1. INTRODUCTION

In many ways, the development ofcollaborative transportation management(CTM) in supply chains seems to be a trend

opposed to transport outsourcing. The latterhas usually started as an arrangementwhereby a carrier performs services for afirm that were originally performed in-house(i.e. vertical disintegration), see e.g.

TRANSPORT OUTSOURCING AND TRANSPORT

COLLABORATION RELATIONSHIP - THE RISK HEDGING

PERSPECTIVE

Đurđica M. Stojanovića* and Bjørnar Ø. Aasb

aUniversity of Novi Sad, Faculty of Technical Sciences, Department for Traffic andTransportation, Trg D. Obradovića 6, 21000 Novi Sad, Serbia

bMolde University College, The Norwegian School of Logistics, PO Box 2110, NO-6402, Molde, Norway

(Received 9 May 2014; accepted 14 January 2015)

Abstract

Although transport outsourcing decision-making and collaborative transport management (CTM)have been “hot topics” for years, their links are still not thoroughly explored. The purpose of thispaper is to contribute to a better understanding of the relationship between them. In particular, wefocus on the conflicting and complementary features of these concepts with regard to their capabilityto hedge against transport outsourcing-related risks.

Transport outsourcing is often a tool for transferring part of the demand risks from the primaryparties in supply chains to transport service providers. However, new relationships introduce somenew risks - outsourcing contract risks. It is important to identify, estimate and compare such kinds ofrisks. Transport collaboration may decrease both the demand risks and the outsourcing contract risks,although the relationship with the latter is more complex. It is used an exploratory research based ona combination of a literature review and empirical examples.

Keywords: transport outsourcing, transport collaboration, demand risk and uncertainty, small andmedium enterprises

* Corresponding author: djurdja@uns.ac.rs

S e r b i a n

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Serbian Journal of Management 10 (1) (2015) 33 - 49

www.sjm06.com

DOI: 10.5937/sjm10-6676

(Harland et al., 2005). The main idea is tofocus on core business and let specialists,who are assumed to be more capable, to takecare of non-core activities. On the contrary,CTM is treated as a tool for strengtheninglinks between carriers or logistics providersand their customers to cross over theboundaries, i.e. to make new, “extendedenterprises” (Jagdev & Thobern, 2001).However, both concepts are of strategicimportance for al involved enterprises.Furthermore, these concepts also representthe most important supply chain trends intransportation which have taken place inrecent years.

The purpose of this paper is to contributeto exploring the role of transport outsourcingand CTM in hedging transport risks throughproviding a better understanding of theirrelationship. These risks both support anddiscourage an outsourcing decision and aretrends that are likely to continue in thefuture. Thus, due to the strategic importanceof transport outsourcing and CTM as well astheir relationship which will be explored inthis paper, it is important not only to analysethem separately, but also to explore the linksbetween them. Although there is asubstantial body of literature about logisticscollaboration and logistics outsourcing,including transport outsourcing, there seemsto be few papers which address theirrelationship (Cakić et al., 2007). A literaturebody about their relationship from the riskperspective is particularly scarce. Thestarting point - hypothesis in this paper isthat related links have to exist. If so, due tosignificance of both trends in transportlogistics, they may be and have to berevealed and explored more in-depth.

The paper is organized as follows. In nextsection, the most important risks related totransport outsourcing decision-making in

SMEs are explored and discussed. Further, aconceptual model is proposed, which depictsthe relations between two kinds of transportoutsourcing risks according to the adoptedrisk classification. The main principles oflogistics and transport collaboration aredescribed in the Section 3 and the impact oftransport collaboration on transportoutsourcing-related risks is briefly discussed.In Section 4, the applied case studymethodology is described and in Section 5,two cases are used to illustrate the ideaspresented in the previous sections. Further,the role of CTM and transport outsourcingconcepts and their interrelationship inhedging transport risks is elaborated on inSection 6. Finally, implications andconclusions are presented in the last section.

