Abstract — One of the major function that Automobile Industry outsource is logistics services.

The main reason of the Industry is to restore this functional aspect as in-house or to subcontract
or contract with one or many LSP’s that are entirely strategic and can have a significant impact
on the performance of supply chain that is its efficiency is at stake due to which the outsourcing
of logistics services plays an important role in making these services more efficient and
effective and also have a greater impact on the performance of the logistic services itself.
Various aspects of the Logistics service providers issue have been covered in the foregoing
studies (Hofer et al., 2009), however, very little are known analyzing the impact of the use of
these providers on the performance of companies. The objective of this article is to analyze the
impact of the outsourcing of logistics activities according to four levels. The article
concludes by presenting the likely recommendations and conclusions on how companies
can move forward with the outsourced logistic activities.
Keywords — Logistics, outsourcing, logistic service providers, impact, performance.

I. INTRODUCTION AND CONTEXT

Today, the competitive and demanding environment forces market participants to be more
active, to focus on a more efficient organization and to constantly innovate new
approaches to stay ahead of their competitors [1]. These actors have made great efforts to
increase their core competency, thus having a new tendency to outsource certain activities and
have sought to limit their range of activity to be able to focus on the one they master better.

It is in this context that the phenomenon of logistics outsourcing is then developed and
multiplied [1]. This reengineering process seems to affect almost everyone involved, from
industrial to distributors through Logistic Service Providers (LSP). The point is to reduce
costs in a context where the logistical issues become more complex. However, under the
constraint of the economic environment and looking to be more competitive, companies are
developing collaborative relationships increasingly close. [2]. The logistics process for the
management of all physical flows both in and between companies. It is a transversal
process that concerns all the services of a company and which includes in the reflection the
partners [3]. The logistics process can also be broken down into four levels:

First level: The first level is the level of execution of basic activities, such as transportation and
warehousing.

Second level: The second level concerns value-added activities.

Third level: This level refers to the level of planning and control. The activities that can be
outsourced to this level are the management of transport and warehousing operations. The
inventory management sub-activities are sales forecasting, inventory control and event
control.

Fourth level: This level corresponds to the highest level of logistics activities, resulting in the
design of distribution networks. This is the level of strategic planning and control in which
decisions are made regarding carrier selection, location and analysis of site location and
logistics network management. When the activities at this level are outsourced, the LSP takes in
charge the design of the logistics network and orchestrates all the logistics flows of the network.
[4]. In this context, by outsourcing logistics activities, companies can achieve economies of
scale and thereby reduce financial risks. The investment in logistics assets, the example of the
platforms, necessarily requires a considerable amount of agent, which implies a high financial
risk. The reduction in the costs of logistics outsourcing comes mainly from the best use of
capacity and the best allocation of capital [5]. The logistics service provider can thus achieve
a significant degree of efficiency by exploiting, among other things, economies of
In addition, companies can also better allocate their capital by refraining, for example, from
investing in warehousing, which can reduce these financial risks. Indeed, it is found that the
performance of the services is an important area that the focus should be more so as the
logistics outsourcing is often supposed to influence the performance of the service [7]. At the
same time, many activities historically integrated by companies have gradually been sold to
third parties during their growth. As a result, companies adopt the strategy of
"cooperating" to minimize costs and maximize the quality of services and consequently improve
performance. [8] [9]. Thus, the literature often emphasizes that outsourcing, which was
initially a cost-cutting instrument, later became a method for creating more value-added [10]
[11]. At the same time, logistical outsourcing is all the more justified because the industrial
climate is rather bleak: demand and global productivity are falling [12]. Consequently, the
purpose of logistics outsourcing is "to increase the flexibility of the firm in the face of the
vagaries of the market" [13].

II. LOGISTIC SERVICE PROVIDERS : Over the years, products and services have
experienced many forms of diversity and complexity, as have changing consumer demands
that are increasingly personalized. Logistics services have also grown as domestic and
international markets for goods and services have grown [14]. Thousands of new products and
services have been introduced in recent decades and are being sold and distributed to
consumers around the world. As a result, the market has become increasingly competitive, and
in the past two decades, companies have been finding it increasingly difficult to maintain
their usual level of performance and growth rate. Each transaction abroad can involve 20 to 30
actors in the transfer of flows between the origin point and final destination [15]. At the same
time, companies tend to focus on what they do better by outsourcing their operations outside
their areas of expertise to specialized partners [16]. This movement of outsourcing has given
birth to a new type of actor commonly called Logistics Providers or Logistics Service
Providers (LSP). The emergence of the logistics service industry has made in the context
of shifting from industrial to service activities. Figure 1. Evolution of the Logistic Service
Provider As illustrated in Figure 1, logistics service provider companies had evolved from
different perspectives- services offered, outsourcing models, relationship and pricing.

