&plained by 29olzbaur, 34446

T* 05 8+7+87- ,655

Implementation of risk management is unavoidable to wrestle with risks and to achieve

corporate goals. Due to several corporate disputes, specific declarations along with

regulatory re!uirements e&ist in almost all countries with respect to the analysis,

communication and monitoring of risks e&plained by 2Cajuter %, 34((6. he generic

management process forms the base for typical risk management process and encloses

risk identification, assessment, mitigation and control as follows.

R05 07-0:06+-07

isk identification step is prime important as risks can be managed after its

identification only. Detection of all hidden risks is not possible. #t the same time,


18/75

benefits and costs have to be balanced as collecting risks leads to costs. 9azardous

effects can be occur if several risks bundles together and are not identified previously.

2*berle # O, 344J6 suggests that as fre!uent variations occur in the company, supply

chain and environment the risk management process, risk identification should be

carried out continuously. Different methods for risk identifications are suggested by

omeike in 344=. *&ample e&plains that interviews, checklists, and /1O analysis for

identification of ongoing and obvious outsourcing risks, with failure mode and effects

analysis 2-;*#6 targets detection of future and unknown outsourcing risks. herefore,

preference is to use a combination of methods as suggested by 2*berle # O, 344J6

o identify risks, risk classification may helpful in the risk identification depending on the

applied method. 9owever, risks can be classified in different ways. 1hile disastrous,detracting, marginal and negligible risks depending upon hazard severity are

distinguished. /trategic, tactical and operational risks are separated on the planning

level by 2/ahasraman +arasimha, 3446. Depending upon the business type or

operational area, $hristopher and %eck in 3445 refers supply, demand, process, control

and environmental risks while ogler in 3443 describes supply, production, distribution,

financial and personnel risks. ransport risks are introduced into both supply and

distribution risks is then specified as default due to loss of the entire cargo, !uantitative

representing partial destruction during transport, costs including increase in transport

costs, !uality elaborating damage during transport, and time risks 2delayNearliness of

delivery6. 2ogler /, 34436

During risk analysis, at first by indicating the similarity of occurrence and the possible

outcomes of risks these are grouped. he estimation can either be done !uantitatively

or !ualitatively.

uantitative methods to assess risks are used if data availability is enough. hough

!ualitative methods lowers time and efforts may leads to subjective results. -or risk

assessment several methods used for risk identification can be utilized, for e&ample

brainstorming or -;*#. #gain, it is 5( sensible to utilize a combination of methods from

the suggestions of 2omeike -, 344=a6.


19/75

R05 80-0+-07

his third step of the risk management process is strategy selection and implementation

stage. $ompany representatives select strategies and measures and assign priorities to

meet the risks depending on the nature of risk, the enterprise, supply chain, and their

objectives. $osts of implementation and chances of rebound risks also considered while

selecting moderation strategies and measures.

#s per the citation of 2%orter, 3446 a strategy to characterize @the creation of a uni!ue

and valuable position, involving a different set of activitiesA, strategy is designed by

application of various measures. #vailable strategies and measures to handle risks are

concentrated in chapter J.

R05 67-<

It is the final assessment of the measures applied for their effectiveness during risk

control. o patch"up, further measures prescribed especially with respect to changing

environment. 0alanced scorecard is the well"known e&ample of application of method

respect to risk control step as e&plained by 2Cajuter %, 34((6

2*berle # O, 344J6 /uggests continuance in risk management process because

individual risks or the entire risk situation may change with time

KEY SUCCESS FACTORS AND RISK FACTORS IN LOGISTIC OUTSOURCING

BUSINESS)

K S;6655 :+6-5)

•

uality manpowerL >rowth of =% and 5% services in India forces manytrucking and warehousing companies engaged with particular segment to work

as overall logistics service providers. Inade!uate skilled manpower available

with these companies to operate the entire supply chain. raining of personnel

will be essential to the success of these players.


20/75

• Ceeping pace with technologyL In substructure of the ransportation, ogistics,

1arehousing and %ackaging /ector use of Information echnology 2I6 is very

effective. #ssistance of I in 1;/, ransportation ;anagement /ystem, rack

and race, *nterprise esource %lanning, etc is vital and catalytic. %roduct

movement 2-ID tags for tracking, >%/6, warehousing 21;/6, etc are the areas

of logistics becoming strong with use of technology. Organized logistics

companies become superior to the unorganized ones with the adoption of

technology, and will be crucial to their operations with increased competition.

• *nhanced operational efficiencyL o survive under constant pressure and the

growing competition, improving operational efficiency will be work key to the

success of logistics firms.

K R05 F+6-5)

• H0*


21/75

alliances and charges too much to customers as there is no suitable regulations

resulted in increased overall logistics costs.

