ABSTRACT

Introduction A practice more and more applied within logistics and SCM is outsourcing. A changing industry context and new demands on logistics are driving a trend towards outsourcing of more advanced logistics services; often called third-party logistics (Andersson 1997; van Laarhoven et al, 2000). Following this trend, the organizational relationships in the supply chain gets more complex and hence the risk situation changes both for the shipper and the service provider (Lalonde and Cooper, 1989). Uncertainty and risks have to be handled both before the outsourcing decision and during the outsourcing period. Many different kinds of risks are involved, which on a high level can be categorized as either strategic or operational risks. Before the outsourcing decision, the risks to be assessed are more of strategic kind. Risks can also be a key factor when deciding which logistics functions to outsource (Rao and Young, 1994). After and during the outsourcing, the operational risks have to be handled in different ways.So far there has only been a limited research focus on uncertainty and risks created by ‘third party logistics’ and changes in the risk situation and the risk management processes for both the buyer and the provider in an outsourcing situation. This chapter focus is on how outsourcing of advanced logistics influences the risk exposure and how the buyer of the services and the provider respectively influence, as well as handle these risks. The following questions will be addressed: 1. What risks/uncertainties have to be managed when outsourcing logistics?2. How does the risk/uncertainty situation between the ante and post situation changes for both the buyer and provider of advanced logistics services?3. How are the involved parties using the risk management process and how has this changed?4. How is liability transferred between the partners in relation to activities and control?