2. RISKS IN TRANSPORT

OUTSOURCING DECISION-MAKING

2.1. Transport outsourcing

Very few logistic trends have so farcaught the attention of academics andpractitioners to the same extent asoutsourcing. The experts in the mostdeveloped countries have started to heraldthe emerging outsourcing trends (verticaldisintegration) since mid-1970s (Harland etal., 2005). As a non-core activity in mostenterprises, transport, together with otherlogistics activities has been among the firstcandidates for outsourcing. After the transferor sale of resources, enterprises buy back thetransport and/or related services. The level ofoutsourced logistics varies from simplecapacities and assets outsourcing, to singleprocesses and activities outsourcing, such astransport or warehousing, to bundledactivities, where an intermediate coordinates

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integrated value-added logistics in the supplychain (Stefansson, 2006). Agreements withcarriers and logistics providers vary fromspot contracts to long-term agreements andstrategic alliances.

However, practical experience has shownthat it is very important to keep in-houseexpertise and control of outsourcedactivities; at least enough to be able to makeappropriate contracts with logistics providersand properly monitor the execution of theactivities (see e.g., (Wilding & Juriado,2004), and (Aas et al., 2008)). Wilding andJuriado (2004) support the idea thatoutsourcing in logistics should not be treatedas an “all or nothing” kind of decision andthat mixed solutions may often give the bestresults. In praxis, enterprises usuallyoutsource their fleet, facilities and activitieswhich tend to be rather transactional,operational, and repetitive, but still keep theparamount control over the activities andmost of the strategic decisions in-house(Langley, 2014).

2.2. Transport sourcing uncertainties

and risks within supply chain

Supply chain uncertainty refers todecision-making situations in the supplychain, where a decision maker has a lack ofinformation about supply chain behaviour orits environment, lacks effective controlactions and/or is unable to predict the impactof possible control actions (van der Vorst &Beulens, 2002). In modern supply chains, theuncertainty and related risks are among thecrucial issues. Risk is increasing, and isshifting around in modern complex anddynamic supply chains and networks(Harland et al., 2003). Although transportuncertainty belongs to the “supply chainuncertainty family”, their relationship has so

far been rarely explored in the literature.Among the exceptions is the work ofSanchez-Rodrigues et al. (2008), and theirfindings have partly constituted the startingpoint for our research, focusing on transportuncertainties from the transport sourcingperspective.

The main reasons for outsourcing relatesto cost and strategy issues, such aseconomies of scale, core competence andflexibility. Logistics and transportoutsourcing in the supply chain increase theoutsourcing company’s flexibility to dealwith different types of changes in the supplychain. It allows sharing or passing ondifferent risks to the carriers or logisticsproviders. Consequently, its importancegrows in an uncertain environment.However, outsourcing normally increases thecomplexity and, therefore introduces otherkinds of uncertainties and related risks insupply networks (Harland et al., 2003).Logistics outsourcing also usually leads to anincreased supply chain complexity, wherebythe outsourced processes become harder tocontrol and manage. Berger et al. notice thatalthough outsourcing can be one of the mostrisky decisions for a firm, its related risk, aswell as the potential to mitigate such risk arescarcely considered in the literature (Bergeret al., 2005).

In this paper, all uncertainties and relatedrisks have been classified from the transportoutsourcing perspective into two categories -“external” and “internal”, according to Cakić(2009) and Stojanović et al. (2013). Externaloutsourcing risks that are important fortransport managers, are concerned withsupply chain demands, and consequently,transport orders. Indirectly, they also includethe impact of factors like industry, businessstrategy, market, and the economicenvironment. All of them are concerned here

35Đ. Stojanović / SJM 10 (1) (2015) 33 - 49

as transport demand uncertainties and relatedrisks. On the other hand, all risks related withthe transport service provider-customerrelationship are called internal outsourcingrisks. They involve risks related to any of thetransport sourcing decisions in theinterorganizational decision-making process,such as insourcing, purchasing, outsourcing,backsourcing, as well as the nature ofcontracts with service providers, the numberof involved carriers and the changing ofservice provider. In the outsourcingliterature, internal and external outsourcingrisks are usually identified as motivators andobstacles for an outsourcing decision. Thelist of particular risks given in Table 1 shouldnot be considered to be complete.