• L+6 : 50aining fle&ibility

Cnow"how transferNusageabor considerations

$apacity improvementNhandling peaksNcustomer demand

Decrease in capital employed

#ccess to new I

Increase in speed

$ompany restructuringNdevelopment of supply chain

partnership

$entralized facilitiesNdistribution systems

;anagement and political considerations

>lobal capabilities*conomies of scale 2realized by service provider6

>aining more cost transparency

$hange implementation


22/75

S;6' (DUHAMEL F 1&&3"

# fundamental factor in logistics outsourcing contributes $ost reduction and cost related

aspects. /econd most mentioned influence for logistics services are core businessNon

core competencies and at third the improvement of service level and service !uality.

>aining fle&ibility, the transfer of provider8s capability, applications associated with labor

or the ability to troubleshoot barriers are the other influences mentioned by fewer

authors and also provided by 2Cajuter %, 34((6

Observations from survey conducted suggest that transport, reverse logistics and freight

forwarding are the functions fre!uently outsourced in the surveyed companies.

Overview of the outsourcing of different logistics functions by manufacturing and trading

companies in the various regions of India shown below. #s per available information

more than JK of the local and international transports are carried out by an e&ternal


23/75

service provider for every J organizations out of (44 in India. /urvey observation

suggest that about 34K of these companies outsourced (K"JK of their household

transport 2(JK of the companies for international =4 transport respectively6 from the

e&planation of . #s transport does not belong to the main proficiency of manufacturing

companies transport is outsourced very fre!uently from the organizations. ransport,

freight forwarding, and reverse logistics like areas have a long history of proficiency in

the world of logistics service providers. hese functions are outsourced to third parties

due to the cost factor criteria suggested by 2Cersten 1 /chrPder ; /inger $ -eser ;,

34((6.

F;'1' RELEVANCE OF LOGISTIC OUTSOURCING SERVICES'

S;6' (K5-7 W S6* M S07 C F5 M 211"

In terms of investment, in third party ware"housing and inventory management

investments are negligible or lesser by companies as preference is to regulate prime

operations like product customizationNfinalization and logistics I systems. It is the same

for invoicing and order processing. $ompanies are often afraid to operate these fields

through service providers because these activities mean direct customer contact.


24/75

T>


25/75

seng, 344J and modified $hang, (::M puts some components of logistics costs as

follows. -inding of this analysis is, with charging to 3:.5K of logistics costs, and

inventory costs 2(.5K6, warehousing costs 2(,4K6, packaging costs 2((.:K6,

management costs 2((.4K6, movement costs 2.MK6 and ordering costs 2J.JK6

transport shows ma&imum costs. he transport costs is almost one"third to total logistics

costs. he means of transport, corridors, containers, pallets, terminals, labors, and time

are contributed under transport. his figure represents the cost structure of logistics

systems and order of importance in improvement processing. 2Caliprasad ;, 344)6

(K+


26/75

T+=raph figures shows that ma&imum growth is shown by therailway and sea modes among the increase in all modes of transportation along with

annual increase in all modes of transportation.

T+=


27/75

M : T+75,-+-07 P67-+ : --+< 6+

8987-A0 2.#

S+ 2

R+0+ 23

R+ #4.#

F0;.3

S;6' 2%rabir D, 34(36

I7-,-+-07) >raph shows that for cargo movement in India by oads is more

favorable mode as compare to the ail, #ir and /ea modes of transportation. eason

behind is that the roads almost cover all the areas in India than the other mode of

transportation. 0est mode of transportation is road because of poor development and

services of other modes. One more reason that favors road in India as first choice is

that road covers almost all the urban, rural and hilly area in contrast to railway and

cargo movement by air is least preferred due to high cost involved.


28/75

T+=


29/75

T+=


30/75

practice with almost JK of the single truck operators and almost :4 Kof with turnover

of less than I+ (4 million trucking companies. $ompared to the other industries worst

working conditions, weak and unstable manpower policies, unfair practices involved,

low pay"scale are the reasons for disfavoring employment in sector and are e&ploiting

sectors image. 0esides of industry persons >overnment also hasn8t concentrated on

the manpower development in this sector. here are no provisions made for driver

training, loading N unloading supervisory, proper handling practices for this sector e&cept

very few institutions.

oad transport system possesses significant advantages over other modes. oad

transport system has following advantages

• e!uires lesser capital investment for vehicles,

• $omparatively easy for new users to gain entry,

• *nsures that innovations and new technologies can diffuse !uickly through the

industry.

• elatively high speed of the vehicle.

• One of its most important attributes is the fle&ibility of route choice.

2odrigue < %, 344)6states, these multiple advantages made cars and trucks the modes

of choice for a great number of trip purposes and led to the market dominance of cars

and trucks for short"distance trips.

