Performance measurement oforder-delivery chain in SMEs: Case study

Tutkimus pyrkii selvittämään, kuinka tehokas suorituskykymittaristo voidaan parhaiten suunnitella pk-yrityksessä. Tutkimuksen tavoitteena on luoda suorituskykymittaristo pienen kohdeyrityksen johtajien tarpeisiin. Päähuomion kohteena on yrityksen tilaus-toimitusketju ja arvoverkko. Työ on luonteeltaan kvalitatiivinen toimintatutkimus, joka noudattaa toiminta-analyyttista tutkimusotetta. Työn teoriaosassa selvitetään, kuinka suorituskyvyn mittaaminen sekä materiaali-, tieto- ja rahavirtojen hallinta on kehittynyt viime vuosina pk-yrityksen näkökulmasta. Mittariston suunnittelu aloitetaan kohdeyrityksen perusteellisella analyysilla. Tämän pohjalta määritellään yrityksen kriittiset menestystekijät, joista lopulta johdetaan suorituskykymittarit. Tutkimuksen perusteella voidaan todeta, että yleinen asenne mittaamista kohtaan, strategian huomioinnin puute sekä tietojärjestelmien rajoitteet ovat päähaasteita pk-yrityksen suorituskyvyn mittaamisessa. Mittareiden tuleekin olla melko yksinkertaisia ja helppoja käyttää, jotta mittaamisen ei koettaisi kuluttavan rajallisia resursseja liikaa. Mittariston tulee kuitenkin antaa kokonaisvaltainen kuva yrityksen suorituskyvystä, johon vaikuttavat kaikki arvoverkon osapuolet ja heidän yhteistyö toistensa kanssa.

Asiakaspalveluprosessin mittariston luominen: Case Borealis Polymers Oy

Työn tavoitteena oli luoda asiakaspalveluprosessin mittaristo päivittäisen operatiivisen toiminnan seuraamiseksi ja parantamiseksi. Tarkoituksena oli mitata tilaustoimitusketjun suorituskykyä sekä tutkia mahdollisia kehitys ja parannuskohteita. Työ tehtiin Borealis Polymers Oy:n Fenolin Liiketoimintayksikölle. Yhtiön käytössä on Balanced Scorecard KPI- mittaristo. Asiakaspalveluprosessin mittaristo luotiin BSC asiakasnäkökulman mukaisesti soveltuen yhtiön toimintaympäristöön ja tavoitteisiin. Mittariston tarkoituksena on täydentää KPI- mittareita keskittyen päivittäisen asiakaspalveluprosessin suorituskyvyn ja asiakastyytyväisyyden parantamiseen. Asiakaspalveluprosessia kuvaavia mittareita testattiin suorittamalla asiakastyytyväisyyskysely, joka käytännössä toteutettiin sähköpostitse tehtynä tyytyväisyysmittauksena. Mittauksella haluttiin selvittää asiakastyytyväisyyden taso, palvelun eritekijöiden suhteellinen tärkeys asiakkaille eli mitkä laadun tekijät ovat asiakkaille tärkeimmät sekä miten asiakas kokee Borealiksen asiakaspalvelun suhteessa kilpailijoihin. Asiakaspalvelukysely on osa yhtiön kuluen vuoden aikana tehtävää asiakastyytyväisyysselvitystä. Lisäksi työn tavoitteena oli luoda jatkuvan toiminnan seuraamiseksi tulevaisuutta varten mittarit asiakkaille tärkeimpien laadun tekijöiden seuraamiseksi.

Supply chain integration: studies on linking customer responsiveness and operational efficiency in logistics policy planning