Although in some listed papersoutsourcing risks in supply chains areconsidered in rather a general manner, weregard the findings as applicable to transportand logistics outsourcing as well. Someauthors also notice that the literature bodyabout logistics risks in supply chain is scarce,compared with the one about other supplychain risks (Maslarić et al., 2012). If we

focus on given transport outsourcing risks,the gap is even more obvious. Further,looking at the risks in Table 1, one maynotice that global companies and SMEs mayhave different criteria in logisticsoutsourcing decision-making, or rank thefactors influencing an outsourcing decisiondifferently (Finch, 2004).

Following such classification of risks, itcan be seen that their relationships with thetransport outsourcing decision are differentin essence, from the viewpoint ofoutsourcing enterprise. This difference isdepicted by the conceptual model given inFigure 1 (Cakić, 2009). The demandvariability and amplification related risks cannegatively affect the transport performance(Potter & Lalwani, 2008). Transportoutsourcing can push these external riskstowards the service provider. On the otherhand, internal outsourcing risks increasewith the level of transport outsourcing, i.e.outsourcing of capacities vs. outsourcing ofmanagement functions. Furthermore,internal risks could rapidly rise with thecomplexity of the outsourced activities, i.e.

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Table 1. List of external and internal transport outsourcing risks, which are recognized inthe literature

with the bundling of transport with otherlogistics activities and with outsourcing ofprocesses. Thus, the rough risk estimation inthe model indicates that it does not onlymatter whether a particular operation ormanagement task is outsourced, but also itslinks with other transport or logisticsactivities. In order to avoid externaloutsourcing risks, a firm will tend to enforceservice provider responsibility and share thegoals in the supply chain with a few numbersof specialists. Main measures in hedginginternal risks include increasing the control,keeping management in house, establishing amonopolistic position and using spotcontracts when contracting carriers.

In its efforts to minimize both the externaland internal transport outsourcing risks, afirm has to permanently evaluate thetransport sourcing decision and develop therelated management tools and mechanisms.Such mechanisms should include riskidentification and evaluation. The model isbased on the belief that a firm’s outsourcing

decision should be in the equilibrium of bothrisks. As mentioned above, this will besituation dependent since the equilibriumwill be moved if actions are taken to reducethe external and/or internal risks. It is alsosupposed that the risk functions areasymptotic rather than linear, as they areinfluenced by many factors.

Presented conceptual model belongs tothe group of very rare normative models inthe transport outsourcing literature whichdescribe transport outsourcing risks. It alsoseems to be very suitable as a basis tocontinue the research on relationshipbetween transport outsourcing and transportcollaboration from the risk perspective.

3. IMPACT OF CTM ON TRANSPORT

OUTSOURCING RISKS

In Section 1, it was pointed out thatcollaboration in logistics and particularlytransport, are among the most important

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Figure 1. The relationship between external and internal transport outsourcing risks

Source: Cakić, 2009

trends in logistics. Collaboration has beendescribed as an attempt to fully satisfy theconcerns of the parties involved in exchange,in order to achieve an integrative settlement(see e.g. (Esper & Williams, 2003)). Therising interest in this idea has been recordedsince the beginning of the new century. In thelogistics area, the focus of academics is oncollaborative relationships between the mainplayers in supply chains on the one hand, andcarriers and logistics operators and theircustomers, on the other hand. The first one isrelated to Collaborative Planning,Forecasting and Replenishment (CPFR) andassociated processes. The latter direction isknown as Collaborative TransportManagement (CTM). The idea is that allinvolved companies should share benefitsand risks, working together towards commonobjectives to reach win-win(-win) solutions.The objective of CTM is “to improve theoperating performance of all parties involvedin the relationship by eliminatinginefficiencies in the transportationcomponent of the supply chain throughcollaboration” (VICS, 2008).

According to (Tyan et al., 2003), CTM isa “new business model for integratingtransportation management with supplychain management”. Esper and Williams(2003) are more precise and say that “CTMessentially involves converting orderforecasts developed via CPFR, into shipmentforecasts, and collaboratively ensuring theiraccurate fulfillment”.

