What is logistics function outsourcing?

The main areas of logistics function outsourcing include order management, reverse logistics management, transportation, and warehousing management. The logistics function outsourcing referred to here only covers third-party and fourth-party logistics that rely on IT platforms to provide logistics outsourcing services to clients.
　　
　　Currently, transportation and warehousing management are the most commonly outsourced functions in China. However, as illustrated in the case study, order management outsourcing can foster a closer partnership between logistics service providers and clients. According to BearingPoint's estimates, the scale of China's logistics function outsourcing industry reached 440 million yuan in 2006 and is expected to maintain rapid growth over the next four years.
　　
　　Case Study: In 2003, Red Bull, which had partnered with PG Logistics for five years, encountered new challenges. At the time, although Red Bull understood its national sales situation, it lacked real-time awareness of inventory and market-end responses. Consequently, Red Bull chose PG Logistics as its third-party logistics provider, outsourcing all logistics operations across its 29 regions and warehouses nationwide to PG Logistics.
　　
　　Based on its warehousing and logistics capabilities, PG Logistics tailored a custom order management system for Red Bull, integrated Red Bull's order processes, and took charge of all logistics aspects. After Red Bull's factory shipped goods, PG Logistics was responsible for delivering products to 20 regions nationwide and managing warehouses. Inventory distribution was carried out according to Red Bull's instructions. PG Logistics is now further integrating supplier processes and its ERP system to enhance system efficiency.
　　
　　Through the integration of PG Logistics' bespoke system with its own, Red Bull can monitor product performance at regional end-point retail stores in real time. This provides robust support for production decision-making, effectively reduces inventory costs, and significantly improves Red Bull's market responsiveness and competitiveness.