Abstract The research problem in the thesis deals with improving the responsiveness and efficiency of logistics service processes between a supplier and its customers. The improvement can be sought by customizing the services and increasing the coordination of activities between the different parties in the supply chain. It is argued that to achieve coordination the parties have to have connections on several levels. In the framework employed in this research, three contexts are conceptualized at which the linkages can be planned: 1) the service policy context, 2) the process coordination context, and 3) the relationship management context. The service policy context consists of the planning methods by which a supplier analyzes its customers' logistics requirements and matches them with its own operational environment and efficiency requirements. The main conclusion related to the service policy context is that it is important to have a balanced selection of both customer-related and supplier-related factors in the analysis. This way, while the operational efficiency is planned a sufficient level of service for the most important customers is assured. This kind of policy planning involves taking multiple variables into the analysis, and there is a need to develop better tools for this purpose. Some new approaches to deal with this are presented in the thesis.The process coordination context and the relationship management context deal with the issues of how the implementation of the planned service policies can be facilitated in an inter-organizational environment. Process coordination includes typically such mechanisms as control rules, standard procedures and programs, but inhighly demanding circumstances more integrative coordination mechanisms may be necessary. In the thesis the coordination problems in third-party logistics relationship are used as an example of such an environment. Relationship management deals with issues of how separate companies organize their relationships to improve the coordination of their common processes. The main implication related to logistics planning is that by integrating further at the relationship level, companies can facilitate the use of the most efficient coordination mechanisms and thereby improve the implementation of the selected logistics service policies. In the thesis, a case of a logistics outsourcing relationship is used to demonstrate the need to address the relationship issues between the service provider andthe service buyer before the outsourcing can be done.The dissertation consists of eight research articles and a summarizing report. The principal emphasis in the articles is on the service policy planning context, which is the main theme of six articles. Coordination and relationship issues are specifically addressed in two of the papers.

Improving the order-delivery chain

Tutkielman tavoitteena on tarkastella letkuventtiilien tilaus-toimitusketjua ja selvittää, kuinka se muodostuu. Tavoitteena on laatia selvitys yrityksen tilaus-toimitusketjun muodostumisen vaiheista yrityksen sisäiseen käyttöön ja tutkia, kuinka ketjua voitaisiin parantaa, jotta tulevaisuudessa asiakkaita voitaisiin palvella paremmin ja joustavammin. Tutkimusongelmaa lähestytään prosessiajattelun näkökulmasta ja tutkielmassa käytetään kvalitatiivista tutkimusmenetelmää, jonka pääasiallisena tiedonkeruuvälineenä on vapaamuotoiset haastattelut, yrityksen dokumenttien tutkiminen ja analysointi sekä yrityksen toiminnan havainnointi. Tilaus-toimitusketjun parantaminen edellyttää yritykseltä ja sen edustajilta asiakkaiden ostokäyttäytymisen ohjaamista, tiedon avointa ja oikea-aikaista jakamista kaikille sitä tarvitseville sekä kulttuurierojen huomioon ottamista. Erityisesti tilaus-toimitusketjun alkuvaiheisiin tulisi panostaa tulevaisuudessa, sillä monet ongelmat syntyvät tutkimuksen mukaan toimitusketjun alkupuolella.

Drivers and Barriers of Collaboration in the Value Chain of Paperboard-Packed Consumer Goods

Value chain collaboration has been a prevailing topic for research, and there is a constantly growing interest in developing collaborative models for improved efficiency in logistics. One area of collaboration is demand information management, which enables improved visibility and decrease of inventories in the value chain. Outsourcing of non-core competencies has changed the nature of collaboration from intra-enterprise to cross-enterprise activity, and this together with increasing competition in the globalizing markets have created a need for methods and tools for collaborative work. The retailer part in the value chain of consumer packaged goods (CPG) has been studied relatively widely, proven models have been defined, and there exist several best practice collaboration cases. The information and communications technology has developed rapidly, offering efficient solutions and applications to exchange information between value chain partners. However, the majority of CPG industry still works with traditional business models and practices. This concerns especially companies operating in the upstream of the CPG value chain. Demand information for consumer packaged goods originates at retailers' counters, based on consumers' buying decisions. As this information does not get transferred along the value chain towards the upstream parties, each player needs to optimize their part, causing safety margins for inventories and speculation in purchasing decisions. The safety margins increase with each player, resulting in a phenomenon known as the bullwhip effect. The further the company is from the original demand information source, the more distorted the information is. This thesis concentrates on the upstream parts of the value chain of consumer packaged goods, and more precisely the packaging value chain. Packaging is becoming a part of the product with informative and interactive features, and therefore is not just a cost item needed to protect the product. The upstream part of the CPG value chain is distinctive, as the product changes after each involved party, and therefore the original demand information from the retailers cannot be utilized as such – even if it were transferred seamlessly. The objective of this thesis is to examine the main drivers for collaboration, and barriers causing the moderate adaptation level of collaborative models. Another objective is to define a collaborative demand information management model and test it in a pilot business situation in order to see if the barriers can be eliminated. The empirical part of this thesis contains three parts, all related to the research objective, but involving different target groups, viewpoints and research approaches. The study shows evidence that the main barriers for collaboration are very similar to the barriers in the lower part of the same value chain; lack of trust, lack of business case and lack of senior management commitment. Eliminating one of them – the lack of business case – is not enough to eliminate the two other barriers, as the operational model in this thesis shows. The uncertainty of the future, fear of losing an independent position in purchasing decision making and lack of commitment remain strong enough barriers to prevent the implementation of the proposed collaborative business model. The study proposes a new way of defining the value chain processes: it divides the contracting and planning process into two processes, one managing the commercial parts and the other managing the quantity and specification related issues. This model can reduce the resistance to collaboration, as the commercial part of the contracting process would remain the same as in the traditional model. The quantity/specification-related issues would be managed by the parties with the best capabilities and resources, as well as access to the original demand information. The parties in between would be involved in the planning process as well, as their impact for the next party upstream is significant. The study also highlights the future challenges for companies operating in the CPG value chain. The markets are becoming global, with toughening competition. Also, the technology development will most likely continue with a speed exceeding the adaptation capabilities of the industry. Value chains are also becoming increasingly dynamic, which means shorter and more agile business relationships, and at the same time the predictability of consumer demand is getting more difficult due to shorter product life cycles and trends. These changes will certainly have an effect on companies' operational models, but it is very difficult to estimate when and how the proven methods will gain wide enough adaptation to become standards.

