Logistics Outsourcing Decision-Making of Manufacturing Enterprise Considering the Switching Costs

Many manufacturing enterprises, especially some large state-owned manufacturing enterprises, have a certain amount of logistics capacity. However, when these enterprises want to outsource their logistics, they will face to a big problem: How to deal with the logistics equipment and personnel? This will produce switching costs. This paper defines the switching costs of logistics outsourcing as the costs occurs when the enterprises want to change their logistics strategy from self-support to outsourcing, and establishes a two-dimensional decision-making model of logistics outsourcing on the basis of the Bruce's model by adding the switching costs. The conclusion is that manufacturers can not make decision only based on whether they can get profit from outsourcing, but also should consider whether the size of the income can offset the switching cost in the benchmark investment recovery period. This paper also found that the impact factors of the investment recovery period of switching cost: the cooperation efficiency of manufacturing enterprise and third-party logistics enterprise, the time needed to get to the stable stage, as well as asset specificity.