Author: Li, Lun-kei Luke
Title: Framework for third party logistics in oil industry
Degree: M.Sc.
Year: 2003
Subject: Hong Kong Polytechnic University -- Dissertations
Business logistics
Business logistics -- Contracting out
Oil industries
Department: Department of Industrial and Systems Engineering
Pages: x, 111, [31] leaves : ill. ; 30 cm
Language: English
Abstract: Third party logistics is believed to be the most effective tool to improve a company's competitiveness in today's highly competitive market environment. It enables a company to better utilize its resources and reduces the operating cost. However, the implementation of third party logistics does not guarantee its success. From the viewpoint of supply chain management, the introduction of a service provider will complicate the supply chain's structure and eventually affects the whole supply chain's performance. Therefore, it is crucial to adopt an appropriate strategy to ensure a successful implementation. This was demonstrated by one of the leading oil companies in Hong Kong which outsourced its low efficiency non core activity -product delivery operation, to a third party logistics service provider about two years ago. Through the outsourcing arrangement, the oil company achieved its cost reduction target and improved its service quality and operation efficiency. Based on this real life outsourcing experience and some relevant literature reviews a framework has been developed for oil companies in Hong Kong to implement their outsourcing functions successfully by establishing and maintaining a trustful relationship with the service provider. With an increasing demand on third party logistics in the future Hong Kong oil industry, this framework would assist an oil company to transform itself into a fourth party logistics service provider to provide service to other oil companies or dangerous goods companies in the local market. Unlike former researchers who had developed their frameworks focusing only on relationship maintenance, this framework was developed on the concept of supply chain integration through relationship formation and maintenance between the host company and the service provider. Due to the lack of qualified logistics service providers in the Hong Kong oil market, establishing a strong relationship between the oil company and the right service provider becomes critical to the success of the whole implementation. The framework contains four essential elements capability and availability of third party logistics service provider; incentive; enabler and management component which are critical factors affecting the formation and maintenance of a trustful relationship. These elements also help oil companies to integrate themselves with the service provider to improve the operation efficiency. After all, the result in the outsourcing case of this oil company showed that there was a significant improvement in reducing the unit operating cost by 25% and at the same time, improving its vehicle utilization by 18% in its outsourced logistics function. Businesses that are eager to improve their competitive advantage through third party logistics will find this framework useful especially when there is a high switching cost occurs between outsourcing and self own operation and qualified service providers are scarce in the market.
Rights: All rights reserved
Access: restricted access

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