Contract manufacturing networks structure and supply chain management

The usual objectives that companies have for subcontracting are studied in this thesis. The case company’s objectives for contract manufacturing now and in the future are identified. The main objective of the thesis is to create a focused model for the structure and supply chain management in the contract manufacturing network. This model is made for case company’s certain profit center. The different possibilities and their advantages and disadvantages for the structure and supply chain management are examined trough a theoretical review of literature. The possibilities found are then examined from the case company’s point of view. The case company point of view is established based on the opinions of the case company’s representatives. The outcome of the thesis is that the star shaped structure with supply chain management centralized to case company would be the best choice for the case company to manage the contract manufacture network.

Cuticular and Suberin Polymers of Edible Plants. Analysis by Gas Chromatographic-Mass Spectrometric and Solid State Spectroscopic Methods

Cutin and suberin are structural and protective polymers of plant surfaces. The epidermal cells of the aerial parts of plants are covered with an extracellular cuticular layer, which consists of polyester cutin, highly resistant cutan, cuticular waxes and polysaccharides which link the layer to the epidermal cells. A similar protective layer is formed by a polyaromatic-polyaliphatic biopolymer suberin, which is present particularly in the cell walls of the phellem layer of periderm of the underground parts of plants (e.g. roots and tubers) and the bark of trees. In addition, suberization is also a major factor in wound healing and wound periderm formation regardless of the plants’ tissue. Knowledge of the composition and functions of cuticular and suberin polymers is important for understanding the physiological properties for the plants and for nutritional quality when these plants are consumed as foods. The aims of the practical work were to assess the chemical composition of cuticular polymers of several northern berries and seeds and suberin of two varieties of potatoes. Cutin and suberin were studied as isolated polymers and further after depolymerization as soluble monomers and solid residues. Chemical and enzymatic depolymerization techniques were compared and a new chemical depolymerization method was developed. Gas chromatographic analysis with mass spectrometric detection (GC-MS) was used to assess the monomer compositions. Polymer investigations were conducted with solid state carbon-13 cross polarization magic angle spinning nuclear magnetic resonance spectroscopy (13C CP-MAS NMR), Fourier transform infrared spectroscopy (FTIR) and microscopic analysis. Furthermore, the development of suberin over one year of post-harvest storage was investigated and the cuticular layers from berries grown in the North and South of Finland were compared. The results show that the amounts of isolated cuticular layers and cutin monomers, as well as monomeric compositions vary greatly between the berries. The monomer composition of seeds was found to differ from the corresponding berry peel monomers. The berry cutin monomers were composed mostly of long-chain aliphatic ω-hydroxy acids, with various mid-chain functionalities (double-bonds, epoxy, hydroxy and keto groups). Substituted α,ω-diacids predominated over ω-hydroxy acids in potato suberin monomers and slight differences were found between the varieties. The newly-developed closed tube chemical method was found to be suitable for cutin and suberin analysis and preferred over the solvent-consuming and laborious reflux method. Enzymatic hydrolysis with cutinase was less effective than chemical methanolysis and showed specificity towards α,ω-diacid bonds. According to ₁₃C CP-MAS NMR and FTIR, the depolymerization residues contained significant amounts of aromatic structures, polysaccharides and possible cutan-type aliphatic moieties. Cultivation location seems to have effect on cuticular composition. The materials studied contained significant amounts of different types of biopolymers that could be utilized for several purposes with or without further processing. The importance of the so-called waste material from industrial processes of berries and potatoes as a source of either dietary fiber or specialty chemicals should be further investigated in detail. The evident impact of cuticular and suberin polymers, among other fiber components, on human health should be investigated in clinical trials. These by-product materials may be used as value-added fiber fractions in the food industry and as raw materials for specialty chemicals such as lubricants and emulsifiers, or as building blocks for novel polymers.