A9+7-+5)

•

oad network of =.= million km is the second largest globally

• JJK of total freight movement is via roadways

• oads offer wide reach and easy accessibility to even small markets

D05+9+7-+5)


31/75

• 9igh cost of transportation

• +ational 9ighways account for only 3K of the total network but carries 54K of

total freight

K D9


32/75

F0; $

S;6'(P+=0 D 212"

I7-,-+-07) >raph suggests that there is high movement of goods by railway, 0ut

restricted at domestic level.

RAIL)

he Indian ailways planned to develop ogistics %arks QGhubs8 in supply chain

parlanceR is a good one. o reduce the supply chain costs plan has potential to

accumulate and enlarge the supply chain. -or efficient working of the plan the service

concept, service delivery and infrastructure will be well organized for the ailways

ogistics %arks. -or the ailways ogistics %ark to count up financial worth to the

supply chain, one of the activity of transport means incoming or outgoing, has to be by

rail. -or switching the customers from road to rail the Indian ailways would have to

put"in innovative train services.

A9+7-+5)


33/75

• /pread over M(,J44 km, railways carries 3JK of total freight movement

• ow transportation cost as compared to roads

D05+9+7-+5)

• 0ulk commodities account for :4K of total freight revenues

• Infle&ibility to reach deep interiors

K D9olden uadrilateral to be initiated in

344M"4:

SEA/PORT'

TABLE .!' SEA/ PORT FRIGHT IN INDIA

Y+ S+ F0*- ( 80


34/75

F0; !

S;6' (P+=0 D 212"

I7-,-+-07) ;ovement of goods by the sea is e&plained through above graph.

#ccording to the graph with increased international market the movement of the goods

by sea also increased.

SEA/PORT)

(::: " 3444 prices suggest that the contribution of ;arine transport sector is over 4.3K

to the country8s >D% at constant prices. >D% has increased contribution of transport

sector as the economic activities are growing since last couple of years in India. In the

Indian economy shipping industry plays a key role. India has seacoast of around

,J(km is well adopted (3 major and (M minorNintermediate ports. Vessels having

M.53m >ross egistered onnage 2>6 is transported across ports till the end of

December 344). Increased International trade in India carried through ports. 1ith

growth of :.J(K against the same period of the previous year prime ports in India


35/75

collectively handled 5)=.M5m tons of cargo in 344)"4. ==.=MK of the overall traffic at

major ports between #pril";arch 344, is contributed by he petroleum"oil"lubricants

2%O6 followed by iron ore contributing (.=K, coal (3.:MK, container traffic (J.M5K,

fertilizer contributes to =.45K, and others (.5:K.

#ccording to the %lanning $ommission, with predetermined investment of '/S(.

billion (Jm > 2specified in =rd target6 fleet strength is achievable by India8s shipping

at the end of 34(("(3. $#> with growth rate (4.:)K from 344"4M to 34(("(3, will

improve port throughput up to (,44Mm tones.

A9+7-+5)

• $heapest mode of transportation

D05+9+7-+5)

• %oor state of inland waterways in the country

• 9igh turnover time

K D9


36/75

24 3!# !2# 4% %12$ #1 &

F0; %

S;6' (P+=0 D 212"

I7-,-+-07) continuous increment in movement of goods by air is due to its fast andsafe way is suggested by graph. #lso for the international market air mode of

transportation is preferred more than domestic market.

AIR)

(::: " 3444 prices suggest that the contribution of #ir transport sector is over 4.3K to

the country8s >D% at constant prices. >D% has increased contribution of transport

sector as the economic activities are growing since last couple of years in India. -rom344("43 to 344)"4 there is elevation in local air cargo traffic with $#> of (3.M4K and

for same period international air cargo traffic runs at $#> of (=K. In the year 344)"4

cargo traffic is pre"assumed to be more than(.J)m tones noticing growth rate of (5.)JK

with respect (.5 m tones during 344J"4).


37/75

%lanning $ommission suggests that India8s air cargo movements would fly at over

$#> of ((.JK from 344"4M to 34(("(3.>ems and jewelry, special chemicals and

high"value pharmaceuticals are highly e&ported leads to increase in international air

cargo traffic at all Indian airports.

A9+7-+5)

• -astest mode of transportation

D05+9+7-+5)

• ow freight movement

• MK of total freight traffic being handled by airports in metro cities

K D9


38/75

research with affiliation of survey techni!ue, conduction of workshops and conduction of

e&pert interviews, primary and secondary techni!ues are utilized with contempt of

!uantitative and !ualitative data as well. 2/aunders hornill ;, 344:6

R5+6* P+-*>+)

2/aunders hornill ;, 344:6suggests, the prime constituent of project research is the

pathway with which it is accompanied. #s the strategy is used of *&pert interview and

1orkshop conductance the direct source involvement is mandatory for the research

pathway to lead smoothly which created need of using inductive research pathway in

order to accomplish the research.