Both the collaboration concepts are todayenabled and closely supported by moderninformation systems and Internet-basedtechnologies (Esper & Williams, 2003).However, the information systems andinformation technology development, aswell as information and functionalintegration, have usually not been accepted

and developed at an equal rate amongst allpartners within logistics dyads and triads(Patterson et al., 2004). Generally, SMEs arerarely drivers of collaborative relationshipsbecause it can be expensive, risky and oftenwithout clear and fast benefits for suchenterprises. However, depending on theindustry, supply chain strategy and/or impactof other (often more powerful) partners,SMEs should sooner or latter considerinformation integration and other aspects ofcollaboration with other supply chainmembers.

The papers concerned with CTM arguethat substantial benefits can be obtained byCTM (see e.g. (Esper & Williams, 2003;Tyan et al., 2003)). The main view is thatCTM can reduce costs, increase visibility,flexibility and process control. It can alsoimprove overall transport performance, addvalue to supply chains and create benefits forall parties. CTM introduces a carrier or alogistics provider as a strategic partner and avalue-adding contributor to supply chainprocesses. However, similar to the earlystages of other emerging trends in logistics,much more evidence is provided aboutpotential advantages than the risks relatedwith collaboration and integration. Also, thereview of the body of CTM literature showsthat most papers are focused on operationalaspects and collaboration effects, than onhigher transport management levels and therelationship between CTM and otherstrategic decisions, including transportsourcing.

According to the body of literature; it canbe concluded that the phrase “risks sharedbetween the parties” within CTM is relatedto hedging against both transport demandrisks and carrier/logistics provider-relatedrisks. As an extension of CPFR, CTM shoulddecrease transport demand uncertainty for

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the carrier and, consequently, the risk.Further, CTM obtains increased visibilityand better control of transport processes, sothe risk of carrier opportunism should also bereduced. Even in case of implemented CPFRand related concepts without developedCTM, still there is room for using thebenefits of information integration inhedging transport demand risks e.g. iftransport managers are distributors, notcarriers. However, information integrationwithin a logistics triad may induce some newbusiness risks, such as bad investment into along-term relationship with the serviceprovider, including unnecessary ITinvestments and the need for trust (VICS,2004). There are also risks related withinformation inaccuracy and inadequate ICTmanagement within the logistics triad.According to (Sanchez-Rodrigues et al.,2008), such issues are related to the controlof systems uncertainties. Thus, while CTMdevelopment has clearly an inverserelationship with external transportoutsourcing risks, its relationship withinternal transport outsourcing risks seems tobe more complex, reversible and moresituation dependent. However, according toFigure 1, if logistics and, particularly,transport collaboration impact on both risks,it should also impact on an outsourcingdecision.

4. METHODOLOGY

To support and illustrate the ideasproposed in previous sections by the use ofpractical examples, the successful SMEs inSerbian market have been investigated. Inorder to be selected as cases for our research,SMEs had to meet two main conditions - tohave some kind of logistics collaboration in

the supply chain and to perform some levelof transport outsourcing. An additionalcondition which focal enterprises had tomeet was to exemplify good praxis.

After considering business data andtalking to several practitioners, twoexamples were selected. These are regardedto be suitable for research and are presentedin the next section in detail. Semi-structuredinterviews with top managers, as well as withrepresentatives for the relevant IT,distribution or marketing departments withinthe enterprises have been carried out. Acommon set of questions was prepared tocollect relevant information regarding thefirms’ size, position in supply chain, supplychain strategy, changes related to the processof privatization, distribution system features,main management information system (MIS)and collaborative application features. Thisapproach obtained a suitable basis for cross-case study analysis and furthergeneralization of results.

5. EMPIRICAL EXAMPLES

5.1. Example A

The first firm is a successful Serbianmanufacturer of carpets and other floorcovering products. The enterprise was a partof a larger group - corporation (now Serbianpart of company, in further text:corporation), and now it is also a part of theglobal company, with the core business beingthe production, sales and distribution of floorcovering. The corporation in Serbia includedseveral manufacturers of all types of floorcovering products (i.e. mainly carpets andlaminates), a wholesaler/distributor and aretail enterprise, which focused mostly onthe Serbian and the southern and eastern

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European markets. In 2000, the corporationoutsourced its transport fleet and created anumber of small carriers in the local market,with revolving middle-term agreementsaccording to a social programme.Furthermore, the manufacturer outsourcedits transport and inventory management indistribution to the wholesaler/distributor,which was also a part of the corporation. In2003, the corporation started to implementthe Enterprise Resource System SAP II,recently upgraded into SAP III, and soenabling integrated ordering, integratedinventory and warehouse managementacross the whole distribution chain. Due tothe kind of industry and level of inventoryinformation sharing, the demand throughoutthe supply chain was mostly predictable, sothe external transport outsourcinguncertainty was estimated as low (Table 2).

