Degree of Outsourcing of the Logistics Operations of

a Group of Companies in the City of Neiva.

Pedro Galvis
pgalvisg8156@universidadean.edu.co

Abstract: The present work exposes what is the degree of subcontracting or outsourcing of
logistics operations and the analysis of factors, advantages and disadvantages of the process as
soon as the competitiveness factors of the companies are explored, the characteristics of the
outsourcing process of the company are also analyzed. business sector of the city of Neiva that
have outsourced logistics services.

Avila D., (2014) states that more and more logistic outsourcing is being developed as a
methodology and a strategic tool to manage business, as it is an important component of global
market growth. It is evident that the sustainable operation of the economy requires the constant
improvement of the supply chains, both in the efficiency and effectiveness of the logistic value
services offered, as in the rationalization of the operations and in the optimization of costs.

Specifically, the subject is explored in a group of companies in the city of Neiva as described
below; presents the methodology, measurement techniques, sample and description of the research
tools used to determine the degree of outsourcing of companies and their characterization. It also
presents the macroeconomic analysis, its impact on the country, the importance of outsourcing,
reasons for outsourcing logistics operations, the functions and classes of logistics operators are
reviewed, as well as the stages that must be taken into account in the subcontracting process, the
risks associated with the process and the advantages and disadvantages of logistics outsourcing.
The results of the survey carried out in a group of 100 companies are analyzed, their
characterization is presented, the current degree of outsourcing, the reasons that have been
presented for outsourcing, their perception of advantages and disadvantages, the qualification they
give to the outsourcing process , the logistic indicators that handle in the contracts and their degree
of satisfaction of the service are presented, finally, the factors that hinder the process of logistic
outsourcing and the opinion with respect to outsourcing the logistics operations are presented.

The main comments and the conclusions that allow to determine the degree of logistic outsourcing
in the selected companies of the study, also present the possible future lines of investigation.
Logistics operations have evolved since a few years in terms of technology, infrastructure and
qualified personnel, also in terms of service levels that have been continuously improved, so that
there is the emergence of new actors capable of generating economies of scale and schemes of
added value in very specific sectors of the economy. The evolution of the logistic services
outsourcing concept is presented as a strategic option for companies and as a business opportunity
for logistics operators.

The objective is to present the results of the research on the degree of outsourcing in logistics
operations; This strategy, called outsourcing of processes in the business world, has been presented
as a value-added strategy, which has made logistic operators into flexible, specialized companies
capable of taking on new challenges within the supply cycle.

Keywords: logistics, Third party logistics, BPO, outsourcing degree, supply chain
management

