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TopI. Introduction
Outsourcing can be defined as the assignment of a job to someone outside own business operations such as manufacturing, maintenance, accounting or logistics to the third-party providers. Outsourcing helps companies to concentrate on their core competency while minimizing costs. Core competency is originated from a few activities which companies perform them well and for which companies have unique skills (Hsiao et al., 2010). The advantages of outsourcing are not only decrease in costs but also decrease in asset base, uncertainty, capital investment and increase in focus on core competency, flexibility, responsiveness and adaptability to new technology usage (Kumari et al., 2015).
There are two types of outsourcing: (1) core business outsourcing (manufacturing activities) and (2) non-core business outsourcing (e.g., logistics activities, human resource activities) (Hsiao, et al., 2010). The importance of non-core business outsourcing is a growing issue across world. It reduces cost by the help of better capacity utilization and better capital sharing. Capacity utilization may increase because variabilities in demand can be balanced by providers and providers can have the advantage economies of scale (Hsiao et al., 2010). It is noticeable to state that the integration level of outsourcing changes according to the effect of environmental uncertainties. The uncertainties within a logistics outsourcing relationship are categorized into four main groups: (1) demand volatility, (2) supply volatility, (3) technology uncertainty, and (4) legal unenforceability (Yang and Zhao, 2016). Environmental uncertainty consists of the variability and unpredictability of many different elements related to internal and external environment of an organization (Huo et al., 2014). It can result with high complexity within control mechanism in outsourcing procedures. By the effect of these, the process of obtaining exact information to evaluate market conditions and third-party providers becomes hard to conduct.
Besides forward logistics, outsourcing is found as one of favorable study fields also for reverse logistics (Govindan and Soleimani, 2016). If a company does not consider the reverse logistics operations as core issue, reverse logistics operations can be outsourced by providers. For instance, an Internet system, NetReturn which is improved by Federal Express for reverse logistics management is used by many companies in order to make the authorization easy to product returns (Krumwiede and Sheu, 2002). As Govindan et al., (2012) explain, the main reasons for outsourcing in reverse logistics can be summarized as following:
• Third party providers have potential to have qualified information systems, transportation tools, material handling equipment and warehousing stores to supply reverse supply chain solutions.
• By outsourcing reverse logistics as one of secondary class activity in a firm, firms will get the chance of focusing on their core competencies.
• Outsourcing the reverse logistics may decrease costs because of the advantage of the economies of scale.
• The asset base can be reduced, and the capital released for other productive usage can be deployed.