A study of the factors influencing the decision to either outsource or retain the logistics function of a company, with specific reference to the players in the clothing and footwear industry in South Africa.
Brand, Frederik Abraham Jacobus.
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The world today consists of a global economy, with highly competitive markets in every country. In this arena companies are faced with continually declining profit margins, having to keep costs to a minimal, as well as continually developing Information Systems and Technology. All of these factors have a snowball effect on every other country in the world, providing challenges where there were none before. Companies start to focus on their core competencies, striving to be a benchmark in their industries. All their energies, resources and capital need to be channeled in this direction if they are to succeed. This then begs the question: Who will focus on these companies' non-core functions? The answer is a simpler one - a company whose core business it is to perform another company's non-core functions. One only needs to choose the third party service provider best suited to the company, and outsource your non-core functions to them. These third party service providers can easily incorporate a company's functions into their supply chains, and perform them more efficiently than the outsourcing company. But why focus on outsourcing of the logistics function (which entails transportation, warehousing and 10gisticaIIT)? Internationally this function has been the starting point of outsourcing, and is really only in its infant stages in South Africa. The research will show that even today only some of the areas of this function are being outsourced, whilst the others are still kept in-house. This study will show if there are underlying factors influencing the decision of companies to either outsource or retain their logistics function in-house. The perceived benefits of these two options are also discussed. This study is a formal one. Stated hypotheses will be statistically tested using parametric as well as non-parametric measures. Primary data will be collected through a questionnaire. All relevant literature will be examined and discussed in detail to provide the necessary background. Lastly, the results and findings of the study will be discussed, and recommendations will be made as to viable options in the outsourcing arena. These recommendations should be attempted if South Africa is to catch up with trends in the international outsourcing arena.