Title: Outsourcing or insourcing logistics activities: a Brazilian case study

Authors: Lucas Eric Da Silva; Kaique Doratiotto; José Geraldo Vidal Vieira

Addresses: Department of Production Engineering, Federal University of São Carlos – UFSCar-CCGT, Km 110 João Leme dos Santos, Sorocaba, SP18052-780, Brazil ' University of São Paulo – USP, 128 Prof. Almeida Prado Avenue, Butantã, São Paulo, SP 05508-280, Brazil ' Department of Production Engineering, Federal University of São Carlos – UFSCar-CCGT, Km 110 João Leme dos Santos, Sorocaba, SP 18052-780, Brazil

Abstract: Studies show that logistics outsourcing is a way to reduce costs, enhance performance, increase service quality, and consequently improve consumer satisfaction. However, the decision between outsourcing and insourcing is a highly complex logistics procedure due to several criteria concerning the selection of alternatives. This decision is also not easy to address when we consider the activities of a distribution centre, where the governance structure in Brazil regarding logistics operations must consider a high use of workforce. We apply methods based on multicriteria decision analysis (MCDA) to provide a recommendation to the decision-maker on whether to insource or outsource the logistics operations of a Brazilian company. Although there are few differences between the insourcing and outsourcing of logistics operations, benefits based on flexibility, working conditions, risks, reputation, innovation and responsiveness, encompassing much more than only costs, were crucial for the decision-making of sustaining insourcing of logistics activities.

Keywords: outsourcing; insourcing; decision; multicriteria decision analysis; MCDA; logistics operations; distribution centre.

DOI: 10.1504/IJISM.2019.099702

International Journal of Integrated Supply Management, 2019 Vol.12 No.3, pp.167 - 192

Received: 24 Apr 2018
Accepted: 25 Jan 2019
Published online: 20 May 2019 *

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