Investigation of the drivers of logistics outsourcing in the United Kingdom's pharmaceutical manufacturing industry

Abstract

Logistics outsourcing is a practice commonly used by firms to allow them to access capabilities that they lack internally. Although the main drivers of outsourcing in general are fairly well known, the question of what explains logistics outsourcing decisions within the UK pharmaceutical manufacturing industry, in particular, remains under-researched. Therefore, this study aims to bridge the aforementioned gap in the literature. We surveyed 49 drug manufacturers located in the UK using a web-based questionnaire. The data collected were analysed using logistics regression, exploratory factor analysis, and t-tests. We found that UK drug manufacturers regard improving quality and reliability and reducing logistics costs as the most significant reasons for outsourcing logistics services. We also found a direct positive relationship between the service provider's techno-commercial offerings and delivery performance, and the likelihood of being selected to provide these services. We further explored materials transportation, product delivery, research and development, and clinical trials, which are among the most frequently outsourced logistics activities in the UK pharmaceutical manufacturing industry. The study contributes to the wider literature on logistics outsourcing, and more specifically to that on the UK pharmaceutical manufacturing industry. Findings from this research can also be used to guide outsourcing practitioners’ decisions about the selection of logistics service providers. In addition, the study can help to enhance the service providers' understanding of why firms buy logistics services and which services they are likely to buy.