The available contract carriers’ fleet hasbeen slightly oversized for current demandsand thus the outsourcing enterprise enjoyed acompetitive transport environment (asituation rendered possible by localcircumstances). The group used thistransport outsourcing solution primarily,although not exclusively, to minimizetransport costs. With this outsourcingsolution, the group minimized internaloutsourcing risks, and transferred theexternal transport outsourcing risks towardsthe carriers, even though these risks are low.

Although corporation had an excellenttechnological basis for CTM development,the operative transport planning andscheduling for the whole distribution systemwere performed manually, based on the skillsand the experience of the dispatchers. Theoutsourcing contracts exemplify a highlyasymmetric relationship and small carrierscouldn't do much about transportmanagement decision-making at any level or

within any management function. Though,the corporation was not interested tointroduce CTM - its hard monopolisticposition and strong process control made itpossible to obtain most of the benefitswithout any investment in CTM. Therefore,the condition for real collaboration betweenthe involved parties was not present.

5.2. Example B

The second enterprise has been the one ofthe most successful and fastest growing ITcompanies in Serbia in the last decade. Thisenterprise was also representative toillustrate the influence of supply chaincharacteristics on both transport outsourcingarrangements and CTM praxis. The stake-holding IT group consisted of several SMEs,where the distributors for the Serbian andsome neighbouring markets and a retailer areinvolved in the supply network. Theenterprise has developed its own distributionnetwork, but it also had agreements withsome other distributors and retailers. Thegroup has been among the first which hasmanaged to realize successful B2B solutionswithin this industry in Serbia. Since 2008,almost all order transactions (more than75%) have been executed electronically.Additionally, they have developed a B2Cportal for e-shopping and so created directcontact with end-users. In this industry, thedemand uncertainty is high (Lee, 2002) andinformation sharing and collaborativeinventory planning play a valuable role inorder to decrease the degree of uncertainty.

The distributor used different transportsourcing concepts for the B2B and B2Csolutions. In the first case, it used an own-accounted fleet, which consisted of newvehicles, customized for the purpose of B2Bflows. In the second case, they have

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developed an e-fulfilment system, where anexpress delivery company was involved andmade deliveries to the end-users. Aftercreating an order in the B2C system, arelated transport order was automaticallygenerated and forwarded to the expresscompany who make the delivery within 24hours. All transport operations andmanagement were forwarded to the transportspecialist and the distributor only controlsdelivery complaints and claims. It has alsocontinually reduced its own-account fleetand increased the number of expressdeliveries to other outbound B2B flows, i.e.towards flows from a central warehouse toother wholesalers. Own-account transporthas been kept for a while for the flows fromthe warehouse to their own retail network.

Transport service was used to improve thetotal service quality and add value to thefinal product, particularly in B2C solution.Demand risks, i.e. external outsourcing risks(compared to Example A) were partlyreduced by information integration betweenthe main parties (for example, related tostocks out) and additionally by sharing

information between the distributor andtransport specialist (for example, related toon-time delivery). The internal outsourcingrisks were estimated from low/moderate tomoderate/high, depending on the adoptedtransport sourcing concept (Table 2). In caseof B2B commerce, a high level of demanduncertainty may lead to a lower utilization ofthe own-accounted fleet. In the B2C case, theinternal risk is estimated as moderate/highfor a couple of reasons. First, although arevolving middle-term agreement with thespecialist exists, there are several companiesin the Serbian market which were capable ofproviding satisfactory delivery services atthe moment, and so to obtain a competitiveenvironment. Second, control over transportoperations was still kept in-house since thefocal enterprise has direct contact withcustomers and therefore gets informationabout claims, including transport service.Such information can be used later for long-term planning, i.e. modifying transportcontracts, or even as a decision basis forchanging the specialist. Indeed, the selectedlevel of outsourcing in the last case,