Approaches to Supply Chain Risk Management: Identification, Analysis and Control

Supply chain risk management has emerged as an increasingly important issue in logistics as disruptions in the supply chain have become critical issues for many companies. The scientific literature on the subject is developing and in many respects the understanding of it is still in its infancy. Thus, there is a need for more information in order for scholars and practitioners to understand the causalities and interrelations that characterise the phenomenon. The aim of this dissertation is to narrow this gap by exploring key aspects of supply chain risk management through two maritime supply chains in the immediate region of the Gulf of Finland. The study contributes to the field in three different ways. Firstly, it facilitates the identification of risks on different levels of the supply chain through a systematic analysis of the processes and actors, and of the cognitive barriers that limit the actors’ visibility and their understanding of the operations and the risks involved. There is a clear need to increase collaboration and information exchange in order to improve visibility in the chain. Risk management should be a collaborative effort among the individual actors, aimed at obtaining a holistic picture. Secondly, the study contributes to the literature on risk analysis through the use of systemic frameworks that illustrate the causalities and linkages in the system, thereby making it easier to perceive the vulnerabilities. Thirdly, the study enhances current knowledge of risk control in identifying actor roles, risk visibility and risk controllability as being among the key factors determining risk-management effectiveness against supply-chain vulnerability. This dissertation is divided into two parts. The first part gives a general overview of the relevant literature, the research design and the conclusions of the study, and the second part comprises six research publications. Case-study methodology with systematic combining approach is used, where in-depth interviews, questionnaires and expert panel sessions are the main data collection methods. The study illustrates the current state of risk management in multimodal maritime supply chains, and develops frameworks for further analysis. The results imply that there are major differences between organizations in their ability to execute supply chain risk management. Further collaboration should be considered in order to facilitate the development of systematic and effective management processes.

