Logistics outsourcing in Finnish manufacturing industry - a challenge for small companies

Finnish manufacturing companies in the metal industry currently have more orders they can possibly fulfil on time. Deliveries take place days or even weeks later than agreed with the customer. Manufacturing supply chains are fully booked for over a year. This has also been the situation for small Finnish manufacturing companies that produce air conditioning equipment. They have realised the need to focus on their core competences and to outsource their non-core functions. They are aware that they have to increase their production capacity and thereby free some capacity from warehouse to production. The solution for this need is logistics outsourcing. This kind of change is a big step for a small company, and this was the motivation for the establishment of a research project to support such outsourcing. The objective of this paper is to analyse the challenges small companies face during this logistics outsourcing process. The challenges are critical for a successful business. Firstly, the non-core logistics operations that can be outsourced should be identified. Secondly, a logistics operator willing and capable to provide the desired service should be chosen. And thirdly, the way one’s own organisation should be prepared for the change and how one can take full advantage of outsourcing should be recognised. This paper is based on empirical findings from the Finnish metal industry, but also on an analysis of theoretical findings in the academic literature. The paper focuses on small manufacturing companies.