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Table 2. The comparative overview of outsourcing risk related firms’ characteristics

contributes much more to reduce the externaloutsourcing risks than it negativelyinfluences the internal outsourcing risks. Atthe same time, the distributor was allowed tooffer a high and equal level of deliveryservice to all customers, disregarding its owntransport capacity constraints and thus wasable to reach the company’s business goals.This kind of service could be obtained by thepublic postal operator, or numerous privateoperators. The former provides an universal,but also other postal, express or courierservices in the entire territory of the Republicof Serbia, while the latter offer services,which are partly subject to the restrictionsrelated to the shipment weight, delivery costetc. (Kujačić et al., 2011).

In Table 2, the main characteristics of thefocal firms, their chosen transport sourcingconcepts, related risks and ways for riskhedging are summarized. In Example B,different transport sourcing solutions in B2Band B2C concepts are analysed separately, asB1 and B2 respectively.

6. DISCUSSION ON THE ROLE OF

CTM AND TRANSPORT

OUTSOURCING CONCEPTS IN

HEDGING RISKS

In the previous section, the proposedideas were illustrated in a real environmentby using two enterprises. It is shown thatlogistics collaboration influences transportoutsourcing decisions and vice versa. Ingiven conditions, enterprises haveminimized internal outsourcing risks indifferent ways, through: a) creating amonopolistic position regarding the carriersand keeping transport management in-house(Example A) and b) in-sourcing both thetransport fleet and management (Example

B1). The transport service quality level inExample B2, is controlled by direct contactwith customers in case of claims and itshould also prevent carrier opportunism.Such control is based on traditionalcommunication methods and so cannot beattached to the collaboration issue. On theother hand, external outsourcing risks arehedged by logistics collaboration, i.e. bettercommunication and information integrationbetween the main supply chain members(Example B1), as well as the parties inlogistics triad (Example B2). Bothoutsourcing decisions and collaborationinitiatives depend on the industry, supplychain strategy and other main characteristicsof the firm.

CTM can decrease internal outsourcingrisks through two-way visibility and control.In our last example (B2), only one-wayvisibility, i.e. inventory and orders visibilityis obtained as input data in CTM. This allowsreduced lead time and helps the transportspecialist improve transport performance.However, in further CTM development, evenbetter control and real-time visibility ofcarrier service could be considered in firm B.The importance of such feedbackinformation increases with the level of theinternal transport risks, i.e. the level ofdependency and the power balance. Finally,in this case transport collaborationintroduces low internal outsourcing risks,because the integration could be performedrelatively easily, the investment was low andthe technology compatibility is high. Also,several service providers are capable toprovide the service quality level, andnecessary IT basis in the Serbian market.Therefore, the risk of carrier’s opportunismhas been neglected.

Figure 2 depicts the risk estimations inour examples. The internal and external risks

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are described according to the Figure 1 anddiscussion in the second Section, andestimated according to Table 2 and thecharacteristics of the firms described in theprevious section. The level and shape of therisk functions are estimated very roughly,according to the supply chain strategy, theindustry, the kind of transport contract, therequested level of transport service and thenumber of available service providers in themarket. Figure 2 also includes the detachedimpact of the two identified ways of logisticscollaboration (CPFR and CTM) on theparticular kinds of risk.

Dashed line parallel with y-ordinateexpresses the current level of transportoutsourcing and estimated level of transportrisks in the examples. The dashed line cutsthe curves and so determines the level ofparticular risks. Further, the figures point outthe position of current risk levels regardingthe risk equilibrium in examples. It is alsosummarized the impact of logisticscollaboration on internal and external risksdecreasing in the particular examples. Dottedcurves represent the risks level before the

impact of CPFR and CTM. The introductionof CPFR decreased external risk and so theenterprise found its way to be closer to therisk equilibrium in given example. However,it is not fully extended into CTM, becausecollaboration is still in-house - betweentransport managers and primary parties in thesupply chain. Also, there are not applicationswhich transform orders into transportdemands, as an extension of CPFR.