METHODLOGY OF SURVEY'

S;9 +5 + 5+6* +,,+6*

#s per the suggestions of 2D'# / +##/I;9#+ O #


39/75

2D'# / +##/I;9#+ O #


40/75

re!uired to be assured by the researcher in order to motivate respondent in favor of

providing guanine and authentic information8s.

%hrasing of $losed !uestions enables data collection, data input and computer analysis.

#ccording to 29ier < %age # /amouel %, 3446 these are fre!uently used in large"scale

surveys for !uantitative studies. uantity or information, category, listNmultiple choice,

scale, ranking and comple& grid or tables are the e&amples of closed !uestion as per

20la&ter 9uges $ ight ;, 344)6

C


41/75

initiators or pacifiers are appointed with respect to speculate the relevant data from the

group of professionals in order to discuss the insights of conte&t of the issue and gather

authentic information in order by which respondents response for the debate or

particular !uestions asked

M0-5 +7 '80-5 : >5*,5

he rationale of selecting the research pathway with the virtue of citing group of

professionals risen the following merits and de"meritsL

he workshops are beneficial in case of peoples who are not in favor of personnel

interviews. #lso in this type of survey, workers of the firm are get more involved with the

conte&t of the issue and starts providing their innovative ideas regarding research

conte&t. 'ltimately this techni!ue motivates the thinking of peoples on adroitness and

for their affirmations signifies the workshop. 2*riksson % Covalainen #, 344M6

1hile highlighting the de"merits of this techni!ue, primary highlights the undefined end

and least speculated result, while many of peoples are not in favor to disclose their

ideas in group and willing to plea in personnel interviews. he variable

accomplishments of the variable peoples may vary the outcomes.

In my case of research the workshop is conducted in two parts, in which first group of

professional sorted was local authorities or government peoples while second work

shop group cited was company professionals. he workshops are conducted on the

basis of regular project meetings. wo different groups with two different

accomplishments were selected with accurate planning to eradicate the outcome

variations. he e&pected de"merits of the workshop are counterbalanced by using this

techni!ue of two workshops.

STRATEGY OF THE RESEARCH)

/econdary data collected forms the base for strategy of the research. *&perimental

scheme of the research is utilized instead of theoretical scheme, because *&perimental


42/75

scheme doesn8t re!uire any collection of primary data. #s the conte&t of the research

provides inductive ideas which the theories proposed in regular manner are changed to

regular form their definitive manner.. he research is gathering of correlated views and

the data accumulated is imagined as contemplation of peoples understanding about

conte&t of the research issue, organizations, and customers related to logistic

outsourcing and services. hus inductive approach is best suitable for the project.

ETHICAL ISSUE OF THE RESEARCH)

his section of the research enables us with prime ethical issue that confidential

information obtained from the primary source of the organization. o avoid further

conspiracies with the sources of data, it is purposefully omitted in the research

presentation since the data collected includes the information that comes under the law

of company secrecy. he names of the customers as well as e&pertise, managers,

workers who had given the interview for the process of data collection also kept secrecy

with respect to law of secrecy of personnel information.

EMPIRICAL DATA ANALYSIS)

he logistical outsourcing risk management in actual logistic business scenario is

conferred with reference to imperial data obtained by using various data collection

techni!ues e&plained in previous part of the research. he survey techni!ue is used as

base to construct research with the help of conducting two workshops with company

professionals and local government bodies or unskilled workers with the virtue of

speculating the various logistic outsourcing risks and attributes of transportation

outsourcing risk as major risk speculated previously in this study and in the end of the

task, enteric conclusion is designed in accordance to survey techni!ue used.

he project is undertaken with respect to speculate the logistic outsourcing risks in #pril

34(=. he various attributes of the logistic outsourcing risk like risk prominence,

management of risks and risk mitigation are studied with the virtue of research

background drawn in earlier part of the research. he results obtained in empirical

studies of this research are depicted in following section of the research"


43/75

PARTICIPANTS IN THE SURVEY

he target groups of the empirical study were Indian manufacturers with 33 replies and

logistics service providers with (4 replies. %rocurement 2#dministration6, supply chain

management 2administration6, logistics 2administration6, controlling 2administration6,

business management or member of the management board are the areas in which

respondents works. -igure below shows the share of small, medium, and large

companies of logistics service providers and manufacturing companies. #ccording to

2Cersten 1 /chrPder ; /inger $ -eser ;, 34((6analysis of majority of replies come

from large enterprises while middle type is less interested to respond is carried.