Today, LSP participate actively in the life of the company [17]. They contribute to the value
creation and are real levers of improvement, that is why the organization of the control of
indeed, the study conducted by the firm Ernst and Young shows the strong growth in the number
of providers within the organization. The increase can be seen both in the number of providers
and in the activities entrusted to them. The organization is then confronted with the problems
relating to the management of its various outsourcing. As a central actor, at the heart of ever
more complex and extensive supply chain, the LSP must "develop and consolidate a dual
competency linked to its organizational capacity but also to its capacity for innovation" to carry
out creative activities. added value from finished products ready to be transported to
the consumer via distributors [18].

III. MOTIVATION AND ISSUE As one of the key decisions in the competitive and
demanding environment, companies must redefine their supply chain networks that essentially
involve the reconfiguration of their logistics operations. These include transportation,
warehousing, shipping and value-added services such as packaging and labeling. Depending
on the changing regulatory and policy environment, the nature of the business and the type of
industry, such decisions are made occasionally or regularly. [19]. Over the last two decades,
the outsourcing of logistics activities has been one of the most sought-after logistical
decisions [20]. At present, particularly logistical outsourcing has become a dynamic topic
regarding the number of articles on this subject in indexed publications and journals which
shows that there is a growing interest in the use of a logistic service provider. Although few
studies related to logistics outsourcing have focused on service performance, we argue that the
performance of logistics services is an important area to focus on, as logistics outsourcing
is likely to influence service performance. Finally, although the literature is rich in theoretical
models and empirical studies that deal with the decision to outsource, its determinants, success
factors and failure, we find that studies that deal with outsourcing by adopting an
approach based on the performance of the logistics service remains relatively rare [21]. At
the heart of this fact that our study enrolled. The research question is formulated as follows:
" How activities, subject of logistical outsourcing, have an impact on the performance of
logistics services by using one or more LSP?". The main objective of this article is to find the
meaning of outsourcing the different logistical levels and their impact on the performance of
logistics services. The theoretical framework is analyzed with the different concepts of
logistics
.
IV. IMPACT OF OUTSOURCING OF LOGISTICS
ACTIVITIES
Companies tend to get into this relatively new strategy involving logistics providers (3PL
andt/o 4PL, 5PL) as performance levers instead of realizing the internal activities [22].
According to [23], a company must decide which of the four business levels to outsource to a
logistics service provider and those to realize internally. The activities related to Logistics range
from execution to planning activities that may be outsourced, such as warehousing and
transport (level 1), value-added activities (level 2), level 3 related to planning and control,
total outsourcing or distribution network management (level 4). For example, logistics
outsourcing may offer greater flexibility to adapt to market changes [24]. When the demand
exceeds the capabilities of the company, a logistic service provider may be required to meet
the increased demand [25]. In addition, shorter lead times could be another potential benefit
of logistics partnership. The turnaround time is often a problem and requires large stocks in
transit [26]. With logistics outsourcing, logistic service providers can help companies reduce
delivery time through several restructuring strategies, including faster modes of
transportation, more direct transportation, or the elimination of local inventory [24]. According
to [11] and [27] innovation and profitability were positively influenced by the outsourcing
of non-core activities while [28] indicate its impact on logistics flexibility and profitability.

As a result, logistics outsourcing has contributed to improved operational performance

through reduced operating costs, improved customer satisfaction, on-time delivery of
customer services, lead time reduction, Quick response to customer requests and the use of
modern technology to deliver high-performance services [29].

V. ANALYSIS
The main subject of this study was to know how the outsourcing of logistics activities
has an impact on the performance of logistics services. The literature review reveals that the
outsourcing of logistics activities has a positive impact on the organization's performance, as it
allows the company to focus on its core business and use its resources in the core business,
especially since the LSPs have expertise in the appropriate areas (logistics). "By
outsourcing logistics activities, companies can focus on their core competencies and
other important areas of the organization that cannot be outsourced" [30].
The performance of the logistics service can be examined and analyzed according to the delivery
time and cost, and also on the basis of deadlines (speed of delivery of products to
customers), reliability (in the execution of the agreed service) and flexibility (in response to
market changes). The performance of the logistics service consists of evaluating the ability of a
service provider to deliver the required products at an acceptable cost and within the desired
delivery time in a consistent manner. Improved utilization of facilities and better allocation of
capital are the main reason for cost reduction through logistics outsourcing [31]. LSPs can
better utilize capacity, taking advantage of economies of scale, among others, they can
achieve a significant degree of efficiency. In addition, a better allocation of the capital of the
outsourcing company is also possible, e.g. avoiding spending on trucks or storage for the reason
of supply capacity. A study of [32] has modeled the main variables of the logistics
outsourcing relationship between shippers and logistics service providers and investigated
their influence on the shipper's productivity and competitiveness. In a case study of the
partnership between Melville Corporation, a major US distribution operator, and Mercantile
Logistics, an international logistics service provider [33], the partnership has achieved its four
main operational objectives: reduce total logistics costs, reduce transit times, improve
information and reliability of pipeline. In a study on the performance of logistics outsourcing and
loyalty [34], it has been shown that performance is an important lever for maintaining
loyalty through logistics outsourcing. They discovered that logistics outsourcing improves
performance by exceeding customer goals and expectations and improving loyalty.