Biographical notes: Master supply chain EAN University

1 Introduction constantly increase their capacity to face the challenges

demanded by the management of the supply chain in
Logistic operations have evolved exponentially during
organizations.
the last decades. Technology, infrastructure, equipment and
personnel have been the components with the greatest
Why do companies decide to subcontract activities
evolution, which allows a better response to the needs of its
related to logistics? In this article we present the factors
customers, resulting in a better service. The logistics
identified as those that motivate the management of an
operators thus become an option that supports the strategy of
organization to outsource and how to monitor and evaluate
organizations. These must adapt to the continuous change of
the performance of these third parties, taking into account
the sector, be flexible but specialized at the same time, and
that every day that passes, the logistics outsourcing has been
consolidated as a tool and strategic methodology to manage
business [1].
The population for the present work is established as a set
of 100 companies incorporated in the city of Neiva belonging
to different productive sectors (transport, services, industrial
production, fish farming, oil and gas, finance, public sector,
construction, trade, automotive and agroindustrial). This
population also generates a series of factors that become
disadvantages when it is outsourced [3]. The presence of
advantages and disadvantages in a certain way is related to
the culture and idiosyncrasy of the region and, in this sense,
it is necessary to ask, in addition, what kind of processes are
outsourced in relation to logistics within organizations in
Neiva. Because it is outsourced, what is the degree of
outsourcing of these processes, specialized companies are
hired or not in logistics, or, if these activities are not
outsourced, as they are developed within the organization,
what resources are intended for them and in both cases, how
the cost-benefit relationship has been analyzed [4], [5].
An additional group of companies present in the city of
Neiva is composed of hotels. This sector has been identified
as of great importance because it is a direct player in the
strengthening of tourism as one of the productive bets of the
region. In this sector, performance has been characterized by
poor customer service, and since the companies dedicated to
this activity have been established exponentially, the union
of these is scarce and does not allow the achievement of
objectives. The hotels see as a competitive advantage the
adoption of quality management systems, which in their
support processes would support the logistics processes
making them more effective. The hotels with greater capacity
and that currently have these systems as a management tool;
they have outsourced logistics services [6], [7].
The Chamber of Commerce of Neiva [8] has identified
the activities developed by the registered companies that are
part of the logistics chain. Table 1.
Table 1. Activities of the logistics operator in Neiva
Activity % with attractive income and cost relationships for clients [12],
Municipal freight transport by
road 67,20%
Warehousing and deposit 10,50%
Fluvial transport 6,00%
Shipping national cargo to ports 4,50%
Other activities with less participation are: international
cargo transport by road, cargo handling and rail transport.
The Chamber of Commerce of Neiva [8], [9] also
identified some of the difficulties presented in these
companies dedicated to the logistics sector. The main
difficulty with a presence of 74% in the total number of
companies corresponds to the fact that employees are hired
as temporary staff, which contrasts with the fact that the same
study established that 60% of organizations have higher sales
annual 250 million pesos.
In addition, the city of Neiva, as a region in the path of
technological, industrial and economic development,
presents a series of its own characteristics, evidenced by the
culture, norms and customs present in its inhabitants and that
influence the way of doing business or administer an
organization The study indicated that 44.5% of companies in
the city concentrate their time and resources in controlling
sales due to a large extent and as indicated by [10], [11].
Because it is not counted within the organizations with the
interest of knowing their own processes; There are also no
tools that identify their relevant variables, so improvements
can not be applied or adequate information can be acquired
to make timely decisions that result in better production and
higher sales. In addition, in the generation of sufficient
resources to innovate in technology applied to the
organization and continue to improve in its competitiveness.
On the contrary, only 2.5% cares about participating in
processes of integration to productive chains at a national or
international level. The absence of strategic planning in most
companies is identified as a problem to correct according to
the study of the Chamber of Commerce [8].
The municipal development plan, as well as the
departmental one since 2015, have contemplated and
established as a bet that contributes to competitiveness the
implementation of tools and logistics chains that in turn
support other productive bets in the region such as fish
farming, the agro-industrial sector , tourism, construction,
thus seeking to improve the indicators that have kept the city
in the low middle range in terms of competitiveness at the
national level [8].
Then, a logistics operator appears as an ally for those
companies that decide to improve their competitiveness and
after strategic planning, they deliver their logistics operations
such as transport, storage and distribution of products,
materials in process and additional services, maquila,
packaging, management of deliveries and reverse logistics.
Being a specialized ally, its contribution to the
effectiveness of its clients' processes becomes a benefit that
represents a significant benefit for management, working
[13]
The logistics operator also allows to identify and realize
synergies between the company and the different stages of its
supply chain, adapting it to the capacity and magnitude of it,
through a structured and methodological process [14], [15].
Figure 1 shows the percentage of outsourcing of logistics
operations worldwide according to [16], [17].
Figure 1. % Outsourcing of logistics operations
throughout the world.
 farming, oil and gas, finance, public sector, construction,
trade, automotive and agroindustrial [20].
In order to carry out an adequate analysis, the first thing
that was developed was an investigation about the behavior
that presented the constitution of new companies in the city,
related to the sector to which each one belongs. Table 3
provides this information [20], [21].

Table 3. Constitution and assets of companies in Neiva

by economic sector

2 Methodology
The main objective of the research is to
determine the degree of adoption of the outsourcing of
logistics operations within the city of Neiva. A sample of 100
companies from different economic sectors is contemplated
according to Table 2; for these companies an instrument is
applied with the same objective of measuring the degree of
outsourcing of the logistics processes, which receives an
internal validation supported by a reliability analysis of the The variation shows us a particular behavior, although the
cronbach coefficient [18], [19]. total of companies incorporated in the city increased (27%),
the capital with which they registered decreased (-
Table 2. Sample size. 45%).