In order to carry empirical analysis in Indian ogistic ;arket, the market is segmented in

two categories viz. logistic service providers and manufacturers. he survey techni!ue

of workshop is followed in these two segments and data is obtained from 33

manufacturers and (4 logistic service provider organizations. he following table clearly

presents number of responses obtained during workshops when survey is actually cited

is market by subdividing above two segments in large scale, small scale and medium

scale organizations. +umber of administrative peoples, managers as well as skilled and

non"skilled workers responded with enthusiasm in contrast to the statement made by

2Cersten 1 /chrPder ; /inger $ -eser ;, 34((6as large scale industries respond

devotion while small or medium scale shows deviation towards academic research8s,

he participants in the survey workshop are mentioned in following table created by

researcher"

P+-060,+7-5 07 -* 5;9'

T+=


44/75

M+7+

S70

D06-5

E8,


45/75

1 DTDC O,+-07

M+7+

E8,


46/75

I5 R05 M+7+87- I75-0-;-07+


47/75

D ; ;5 8-*5 - +7+


48/75

$ost risk due to increase transport costs is also the major concern as like the !uality

risk. uantitative risk by partial destruction during transport and default risk arises due

to loss of entire cargo contributes to lower e&tent compared to the other risks. ransport

risks are sorted by manufacturing companies is presented in figure below. ogistics

service providers consider time risk as most important along with the costs and !uality

risks.

#s per the opinion of 2Caluza 0 0lecker , 344J6, @costs, !uality, and timeA are counted

as strategic success factors since (:M48s and considered most important. hese three

aspects as @magic triangleA of project management. #s in all cases time, !uality and

cost risks were regarded most important, study has complete impact of these factors.


49/75

RELEVANCE OF TRANSPORT RISKS FOR THE LOG

F0; 11

/ource" 2Caluza 0 0lecker , 344J6

In the risk management process, the assessment of risks follows the identification of

risks.

he reports of MK of the company representatives suggests that #ssessment of the

risks is not completed, two dimensions probability of occurrence and amount of damage

are !uantified accurately by 54K of the e&perts. 1hen answering this !uestion, it was

possible to agree with several statements or to reject them.


50/75

R5; >5*,5 'E-7 +7+0-* + - -* 07-0:06+-07 :

-+75,- 05

During this research period two workshops on transport risks have been held in 5*,'

In accordance to importance of workshops categorized in previous methodology section

of the research, the more potential risk factor identified during first workshop is @ruck

DriversA in accordance to heterogeneity in outsourcing risks. he identified potential

outsourcing risk is further classified into status of driver, contemplated behavior of

drivers, and un"contemplated behavior of driver as potential outsourcing risks. 1hile in

case of outsourcing risk as truck, categories like condition of truck during time of

delivery, appended accessories of truck risks are identified under the category internal

risks under company point of view category. 1hile analyzing these risks in terms of


51/75

company and e&ternal, added advantageous e&ternal risks like environmental risks,

behavior of local authority in delivery area, infrastructure of the area categorized are

speculated by the participants of the workshop.

RESULT OF THE FIRST WORKSHOP'

T+=


52/75

• Vehicles

condition

$hassis

• *scape Of

-uelNOil

I7-7-07+< +-06

=*+90

• /peedingN9igh

/peed

• 'se Of %hones,

aptops OrVNInattention

• OvertakingNDangero

us Driving ;an

oeuvres

• ow Distance

• est %eriod

• ;issing

DrivingN1orking

ime Documents

• DailyN1eekly est

ime +ot -ulfilled

• $argo /ecuring

• Overweight

• $ondition Of he

T;6

O9


53/75


54/75

• Overweight

• %oor Driving /kills

•

$ondition Of heVehicle

2$reated by researcher, 34(=6

1hile conducting the workshop it is observed that many of the workshop participant

were not providing much association awhile many of them have not attended workshop,

so in order to understand dipper concern of logistic outsourcing risks, decision of

conducting another workshop with the virtue of company prospective outsourcing risks,

is made by the researcher as follows".

THE COMPANYS PERSPECTIVE SECOND WORKSHOP'

In accordance to decision made while conducting first workshop, the second workshop

is conducted with employees of the organization and local government authorities in

target market selected in #ugust 34(=. ;any of the professional operating in logistic

outsourcing business are attended this workshop and interim interpretation is drawn as

follows"

he variable transport outsourcing risks are speculated in this workshop. 1hile

conducting second workshop researcher cited that many of the outsourcing risk

elements speculated in first workshop are replicated in second workshop as well. In

order to conduct second workshop, the transport outsourcing risks are subcategorized

into political, environmental, organizational, truck and truck drivers by adding two e&tra

elements in the category of e&ternal risks in workshop. he prime potential elements

like unskilled truck drivers, appended accessories defects in truck, uncertain

environmental conditions and lack of infrastructure advantages like road conditions,

access to delivery locations are speculated in second workshop.