Electroactive ion exchange membranes based on conducting polymers

Ion exchange membranes are indispensable for the separation of ionic species. They can discriminate between anions and cations depending on the type of fixed ionic group present in the membrane. These conventional ion exchange membranes (CIX) have exceptional ionic conductivity, which is advantageous in various electromembrane separation processes such as electrodialysis, electrodeionisation and electrochemical ion exchange. The main disadvantage of CIX membranes is their high electrical resistance owing to the fact that the membranes are electronically non conductive. An alternative can be electroactive ion exchange membranes, which are ionically and electronically conducting. Polypyrrole (PPy) is a type of electroactive ion exchange material as well as a commonly known conducting polymer. When PPy membranes are repeatedly reduced and oxidised, ions are pumped through the membrane. The main aim of this thesis was to develop electroactive cation transport membranes based on PPy for the selective transport of divalent cations. Membranes developed composed of PPy films deposited on commercially available support materials. To carry out this study, cation exchange membranes based on PPy doped with immobile anions were prepared. Two types of dopant anions known to interact with divalent metal ions were considered, namely 4-sulphonic calix[6]arene (C6S) and carboxylated multiwalled carbon nanotubes (CNT). The transport of ions across membranes containing PPy doped with polystyrene sulphonate (PSS) and PPy doped with para-toluene sulphonate (pTS) was also studied in order to understand the nature of ion transport and permeability across PPy(CNT) and PPy(C6S) membranes. In the course of these studies, membrane characterisation was performed using electrochemical quartz crystal microbalance (EQCM) and scanning electron microscopy (SEM). Permeability of the membranes towards divalent cations was explored using a two compartment transport cell. EQCM results demonstrated that the ion exchange behaviour of polypyrrole is dependent on a number of factors including the type of dopant anion present, the type of ions present in the surrounding medium, the scan rate used during the experiment and the previous history of the polymer film. The morphology of PPy films was found to change when the dopant anion was varied and even when the thickness of the film was altered in some cases. In nearly all cases the permeability of the membranes towards metal ions followed the order K+ > Ca2+ > Mn2+. The one exception was PPy(C6S), for which the permeability followed the order Ca2+ ≥ K+ > Mn2+ > Co2+ > Cr3+. The above permeability sequences show a strong dependence on the size of the metal ions with metal ions having the smallest hydrated radii exhibiting the highest flux. Another factor that affected the permeability towards metal ions was the thickness of the PPy films. Films with the least thickness showed higher metal ion fluxes. Electrochemical control over ion transport across PPy(CNT) membrane was obtained when films composed of the latter were deposited on track-etched Nucleopore® membranes as support material. In contrast, the flux of ions across the same film was concentration gradient dependent when the polymer was deposited on polyvinylidene difluoride membranes as support material. However, electrochemical control over metal ion transport was achieved with a bilayer type of PPy film consisting of PPy(pTS)/PPy(CNT), irrespective of the type of support material. In the course of studying macroscopic charge balance during transport experiments performed using a two compartment transport cell, it was observed that PPy films were non-permselective. A clear correlation between the change in pH in the receiving solution and the ions transported across the membrane was observed. A decrease in solution pH was detected when the polymer membrane acted primarily as an anion exchanger, while an increase in pH occurred when it functioned as a cation exchanger. When there was an approximately equal flux of anions and cations across the polymer membrane, the pH in the receiving solution was in the range 6 - 8. These observations suggest that macroscopic charge balance during the transport of cations and anions across polypyrrole membranes was maintained by introduction of anions (OH-) and cations (H+) produced via electrolysis of water.

Synthesis, characterization and chemical sensor application of conducting polymers

Polymeric materials that conduct electricity are highly interesting for fundamental studies and beneficial for modern applications in e.g. solar cells, organic field effect transistors (OFETs) as well as in chemical and bio‐sensing. Therefore, it is important to characterize this class of materials with a wide variety of methods. This work summarizes the use of electrochemistry also in combination with spectroscopic methods in synthesis and characterization of electrically conducting polymers and other π‐conjugated systems. The materials studied in this work are intended for organic electronic devices and chemical sensors. Additionally, an important part of the presented work, concerns rational approaches to the development of water‐based inks containing conducting particles. Electrochemical synthesis and electroactivity of conducting polymers can be greatly enhanced in room temperature ionic liquids (RTILs) in comparison to conventional electrolytes. Therefore, poly(para‐phyenylene) (PPP) was electrochemically synthesized in the two representative RTILs: bmimPF6 and bmiTf2N (imidazolium and pyrrolidinium‐based salts, respectively). It was found that the electrochemical synthesis of PPP was significantly enhanced in bmimPF6. Additionally, the results from doping studies of PPP films indicate improved electroactivity in bmimPF6 during oxidation (p‐doping) and in bmiTf2N in the case of reduction (n‐doping). These findings were supported by in situ infrared spectroscopy studies. Conducting poly(benzimidazobenzophenanthroline) (BBL) is a material which can provide relatively high field‐effect mobility of charge carriers in OFET devices. The main disadvantage of this n‐type semiconductor is its limited processability. Therefore in this work BBL was functionalized with poly(ethylene oxide) PEO, varying the length of side chains enabling water dispersions of the studied polymer. It was found that functionalization did not distract the electrochemical activity of the BBL backbone while the processability was improved significantly in comparison to conventional BBL. Another objective was to study highly processable poly(3,4‐ethylenedioxythiophene) poly(styrenesulfonate) (PEDOT:PSS) water‐based inks for controlled patterning scaled‐down to nearly a nanodomain with the intention to fabricate various chemical sensors. Developed PEDOT:PSS inks greatly improved printing of nanoarrays and with further modification with quaternary ammonium cations enabled fabrication of PEDOT:PSS‐based chemical sensors for lead (II) ions with enhanced adhesion and stability in aqueous environments. This opens new possibilities for development of PEDOT:PSS films that can be used in bio‐related applications. Polycyclic aromatic hydrocarbons (PAHs) are a broad group of π‐conjugated materials consisting of aromatic rings in the range from naphthalene to even hundred rings in one molecule. The research on this type of materials is intriguing, due to their interesting optical properties and resemblance of graphene. The objective was to use electrochemical synthesis to yield relatively large PAHs and fabricate electroactive films that could be used as template material in chemical sensors. Spectroscopic, electrochemical and electrical investigations evidence formation of highly stable films with fast redox response, consisting of molecules with 40 to 60 carbon atoms. Additionally, this approach in synthesis, starting from relatively small PAH molecules was successfully used in chemical sensor for lead (II).