In the B1 example, it is estimated that therisk equilibrium is the farthest from thecurrent sourcing solution, compared withother two examples. That may indicate thatthe current sourcing concept is not suitablefor demand characteristics. It was partlyfixed by introduction of CPFR, which maycontribute to improved transport planning inthe company. Further measures to reach riskequilibrium may be to change the sourcingconcept (shift toward outsourcing) and tointroduce CTM. Combined CPFR and CTMgive the best visibility between the partiesand, consequently, to overall transport riskdecreasing (Example B2).

Following the theoretical framework

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Figure 2. Risk estimation associated with current outsourcing decisions and changes related withimpact of collaboration in given examples

provided in Sections 2 and 3, two mainobservations arise here. First, the identifiedimpact of logistics collaboration should beincluded in the model proposed in Section 2.Second, only the B1 example shows thatthere is a considerable difference betweenthe risk equilibrium and the currentoutsourcing decision. However, it isrecorded that firm B in this case, tends toincrease the level of outsourcing and isgradually transferring more and moreresponsibility to the specialist, i.e. is shiftingthe vertical dashed line (current state) to theright. Thus, the findings indicate that theenterprises in praxis intuitively look for anoutsourcing decision that lies in the riskequilibrium as described in proposed model.

Following the first observation, we haverevised the model proposed in (Cakić, 2009)(Figure 3). The logistics collaboration on thewhole decreases a particular external and/orinternal outsourcing risk. CPFR and relatedconcepts (e.g. VMI) mainly impactsindirectly on transport demands, throughdemand characteristics and visibility in thesupply chain. Introducing CTM mayincrease visibility and control and thereforedecrease both transport demand andtransport outsourcing risks. However, someCTM development risks, related toinvestment in collaboration and dependency,are superposited with the internaloutsourcing risk. CPFR impacts on externalrisks directly or indirectly, through CTM.The way and intensity of its impact dependon how much CTM is developed. CTM havean impact on the risk level, i.e. positions ofboth risk curves in the graph separately ormutually. Consequently, CTM impacts onthe position of the equilibrium of risks. Thus,it should also influence the optimal transportsourcing solution. The model can be used toexplain and justify the need for the

development of collaborative relationshipswith transport service providers, or forkeeping transport service in-house. Thesuitable room for logistics collaboration isidentified if any of the internal or externaloutsourcing risks are estimated to be in thehigher part of the chart in Figure 3. Althoughthe 2D model in Figure 3 does notcompletely depict it, decisions about CTMdevelopment should also be influenced bythe outsourcing risks, as well as the risksrelated to CTM development, which wereidentified in Section 3.

The model also offers an explanationregarding some phenomenological aspects ofCTM development. One of these is why thecollaboration between a focal (outsourcing)enterprise and many small, non-integratedcarriers (outsources) usually does not work.A second is why collaboration is moreimportant when using third party logisticsproviders (3PL) than when using carriers.From a theoretical viewpoint, this is alsoconsistent with the findings of Holcomb andHitt (2007), who discuss the differencebetween strategic outsourcing, strategicpurchasing and strategic alliances.

To conclude, transport outsourcing andCTM represent two different approaches tohedging transport risks. While transportoutsourcing represents an effort to transferall, or parts of the demand risk towards thecarrier (passive approach), CTM represents ameans to share control and responsibilitywith the carrier (active approach). The latteralso may be based on a wish to avoid thepossible negative effects that appear as aconsequence of having to increase theoutsourcing level. However, higherinternalization of management and control insome cases could save the money needed forinvestments in collaboration with a serviceprovider. Therefore, the model can be also

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used as a framework in considering CTMdevelopment within the logistics triad in thepraxis.

The proposed model is consistent with allcategorizations of logistics collaboration andtransport and logistics outsourcing modesfound in the literature. It also contributes toclarifying the links between transportoutsourcing and CTM by emphasizing andproviding the transport outsourcing relatedrisk perspective. Obviously, a chosenoutsourcing concept in the next stage will bean important precondition to support orinhibit the development of collaborativelinks in the logistics triad. Consequently, thechoice of a particular transport sourcingconcept and level of CTM development,which are two conceptually stronglyinterdependent decisions, should not beregarded separately. These two concepts arenot clear opposites. They should be regarded

as strong complementary conceptsdepending on various circumstances relatedto the nature of the risks and thecharacteristics of the firms. In addition, adecision about the collaboration with carriersis by itself an indicator for stronger and morecomplex relationships to carriers, andconsequently is in accordance with the moreextreme outsourcing levels in Figure 3.