55/75

RESULTS OF THE SECOND WORKSHOP

T+=


56/75

• ack Of

*&perience

• In"Official

ules

• %roblems

During

ransport

2%olice

Inspection6

Due o

'nknown

egulation

s

• #bsence

Of Or 0ad

$ommunic

ation

0etween

Driver #nd

Owner

• Incorrect

Documentati

on

• ;indless N

%rofit"

Oriented

0ehavior Of

he

$ompany

Information

$ustom

/ystem

• Incorrect

ashing N

oading

oss Of

>oods

During

ransport

• %roblems

1ith

Dangerous

>oods

#nimals

• heft

2/ecurity

o abor

/trikes

• abor

estriction

• oss Of

>oods Due

o $rime

/ituation N

errorism

•

Delay Dueo Different

9andling Of

%olice

Inspection

2$reated by researcher, 34(=6

he political risk factors are speculated in the research during workshop and are cited

as corruptions, crime situations in the country which may irrupts risk of damage to

goods to be transported, handling of material as well as political scenario between two

states or nations plays vital role while crossing the borders of states or nations.

DISCUSSION IN ACCORDANE TO TWO WORKSHOPS CONDUCTED'


57/75

1hile conducting investigation of workshops conducted researcher cited that the

outsourcing risks speculated during first workshop are cause"related viz. appended

defective accessories of trucks, time reliable delivery pressure, and impacts of

regulatory framework of local authorities in area selected, while in accordance to the

second workshop held, many of outsourcing risks identified are effect"related, viz.

default risks like environmental conditions, political scenario of the target area, access

to the delivery area, infrastructural developments etc. 1hile conducting workshop

researcher had introduced to many secondary risks which are less potential hazardous

to industry and those are identified as government changes, problems during crossing

the borders of state as well as nations, environmental conditions like rainy weather,

snow falls, heating temperatures in case of transporting frozen goods etc. he

hazardless of the predicted risks is dependent on the operating government8s political

scenario and level of developed infrastructure in demographic selected. he risks

potential in responsible for the damage to industry and it is variable element with

respect to risk occurs in different cases different intervals. hus in order to avoid

potential outsourcing risk damages to affect outsourcing business, the strategy of risk

management should be institutionalized in the organization in order to follow risk

mitigation strategy which is e&plained in further part of the research.

FINDINGS FROM WORKSHOP

he workshop results are interpreted in this part of the research in accordance to the

protocols mentioned in previous section of the research. In accordance to protocols

provided, while conducting the workshops, in initial section the general information

about the organization is conducted and then workshop initiated with asking the

employees about their knowledge on the issue of logistic outsourcing risk and logistic

outsourcing risks management is speculated. he interpretations of the results

discovered from workshop are cited in ne&t section of the research.

MANAGEMENT OF TRANSPORT RISKS WITH THE VERTUE OF WORKSHOPS'


58/75

In accordance to work shop conducted, many of professionals during workshop, cited

outsourcing risk as hazardous entity element which company operations in pessimistic

way during base analysis of company is carried. hus outsourcing risks are speculated

as potential damaging element8s that mainly affects the growth of the organization by

deviating it from achieving its objectives of growth set. he risk also speculated as an

element which provides opportunity of improvement to the organizations, despite it

deviated the organization objective by many of professionals. 1hile few workshop

participants stated that outsourcing risk as hazardous by means of creating revenue

impacts on economic grounds, thus humiliating the financial status of the firm. -ew

participants created highlight on impact of outsourcing risk on supply chain

management systems in the firm, while many of them created focus on outsourcing

risks by e&plaining it in terms of economic, environmental and social elements that

affects the organizational operations. In all, the conte&t of the workshop, suggested

researcher that, logistic outsourcing risks are hazardous elements of the business and

they cause potential damages to the industry operations.

he professionals speculated that the risk management is mandatory phenomenon with

pursuing the firm towards success of objectives set by the organizations. he table

number 5, cited below represents the number of responses gathered during workshop

in terms of speculating the major outsourcing risks element and need of risk mitigation

major to be followed in accordance are elaborated in further part of the research.

1hile conducting workshop in various organizations, researcher came to hypothesize

that M4K of the large scale, medium scale as well as small scale industries have

institutionalized risk management function in their firm.


59/75

F0; 12

(C+- = 5+6* 213"

Out of all workshops conducted in different organizations, 3 out of ) manufacturing

organization associates responded in the favor of institutionalizing risk management as

regular process in their organization, while all of the (3, logistic service providers have

responded in favor of institutionalizing outsourcing risk management in their

organizations. he manufacturing organizations who have responded negatively

regarding the potential of outsourcing risk have adopted the strategy of accepting

outsourcing risk as their daily process and they have developed task force in order to

mitigate this daily task of outsourcing risks.