e-Business and collaboration: A case study of pulp supply chain

This thesis studies how the case company could digitalize its supply chain and what kind of advantages this would create in the light of supply chain efficiency. The case company manufactures several pulp products that are used for paper, fabrics and packaging products by customers worldwide. The paper and pulp industry has been paying more and more attention to increasing supply chain efficiency with new operating and service models made possible by today’s information technology. The main focus of this study is on the supply chain between the case company and its key customers and the goal is to find ways to make the operations between them as efficient as possible. The study relays heavily on collaboration techniques and digitalization technologies. In addition to a theoretical framework, the study includes several empirical studies that offer real-life examples of how these theories and technologies are applied in operating environments similar to the case company. A plan with strategic and operational levels is created according to the findings of the previous sections to support the case company’s future operations. The plan is based on an RFID-supported collaboration model that aims to advance information sharing between the supply chain partners. The time for an RFID-investment is sought to be very optimal and the benefits of such system to be noteworthy, but challenging to measure in monetary terms.

Developing Supply Chain Process Management and Measurement in Global Manufacturing Company

The objective of this research is to create a current state analysis of pulp supply chain processes from production planning to deliveries to customers. A cross-functional flowchart is being used to model these processes. These models help finding key performance indicators (KPIs) which enable examinations of the supply chain efficiency. Supply chain measures in different processes reveal the changes need processes that affect the whole supply chain and its efficiency and competitiveness. Structure of pulp supply chain differs from most of the other supply chains. The fact that there are big volumes of bulk products, small product variations and supply forecasts are made for the year ahead make the difference. This factor brings different benefits but also challenges when developing supply chain. This thesis divides pulp supply chain in three different main categories: production planning, warehousing and transportation. It provides tools for estimating the functionality of supply chain as well as developing the efficiency for different functions of supply chain. By having a better understanding of supply chain processes and measurement the whole supply chain structure can be developed significantly.

Offshoring and outsourcing under demand uncertainty -a supply chain management analysis

Outsourcing and offshoring or any combinations of these have not just become a popular phenomenon, but are viewed as one of the most important management strategies due to the new possibilities from globalization. They have been seen as a possibility to save costs and improve customer service. Executing offshoring and offshore outsourcing successfully can be more complex than initially expected. Potential cost savings resulting from of offshoring and offshore outsourcing are often based on lower manufacturing costs. However, these benefits might be conflicted by a more complex supply chain with service level challenges that can respectively increase costs. Therefore analyzing the total cost effects of offshoring and outsourcing is necessary. The aim of this Master´s Thesis was to to construct a total cost model using academic literature to calculate the total costs and analyze the reasonability of offshoring and offshore outsourcing production of a case company compared to insourcing production. The research data was mainly quantitative and collected mainly from the case company past sales and production records. In addition management level interviews from the case company were conducted. The information from these interviews was used for the qualification of the necessary quantitative data and adding supportive information that could not be gathered from the quantitative data. Both data collection and analysis were guided by a theoretical frame of reference that was based on academic literature concerning offshoring and outsourcing, statistical calculation of demand and total costs. The results confirm the theories that offshoring and offshore outsourcing would reduce total costs as both offshoring and offshore outsourcing options result in lower total annual costs than insourcing mainly due to lower manufacturing costs. However, increased demand uncertainty would make the alternative of offshore outsourcing more risky and difficult to manage. Therefore when assessing the overall impact of the alternatives, offshoring is the most preferable option. As the main cost savings in offshore outsourcing came from lower manufacturing costs, more specifically labour costs, the logistics costs in this case company did not have an essential effect in total costs. The management should therefore pay attention initially to manufacturing costs and then logistics costs when choosing the best production sourcing option for the company.