Page 196 - GHES-3-1

Global Health Economics and
Sustainability
Outsourcing last-mile delivery

1.10. Specific concepts: Independent variables
Independent Dependent
As defined by Kalinzi (2020), outsourcing involves Variables Variables
contracting out job functions to specialized, efficient
service providers who become valued business partners. In
supply chain management, 3PL refers to an organization Cost
that uses external enterprises to handle distribution, 3PL Speed Reduction
warehousing, and fulfillment services. Although 3PL
providers do not own the products within the supply chain,
they take responsibility for their clients’ goods through 3PL Safety Timely
various distribution centers (Manotas-Duque et al., 2016). & Security Delivery
These providers often specialize in integrated warehouse
and transportation operations, which can be scaled and
3PL Local
End-User
adapted to meet customer demands and delivery service Knowledge Satisfaction
requirements (Essilfie-Baiden, 2020).
Outsourcing logistics to 3PL providers is a Figure 1. Conceptual model for the study. (Source: The authors, 2022)
strategic decision involving several processes and Abbreviation: 3PL: Third-party logistics.
criteria that vary across industries and organizations.
A 3PL provider’s performance directly impacts the 1.11. Fundamental theories
outsourcing organization’s supply chain performance and This study is grounded in resource-based theory (RBT) and
competitiveness (Aigbavboa & Mbohwa, 2019); therefore, network theory. The RBT posits that organizations seeking
organizations must possess the necessary skills and capacity valuable, scarce, inimitable, and well-organized resources
to select and manage 3PLs effectively to achieve the desired should consider outsourcing to external providers to
outcomes. While 3PL usage has generally reduced logistics overcome internal resource deficiencies. A strong relationship
costs, Premkumar et al. (2021) attribute this decrease to between firms and external providers can become an
innovative practices by logistics service providers. Effective intangible resource for the organization, emphasizing
communication, transparency, and collaboration between the importance of relationship management and service
the outsourcing organizations and logistics service providers adaptability for outsourcing success (Van Thai et al., 2021);
are critical to achieving long-term success in logistics however, critics argue that the theory does not clearly define
outsourcing; these elements ensure ongoing performance, valuable or scarce resources (Hitt et al., 2015; Ibrahim, 2020).
early conflict resolution, and smoother termination of Network theory focuses on the synergies achieved
relationships (Etokudoh et al., 2017; Paulraj & Chen, 2007). through collaborations within a network, which can
In Africa, government agencies face challenges lead to competitive advantages through enhanced
outsourcing to private sector players due to difficulty service and flexibility (Skjoett-Larsen, 2000). It stresses
measuring outcomes. Private companies typically assess the importance of managing relationships by fostering
success in monetary terms, whereas governments and an information-sharing culture with other companies;
health systems rely on specific key performance indicators however, organizations within established networks may
(KPIs) (Muthoni, 2016; Simon et al., 2020; USAID, 2011). face limitations in pursuing activities that align with their
The potential for outsourcing to diminish some controls objectives (Ibrahim, 2020).
imposed by KPIs requires that public and private sectors 1.12. Gaps in the literature
collaborate to manage outsourcing contracts effectively
(Village Reach, 2016). Existing literature primarily addresses supply chain
operations in public, non-profit environments, where
The selection of a suitable 3PL provider is crucial for development partners largely bear costs. Studies have shown
logistical performance. Choosing an inappropriate provider that using 3PL providers for last-mile delivery of health
can reduce service quality, increase inefficiencies, and lead products, often funded by donors, reduces stockouts and
to a disconnect between the 3PL and the outsourcing improves product availability. This situation allows health
organization, resulting in significant issues (Karamaşa workers to focus on clinical duties rather than logistics
et al., 2020). Figure 1 outlines the six key criteria affecting (Agrawal et al., 2016); however, when donor funding
the selection of 3PL providers: cost, customer service ceases, the transition to local government responsibility
quality, data processing ability, operational performance, is often problematic, and government agencies may be
supply chain capability, and sustainability. reluctant to continue the program due to various factors.

Volume 3 Issue 1 (2025) 188 https://doi.org/10.36922/ghes.4714