B ,+- 67505-07 +7+


60/75

viz. time reliable, !uality of outsourcing, default and !uantitative. he least consolidation

is given to the categories !uantitative risks, !uality of the delivery and default risks as

transport risk is identified as major logistic outsourcing risks in previous section of the

study. ogler,3443. hese risk and number of responses by the associates are

mentioned in following table"

T+=


61/75

he categorized risks are again subgroup according to their causes which are depicted

in above figure. During workshop, total 3M, associates responded the categories of the

transport risks and out of that number of responses per category are cited in above

table viz. (4 respondents responded @timeA, category as most important risk whose

potential damage is very hazardous to their firm while : responded as @defaultA risks are

given prime concern in their organization with respect to uncertainties in their business,

out of all accordingly J respondents responded !uantitative and !uality risks as most

perceived transports risks causing potential damages in their firm.

In addition to above differentiated outsourcing risk elements, the professionals

associated with workshop responded =) more major risks factors stipulated due to

uncertain and most unusual factors, which created a doubt about categoriesdifferentiated by the researcher after workshop. he other risks like fuel shortage,

damaged infrastructure, along with other organization specific internal risks factors

broaden the risk spectrum designed by the researcher. 1hile is cases of some

manufacturers , the distinguished transport risk analysis proved as difficult task due to

huge network they use for their business around the globe. #lso the authenticity of the

information8s provided by the drivers, local authorities as well as workers is also

re!uired to be tested as logistic business is entirely majored on time, !uality, !uantity

and defaults at the end of delivery rather than what risks might have incurred during the

delivery process.

In accordance to workshops conducted, the proficiency of the outsourcing risks is

identified and it is clear that ):K of the manufacturers and logistic service providers do

institutionalize as well as classify the outsourcing risks as their routine business activity.


62/75

F0; 13

(C+- = 5+6* 213"

he workshop conducted provided information about the classification of outsourcing

risks are done on ground of its anticipation as follows"

" #nticipated risks"

;any of the organizations participated in workshop responded that they

implicated supply chain management systems in their firm in order to cite the

predictable outsourcing risks.

" 'n"anticipated risks"

hese risks mainly categorized as per workshop responses are legality of

business, strategies used in business, data to day business activities and market

scenario. #lso the logistic outsourcing standardization nomenclature used by the

third party when logistic is outsources, also arisen as prime outsourcing risk.


63/75

-or the workshop e&perts, road transport risks assessment was a difficult task. Only

)=K companies do the evaluation of road transport risks rest companies estimate risks

in individual cases. -or each company, supply chain and even to each individual risk

assessment varies. hese troubles occurring in assessment of road transport risks

shows need for action on both the scientific and business side.

D5 -* 05 +555587- 6;


64/75


65/75

344)6, the reactive ;easure is mitigation measure that has followed by an organization

in order to mitigate the damage occurred due to the outsourcing risk, while %roactive

approach is implicated in outsourcing risk management, prior to the damage e&pected

due to outsourcing risks.

1hile strategy of distinguishing outsourcing risk as described in earlier paragraph with

the virtue of transferring, sharing, reducing, avoiding or accepting the outsourcing risk is

elaborated by other authors in order to implicate logistic outsourcing risk management

in business. 1hile in some cases objective of risk mitigation still not achieved in

accordance to classification and distinguishing made over risk mitigations. In such

cases risk mitigation is achieved by implicating strategy reducing the impacts due to

occurrence of such risks is implicated in order to avoid the loss of data or reluctance indata to achieve objective of outsourcing risk mitigation. 2Cersten 1 /chrPder ; /inger

$ -eser ;, 34((6

In order to set the strategies for the risk mitigation in transportation outsourcing risks,

authors further classified risk mitigation measure on the grounds of general outsourcing

risk mitigation measures and specific outsourcing risk mitigation measures. #nother

class identified by the authors, is procurement type of outsourcing risks 2Cersten 1

/chrPder ; /inger $ -eser ;, 34((6

LOGISTIC OUTSOURCING RISK MITIGATION'

M0-0+-07 8+5;5 : 7+< 055

he general mitigation outsourcing risk measures are not applicable for the specific

class of outsourcing risk mitigation. hey are applied to the general risk arises in supply

chain management process. he general risk mitigation measures are depicted in

following figure under the subcategories" >eneric Outsourcing risks, %lanning and

%revention of $risis, $ommunicationNInformation %olicy and %ersonnel mitigation risk

measures.

T+=


66/75

MITIGATION MEASURES FOR GENERAL OUTSOURCING RISKS

G706 055

"

#d

"

-le

P577<

" -urther education

in risk

management

" $ross functional

teams

C88;706+-07 +7I7:8+-07,


67/75

@ransferring ransport isks 2*.>.

Incoterms6A

M+ =; @Own ;anagement Of ransportsAP97-07 @0usiness $ontinuity %lanAR;607


68/75

S


69/75

future research, by creating a base for the research for identifying risk factors and

mitigation over it in other logistic activities like warehousing, packaging, managing

movement, ordering. esearch also contribute by provide majors for prime logistic risk

factors like timely delivery, cost of logistic outsourcing, !uality of service to be provided,

default loss due to cargo loading, and !uantitative risks in logistic outsourcing business.

