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BSc Marine Engineering

Research Proposal

Exploration of trends and issues within the 3PL industry across major industry segments of Sri Lanka

By N.K.U.E.G.Nagasinghe

January 2012

CONTENT Page No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Background Rationale and Reaserch Questions Objectives of the Study Hypothesis of the Research Data and Methodology Organisation of the Report References Budget and Resources Timeline 03 04 05 06 07 08 09 10 11


Background Outsourcing is widely regarded as a useful approach to lowering costs

and gaining competitive advantage, and it also has increasingly become a powerful alternative to the traditional, vertically integrated firms. The Outsourcing Institute highlighted that companies gain a 9% costs saving and a 15% increase in capacity and quality, on average, through outsourcing. Hence, outsourcing has greatly used in every business areas, in which, Logistics Outsourcing (LO) were the most popular areas of outsourcing as they dominated the business activity of the 1980s and 1990s. Since the end of 90s, with the development of business activities and globalization, logistics sector has drawn much attention from the Sri Lankan firms. It has been viewed as one of important drivers both for the national economy and business competitiveness, but the results shows that the extent of LO still remain in the low level, the reasons are most Sri Lankan LSPs are changed from former traditional warehousing or transportation companies, which have limited capabilities of operation, and difficult to provide doorto-door integrated services.


Rationale and Reaserch Questions Logistics Service Providers (LSPs), mainly in the form of Third Party

Logistics Providers (3PLs), have become an integral part of many corporate supply chains. As competitive pressures increase, LSPs are becoming more integrated with their customers. This is being achieved by creating strategic alliances and partnerships with other complementary service providers that enhance the overall value propositions on offer. Lead Logistics Providers (LLPs) have also emerged, offering integrative services that go beyond basic transportation and warehousing functions. In addition, new business models in supply chain management are also being tried in various configurations; these include Fourth Party Logistics providers (4PLs), and Joint Services Companies (JSC), where the entire set of supply chain processes is outsourced to a separate management entity.


Objectives of the Study The study had several aims. The overall objective of the study is to

explore trends and issues within the 3PL industry across major industry segments of Sri Lanka. The other objectives of the research are; y y to summarize the current use of 3PL services to identify customer needs and how well 3PL providers are responding to those needs y y to understand how customers select and manage 3PL providers to examine why customers outsource or elect not to outsource to 3PL providers y to look into key issues relating to 3PL use, including provision of integrated service offerings, green supply chain, and supply chain security y to provide strategic recommendations for the future of the 3PL industry and y to enable industry to deploy innovative supply chain business models in the future.


Hypothesis of the Research The main hypothesis of the research is that there are positive

relationships between outsourcing and the profitability, efficiency and customers satisfaction.


Data and Methodology Total of 20 3PL companies in Sri Lanka participated in the research.

Invitations to participate in the study along with the questionnaire were sent to 34 executive level employees. All 34 questionnaires were duly received. Distribution of the questionnaire was done through e-mail and post.


Organisation of the Report The research will be organised in four chapters. Chapter One is the

introductory part that focuses on the research question, rationally, objectives, hypothesis, methodology and the organisation of the study. Chapter Two discusses the theoretical background of the research topic and the literature relevant to the topic. The main findings of the analyses are presented in Chapter Three. Finally, Chapter Four focuses on interpretation of the analyses and the concluding remarks.



Jaafar H.R. and Rafiq M. Logistics outsourcing Practices in the UK: A Survey, International Journal of Logistics: Research and Applications Vol. 8, No. 4, December 2005, 299312 Browne M. and J. Allen. (2001). Logistics out-sourcing In Brewer A.M., K.J. Button and DA. Hensher (eds.), Handbook of Logistics and Supply-chain Management. New York: Pergamon. Fawcett, S.E. and Fawcett, S.A. (1995), "The firm as a value added system: integrating logistics, operations, and purchasing", The International Journal of Physical Distribution and Logistics Management, Vol. 25 No. 5, pp. 24-42. Maltz, A.B. and Ellram, L.M. (1997), "Total cost of relationship: an analytical framework for the logistics outsourcing decision", Journal of Business Logistics, Vol. 18, No. 1, pp. 45-65. Szymankiewicz, J. (1994), "Contracting out or selling out? Survey into the current issues concerning the outsourcing of distribution", Logistics Management, Vol. 7 No. 1, pp. 28-35. Boyson, S., Corsi, T., Dresner, M. and Rabinovich, E. (1999), "Managing effective third party logistics relationships: what does it take?", Journal of Business Logistics, Vol. 20 No. 1, pp. 73-100. Elliot Rabinovich, Robert Windle, Martin Dresner and Thomas Corsi, Outsourcing of integrated logistics functions: An examination of industry practices International Journal of Physical Distribution & Logistics Management, Vol. 29 No. 6, 1999, pp. 353-373. 12 Millen, R., Sohal, A., Dapiran, P., Lieb, R. and Van Wassenhove, L.N. (1997), Benchmarking Australian firms usage of contract logistics services: a comparison with American and Western Wilding R. and Juriado R. (2004) Customer perceptions on logistics outsourcing in the European consumer goods industry, International Journal of Physical Distribution & Logistics Management, Vol. 34 No. 8, 2004, pp. 628-644


Budget and Resources For reading materials Photocopy and printouts Data collection Travelling Finalizing the dissertation Miscellaneous Total 15,000 15,000 25,000 20,000 20,000 20,000 LKR 115,000



Timeline Starting of the Research (Background Research) ---September 2011 Literature Review---September 2011 to October 2011 Data collection---November 2011 Analysis of the data---November 2011 to December 2011 Dissertation writing January 2012 to March 2012 Proof Reading---March 2012 Finalizing the thesis---April 2012 Submission of the Final Thesis---April 2012