From the literature, it is also found that outsourcing is of great benefit to SMEs because they
have limited resources, so it is better for these companies to use the resources of LSPs in their
core business [24]. In addition, LSPs are always ready to provide more support and assistance
when needed in emergencies and to respond flexibly to total outsourcing customers,
especially as they are much more able to deal with such situations as the companies themselves.
In a study on logistics outsourcing and the performance of large manufacturing companies [29],
it was discovered that the outsourcing of all or part of its logistics activities to a logistics service
provider conferred various benefits by reducing the costs of exploitation resulting from
operational and organizational efficiency. The logistics outsourcing has improved the
performance of operations by reducing logistics costs, enabling them to offer their products
and services at more competitive rates to confront strong competition [35]. An approach
based on structural modeling was used to model the variables of the logistics outsourcing
relationship. These variables were classified as levers; those that reinforce the "link"
between shippers and LSPs and outcome variables resulting from this relationship. According
to the findings, a number of levers influence the shipper's relationship with the LSP,
resulting in improved productivity and business performance. Despite these challenges, the
logistics partnership concept has shown that a logistics service provider can help a company
achieve significant results. The process to achieve these results is not without difficulties, but
many of these problems can be anticipated and appropriate measures must be adapted to
minimize their disruption.
According to [36], it was stated that it is essential to put in place a measurement system to
report on the state of the enterprise in a simple and integrated way if we are to make real
progress in a logistics partnership. The table below summarize the number of components of
operational performance had been experienced as a result of adopting the logistics outsourcing
practices.

TABLE 1. SUMMARY OF THE LOGISTICS OUTSOURCING IMPACTS ON

PERFORMANCE
Impact of logistic outsourcing
Agility- faster response to changes
Efficiency in providing services
Elimination of inefficiencies
Information moves faster thus reduces lead time in the organization
Adaptability to accommodate changes that shippers need
Orders and deliveries are easily processed to avoid delays
Revenue has increased
Reduction in logistics costs
High level of inventory accuracy
Flexibility in handling contingency plans
Organization applies optimal transport system
Reduced cycle time
Increase in inventory turnover rate
Improved financial performance
Improved access to timely and accurate information
Accuracy of order processing
Monitoring of stock movement made easier
On time shipping has been achieved
Timely delivery of services to clients
Maximum security is accorded against information proliferation
Effectiveness in providing services
Logistics outsourcing has led to reduction in lead time

The synthesis is presented in an ascending order from the lowest ranked operational
performance to the highest ranked operational performance.

VI. RECOMMANDATIONS ANS CONCLUSIONS

A. Recommandations It is imperative to recommend that an organization's
capacity for innovation is more dependent on the progressive understanding accumulated over a
long period of experience. This research paper presents a diversified theoretical study on the
perception of the impact of the outsourcing strategy on logistics performance. Another
recommendation to note is that business leaders should not only be concerned to minimize
logistics costs while using other specialized companies, but also to take into account the factors
that promote their networking. They should focus on using their knowledge and expertise to
develop new products or services to meet the growing needs of customers. This is
accomplished through a technique called Customer Relationship Management. The goal of
this technique is to achieve better customer service by knowing every detail of their needs.
Therefore, maintain old customers while improving strategies that create new customers,
resulting in competitive advantages.

B. Conclusions
After a detailed review of the literature and a discussion in the analysis, this study can conclude
that the outsourcing of logistics has an encouraging impact on the performance of the logistics
service. But if we consider logistics activities, we can also say that only level 4 has a direct and
positive impact on the performance of the logistics service according to the complexity of
the demand. Considering that the four levels of logistics outsourcing have a direct impact on
logistics service performance in terms of flexibility, reliability and timeliness. This study can
help organizations decide which logistic activity will be outsourced to achieve a greater impact
of logistics service performance. The study also motivates researchers to work more on the
emerging trend of outsourcing. On the other hand, the study is beneficial for academicians in
contributing to the existing literature as a useful reference source in the field of logistics
outsourcing and can also be seen as a subsequent research initiative to refine and extend this
study.

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