CONCLUSION)

he participants in the survey conducted within this project estimated the relevance of

certain transport risks for the logistics sector in general. he results reflected that the

time risk 2delay unseemliness of delivery6 was regarded as the highest risk, followed by

!uality 2damage during transport6, cost 2increase of transport costs6, default 2loss of the

entire cargo6 and !uantitative risk 2partial destruction during transport6. he evaluation

of four logistics strategies with regard to their suitability and application showed that the

respondents rated all specified strategies in the terms of suitability higher than in their

actual application. ;oreover, the respondents regard the general importance of supply

chain risk management to be increasing considerably over the last years. he results

gained in the survey were deepened with the help of two workshops. 1hile the aim of

the first workshop was to identify transport risks from the perspective of road police

authorities, the second workshop aimed at detecting transport risks from the companies8

view. #s a result of the workshops, different kinds of risks were identified and clustered

according to the categories truck driver, company, truck, e&ternalNenvironmental and

political risks. 1hile the risks mentioned by the local authorities were mainly cause"

related, the different risks specified by company representatives were either cause"

related or effect"related. he huge number of identified risks in the field of transport

shows that due to their diversity a successful risk management must consider different

perspectives. In addition to the survey and the workshops, si&teen e&pert interviews

were conducted. In the e&pert interviews, the focus was set on the implementation of

risk management and on possible risks which may occur in transport. 1ithin the

interviews, a total of (3= transport risks 2including a large number of multiple risks6 were

identified and allocated to groups which specify the type of impact of each mentioned

risk. hese groups were time, default 2respectively !uantity6, cost, or !uality of the


70/75

transport process. 1ith the virtue of survey techni!ue various interviews are collected

from the professionals working in logistic industry, I came to conclude that in spite of

many risk factors in logistic outsourcing business, ransportation is identified as major

risk source in logistic outsourcing business. ;any modes of logistic outsourcing were

studied in the research like #ir, $argo, road and /hip, but out of all that transportation

mode is identified as most efficient mode of logistic outsourcing in India, as in India all

the parts of the country including rural as well urban areas are accessible by the roads

and the prime objectives of logistic outsourcing times, !uality and cost factor base

delivery can be successfully achieved with use of road transportation mode. Despite of

it, I identified many uncertain logistic risks which are mainly regulatory issues with

different local as well as national governments, condition of the driver, condition of the

vehicle, conditions of the roads, environmental factors, while using road transportation

mode with. #fter collecting various interviews by conducting workshops in various

regions of India, I identified key success factors of logistic business like !uality

manpower, use of technology, operational efficiency are still lagging behind in India in

terms of use of available manpower, technology and training the same with skilled

re!uired in handling logistic outsourcing operations. I identified that the logistic industry

has facing intense competition within India, which has lowered the business margin for

them, and this ultimately affected the use of available resources for them. Due to this

intense competition many of the logistic firms are lagging behind in their revenue

generation targets and this led them use the traditionally operating tools of logistic

outsourcing rather than implement most technologically sound systems in their logistic

outsourcing operations. 1ith the conte&t of the research carried and primary and

secondary data collected I came to conclude that along with transportation many other

risks factors in logistic outsourcing business can be identified and need to be focused

intensely by logistic outsourcing solutions providers, which are mainly lack of

infrastructure, lack of skilled manpower and technology, highly fragmented and

unorganized market, lack of standards and processes within the sector, regulatory

restrictions by particular territory by local as well as national government.


71/75

1ith the virtue of primary data collected using survey techni!ue by workshop method, I

identified transportation is the major logistic outsourcing risk factor which is re!uired to

be focused as it cost around 4K of the total logistic cost in business. he entire logistic

outsourcing business margin is dependent on transportation business, while other

activities like warehousing, packaging etc. are given secondary considerations in terms

of margins. /o in order to generate a revenue for the business and ensure success in

logistic outsourcing business the four major risk identified, like time, !uality, !uantitative,

default 2loss in cargo6, and cost are re!uired to be counteracted by using key success

factors elaborated in literature review section of the research.

B0=


72/75

!. M06*+< F. C=-- 24 T* O;-5;607 R9 T D I- R0*- (C=-- 24"

%. S+;75 M. L>05 P. T*7*0


73/75

C8,-7- A;-*0-05 I7 21'211 A;-*5) E;+ A


74/75

3.H+.4,


75/75

4.HALCOMB T.R. HITT M.A. T>+ + 8< : 5-+-06 ;-5;607

J;7+< : O,+-075 M+7+87- 9.2# 7.2 ,. 4$4'4%1 2$.

41.DUHAMEL F. C,+- S-+-) O;-5;607 M-095 +7 R055.

E;,+7 M+7+87- J;7+>>.;756+,./-->/6887/M-075/TIS/I7-+-T'

212/P57-+-075/3.3.RIS.,:.