Logistics outsourcing in China: The manufacturer-cum-supplier perspective

Purpose: This study aims to investigate differences among Chinese manufacturers-cum-suppliers in their logistics services provided to different local and foreign customers and assess the management areas that they must address in order to satisfy the logistics requirements of their customers. Design/methodology/approach: A questionnaire-based survey was conducted amongst managers of manufacturing firms in four industries, automotive, telecommunication and computer, household appliance, and electronics, located in the Shanghai region of China. A five-point Likert scale (1 - least important, 5 - most important) was used to measure the importance of services provided, and assess customer satisfaction level, impact on management of manufacturers, and difficulties and challenges faced by the manufacturers. Findings: The results indicate that foreign customers place significant emphasis on different services from those of their local counterparts. Results also indicate that many challenges need to be addressed by the manufacturers with respect to HR, customer service, and IT integration. A significant difference between manufacturers' satisfaction levels with local and foreign customers is also noticeable. Practical implications: Since third-party logistics (3PL) industry in China is still in its infancy. Most of the Chinese manufacturing firms have to provide major logistics services to their customers. Hence further growth of the Chinese economy depends to a large extent on the ability of the manufacturing firms to provide efficient and effective logistics services. The findings of this study demonstrate that in order for the outsourced manufacturers in China to provide logistics services to local and foreign customers, they are required to restructure their organizations and adjust their operation strategies. Originality/value: This study is a rare attempt to discuss outsourced manufacturers in China in adjusting their logistics strategies and operations to meet the demands from both local and foreign customers after China's admission to the World Trade Organization.