Review of Export/Import Management Article
In their article Global Supply Chains: Factors Influencing Outsourcing of Logistics Functions, Rao and Young (1994) analyze results of their research into the motivations of 44 companies in the import-export value chain choose to outsource either partial or entire sets of processes relating to their role of 3rd party logistics providers and in some cases, Less-Than-Truckload (LTL) service providers. The methodology the research (Rao and Young, 1994) relies on is a case study approach of interviews with key members of the management teams of the companies included in the initial research design. The shippers who were interviewed for the study relative to their import/export intentions included automobile, chemicals, consumer goods, food products, electronics and metals manufacturers, in addition to freight carriers, fo
While the motivations vary both by specific company included in the study and by segment of the market, the model the researchers propose from the research results highlight the following five critical decision factors these companies rely on for outsourcing export/import process areas or keeping them in house. When export and import management is not a core part of a company's competitive strength, there is a strong chance either part or the majority of processes will be outsourced. These five factors include centrality of the logistics functions to the core competencies of the companies involved, risk and liability including control of the outsourced function, operating costs/service tradeoffs, the extent of information and communications systems compatibility with the potential outsourcing partners, and the existing market relationships inherent in the area of the market they are competing in. The researchers provide a thorough analysis of the differences in EDI standards and how the variations across geographies further exacerbate the challenges of outsourcing export and import management functions. Another surprising finding from the research completed shows that the major motivation for outsourcing export and import management isn't necessarily cost, it's the ability of the companies considering and executing the strategies to focus on their core competencies. Instead the majority cited the need for retaining control of the most critical functions involved in export and import management and concerns over the ability to manage the complexity of transactions and order management processes. There is also the concern over being able to centralize export and import management functions for better measurement and control of strategies, including the introduction of key performance indicators (KPIs) and measures of performance. Ultimately the motivations of companies to outsource either part or all of their export and import management have more to do with their concentration on their core strengths versus purely seeking cost reductions. These five key factors define the decision frameworks of companies choosing to outsource their export and import functions. Surprisingly only one respondent cited the ability to manage the processes better than a potential outsourcing partner (Rao and Young, 1994). The concentration on service and accountability across multiple process workflows in export and import management also pervade the results. rwarders, and 3rd party logistics providers, port operators and information/telecommunications companies. The motivations of these companies to outsource portions or segments of the export and import management functional areas are specifically covered in the study as well. Rao and Young (1994) present fascinating results of their research showing the implications of how export and import management outsourcing is revolutionizing global supply chain management.
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