Variables Values With this sample of 100 companies will work on the
Population 3.091 application of an instrument that contains questions
Confidence level 95% 1,96 corresponding to the following queries: who is responsible
ERROR 7% 0,07 for the logistics operations of the company, how are the
Probability of accident 0,87 employees of your company, which considers that are the
Probability of error 0,13 advantages of outsourcing and if he has outsourced services
Sample size 100 or not in his operation [22], [23].

Figure 2 Cronbach coefficient reliability analysis 3 Results

Once the instrument has been applied to identify those
responsible for logistics activities in the sample of
companies, it has been identified that, in most of them, the
role of Manager or Administrative Head is responsible for the
development of logistics operations. You can find the other
roles ordered in Figure 3.

Figure 3. Responsible for logistics in the company.

Likewise, in the instrument the questions are presented to
the following inquiries; Who is responsible for the logistics
of the company? In what order is the number of employees in
your company? What do you consider to be the advantages
of outsourcing or subcontracting? and does it have
outsourced services or not in its logistics operation? [12],
[13].

The 100 companies identified for the analysis, domiciled

in the city of Neiva are part of the following productive
sectors: transport, services and industrial production, fish
 On the other hand, the instrument has established Figure 4. Outsourced logistics activities and level of
that, of the total sample, 54 companies claim to have satisfaction.
subcontracted some of the logistics activities required by
their organization. As shown in Table 4, it was possible to
120%
identify in the same way that the larger the size of the
100% 4%
company, in relation to the number of employees, the greater
the degree of outsourcing of logistics activities. 80% 50%
60% 79,50% 88,90% 72% 71,40%
100% 100%
40%
Table 4. Pearson correlation 50%
20% 28,60%
Número de Calidad del Costo del Numero de actividades 20,50% 11,10% 24%
Correlación de Pearson 0%
empleados Outsourcing Outsourcing logisticas tercerizadas
Número de empleados 1 ,279* 0,256 ,305**
Calidad del Outsourcing ,279* 1 0,227 -0,093
Costo del Outsourcing 0,256 0,227 1 0,097
Numero de actividades
logisticas tercerizadas ,305** -0,093 0,097 1

Excelente Bueno Regular

Figure 4 shows the data, which allows us to identify the
logistics activities outsourced by the companies in Neiva, as
The contracting with logistics operators and the
well as the level of satisfaction with them provided by the
outsourcing of these activities, according to the research,
third party, which in all cases is a specialized logistics
responds to the following reasons within the organization in
operator. The subcontracted activities correspond to:
Table 5.
• Transportation and distribution
• Purchases and supplier management
Table 5. What caused you to outsource logistic activities
• Inventory management
in your company.
• Storage
• Foreign trade
• Additional services such as marking, labeling,
packaging, assembly
• Other logistic activities
The information obtained allows us to identify that, in
general, companies are satisfied with the management carried
out by the contracted logistics operators. The 78.95% of the
evaluations place the perception in "good", 17.54% in
"Excellent" and 3.51% in "Bad". It is established that there is
a balance between the costs generated by the logistics
operation and the perceived satisfaction of the service, so the
role of administrative manager is the most frequent in charge The most frequent reason corresponds to the possible cost
of the logistics operations of the company, since it is also the reduction with 39.4%. For this reason, it is necessary to
person who performs a cost control of the company's include in the instrument the identification of the impact of
management [14], [15]. the costs of the different logistics activities subcontracted by
the companies in Neiva. Table 6 gives us this
characterization.

Table 6. Logistics contingency activities contracted with

the logistic cost ranges

En cuál de los siguientes rangos se encuentra el costo

Por favor indique cuales de estas logístico en su Empresa sobre las ventas
actividades logísticas usted contrata o
9,1% 13,1% Más
terceriza. 3,1% al 6,1% al
2% al 3% al 13% al 16% del
6% 9%
16,1%
Transporte y distribución 30,8% 53,8% 20,3% 2,6% 2,6%
Compras y manejo de proveedores 11,1% 33,3% 11,1% 11,1% 33,3%
Administración de inventarios 50% 25% 25%
Almacenamiento 16% 72% 8% 4%
Comercio exterior 100%
Servicios adicionales (marcado, 25% 25% 50%
etiquetado, empaque, ensamble)
Otros 25% 25% 25% 25%
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