The model also has some seriouslimitations. In real life, SME managers mustmake decisions about transport outsourcingand/or CTM development regarding otherimportant aspects, such as business strategy,investment assessments, cost reductionassessments and service quality assessments.Therefore, the model outcome should betreated as only one among several keyfactors in the decision-making process. Itmust also be noticed that the risk estimationin the given examples are only sketched and

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Figure 3.The relationship between transport demands risks, transport outsourcing risks and CTMrisks

in some aspects the proposed model seemsrather intuitive than firmly backed andexplained by the examples. Although authorsfeel that the model adequately describes theimpact of transport collaboration ontransport outsourcing risks, it is based on andexplained by two case studies and thereforeit is rather crude. The same comment can bemade about the reverse loop between thetransport outsourcing level and CTM risk.Managers can therefore use this model as arough basis in making relationship betweentransport outsourcing and collaborationdecisions. However, further research isnecessary to develop more sophisticatednormative models.

The model is in essence dyadic (e.g.describes transport service provider-customer relationships) and a more complexenvironment with intermediates is not fullyexplained. For example, in Example A,current situation probably directs a shift ofthe future CTM development from a"distributor-carrier" relationship towards a"transport service provider-customer"relationship, e.g. towards the main parties inthe supply chain. In such a case, theproposed model should be moresophisticated and relate identified internalrisks with all parties in the triad/multiad.

7. IMPLICATIONS AND CONCLUSION

The findings has both, theoretical andpractical implications. The risks related totransport demand and supply are used as abasis for developing a conceptual frameworkwhich depicts the comparative impacts oftransport outsourcing and logistics andtransport collaboration on the hedging oftransport demand risks. It is also argued thatthe transport sourcing decision and transport

collaboration development create their ownrisks which are interrelated and create acontinuous loop. In a dynamic environment,firms should continuously evaluate, correlateand coordinate them in order to hedge therisks related with both concepts. We havebeen unable to find presentations of thiscomplex relationship in published academicliterature.

The proposed model does not intend togive a comprehensive explanation of theimpact of logistics and particularly transportcollaboration on transport sourcing decisionsand vice versa. Rather, the paper stresses theimportance of their relationship for furtherresearch, as well as in real-life decision-making, focusing on a particular aspect oftheir relationship - the hedging of transportrisk. However, in real life managers mostlymake decisions regarding other importantaspects, such as strategy, cost reduction andservice quality. The research could also havepractical implications - the findings may behelpful for SMEs to correlate their transportsourcing concept and CTM development.

Further research could be directed indifferent ways. For example, it could betheoretical and provide more knowledgeabout the interrelationship between the twotrends, which have been among the mostimportant supply chain trends (Bowersox etal., 2000). Research could be also ratherpractically oriented and explore the in-depthinterdependence between two conceptstowards normative models for hedgingtransport risk. Later should covercomprehensive survey and different industrysectors in Serbia and so indices the overallstate in an emerging economy. Our researchhas focused on SMEs. However, it could beinteresting to explore the studiedrelationships in large companies as well,because the reasons for outsourcing and

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collaboration, and consequently the risks,may differ from SMEs, particularly in aninternational context. Finally, we used anexploratory approach, to explain therelationship between two major trends intransport logistics. However, further researchmay include a range of different qualitativeand quantitative methods and techniques, aswell as their combination. For example,optimization models could be developed todescribe the impact of CTM on transportoutsourcing risks, or dynamic programming(backward propagation) could be used tomodel transport outsourcing.

Acknowledgement

The research in this study was partlyfinancially supported by the SerbianMinistry of Education and Science (ProjectNo. TR36030).

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ОДНОС ИЗМЕЂУ ТРАНСПОРТНОГ АУТСОРСИНГА И

КОЛАБОРАЦИЈЕ У ТРАНСПОРТУ - АСПЕКТ ЗАШТИТЕ ОД

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Ђурђица М. Стојановић, Bjørnar Aas

Извод

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