Sourcing, Contracts and Logistics Partnerships

Introduction

Logistics sourcing is the managerial process of deciding which activities an organisation should perform internally, which should be purchased from external providers, and how external relationships should be governed. It includes carrier selection, freight procurement, tender design, tariff evaluation, contract negotiation, service-level management, and the development of collaborative relationships with third-party logistics providers (3PLs), fourth-party logistics providers (4PLs), and digital logistics platforms.

These decisions are strategic because logistics providers influence cost, customer experience, resilience, market access, data quality, carbon performance, and the organisation’s ability to respond to disruption. A low transport rate can be economically inferior if it generates unreliable delivery, claims, stockouts, administrative complexity, or reputational damage. Conversely, a premium provider may create value through consolidation, visibility, flexibility, and process innovation.

The central managerial challenge is therefore not simply to obtain the lowest quoted price. It is to design a sourcing and governance system that aligns provider incentives with the shipper’s operational and strategic objectives.

Learning Objectives

By the end of this chapter, students should be able to:

1. Apply make-or-buy and carrier-selection frameworks.
2. Design a logistics tender, tariff structure, and evaluation model.
3. Develop service-level agreements (SLAs) and incentive-compatible contracts.
4. Distinguish the roles of 3PLs, 4PLs, lead logistics providers, and digital platforms.
5. Manage negotiation, supplier performance, risk, ethics, and relationship governance.
6. Critically evaluate outsourcing decisions under uncertainty and changing demand.

1. The Strategic Logic of Logistics Sourcing

A logistics sourcing decision has four linked dimensions:

• Scope: What activities are being sourced—transport, warehousing, customs, freight audit, planning, technology, or an integrated network?
• Market structure: Are capable providers available, and is the market competitive or concentrated?
• Governance: Should the relationship use a spot transaction, a renewable contract, a relational agreement, or a strategic partnership?
• Performance: Which outcomes matter—cost, service, resilience, sustainability, innovation, or all of these?

Transaction-cost economics explains why organisations do not automatically outsource every activity. Market transactions involve search, negotiation, monitoring, adaptation, and enforcement costs. Outsourcing may reduce operating cost but increase coordination or dependency risk. The resource-based view adds that activities creating distinctive capabilities may be retained even when external suppliers appear cheaper. Dynamic-capability theory further suggests that firms should retain or develop activities that help them sense, seize, and reconfigure in changing markets.

A useful principle is:

Outsource activities that are non-differentiating and can be governed effectively; retain or tightly control activities that create strategic advantage, critical knowledge, or unacceptable dependency.

This principle does not imply that all routine transport should be outsourced. A manufacturer with unusually complex product handling, regulated materials, or mission-critical delivery may need internal expertise even when vehicles are externally operated.

2. Make-or-Buy Analysis

2.1 Relevant costs

A make-or-buy comparison must use relevant, avoidable costs rather than accounting costs alone. A basic annual comparison is:

where:

• C_make = annual cost of internal provision;
• C_buy = annual cost of outsourcing;
• F_make and F_buy = annual fixed costs;
• v_make and v_buy = variable cost per shipment or unit;
• Q = expected annual volume;
• C_internal-risk and C_external-risk = monetised expected risk and coordination costs.

The break-even volume, when the variable costs differ and risk costs are treated as fixed, is:

This formula applies only when the denominator is non-zero and the cost relationships are reasonably stable over the relevant volume range. It should not be interpreted as a complete decision rule. Capacity constraints, service quality, capital requirements, tax effects, employee consequences, and strategic flexibility must also be assessed.

2.2 Worked example

A firm can operate an internal delivery fleet for an annual fixed cost of $420,000 and a variable cost of $8.20 per shipment. Outsourcing requires an annual management charge of $120,000 and a variable freight charge of $11.00 per shipment. Expected external coordination and disruption costs are estimated at $35,000 per year; internal risk costs are $15,000.

The internal cost is:

C_make = 420,000 + 8.20Q + 15,000 = 435,000 + 8.20Q

The outsourced cost is:

C_buy = 120,000 + 35,000 + 11.00Q = 155,000 + 11.00Q

Set the two costs equal:

435,000 + 8.20Q = 155,000 + 11.00Q

Thus:

280,000 = 2.80Q and Q* = 100,000 shipments.

Below 100,000 shipments, outsourcing has the lower estimated cost; above 100,000, internal provision has the lower estimated cost, subject to capacity and service assumptions. If the internal fleet cannot serve peak demand, the apparent advantage may disappear because additional capacity or emergency transport must be purchased.

2.3 Qualitative decision criteria

A graduate-level make-or-buy analysis should include a weighted decision matrix. Typical criteria include:

Weights should reflect business strategy rather than be selected merely to justify a preferred supplier.

3. Carrier Selection and Procurement Design

3.1 Defining the requirement

A tender begins with a precise statement of demand and service requirements. The shipper should analyse historical shipment data by origin, destination, weight, cube, product class, time window, accessorial charge, season, and exception type. Poor data produces misleading bids: carriers either price defensively or submit rates that later require extensive surcharges.

The statement of work should specify:

• lanes, geographic zones, modes, and expected volumes;
• shipment profiles and packaging assumptions;
• pickup and delivery windows;
• equipment and handling requirements;
• customs, security, and regulatory obligations;
• information and proof-of-delivery requirements;
• claims, returns, and emergency procedures;
• implementation milestones and transition responsibilities.

Demand should be presented as a forecast range, not a falsely precise single number. Bidders should be required to identify assumptions, exclusions, capacity limits, and surcharge triggers.

3.2 Tender stages

A robust tender normally contains:

1. Market intelligence: identify qualified providers and benchmark capacity.
2. Prequalification or request for information: test safety, financial strength, technology, insurance, compliance, and relevant experience.
3. Request for proposal: issue common data, contractual terms, evaluation criteria, and response templates.
4. Clarification: provide equal access to material questions and answers.
5. Evaluation: combine commercial, operational, technical, risk, and sustainability factors.
6. Negotiation and best-and-final offer: negotiate with a controlled shortlist.
7. Due diligence and contracting: validate evidence before award.
8. Implementation: establish governance, data interfaces, training, and transition controls.

The procurement process must preserve fairness. Undisclosed changes to volume assumptions or evaluation criteria undermine competition and may create legal exposure.

3.3 Total landed logistics cost

The evaluated cost should include more than the line-haul rate:

where TLC is total logistics cost per shipment or unit; R_base is the base freight rate; S_fuel is a fuel surcharge; S_accessorial represents applicable accessorial charges; C_handling is handling cost; C_inventory is inventory carrying cost caused by transit time; C_failure is expected cost of delay, damage, loss, or non-compliance; and C_admin is procurement, invoice, and monitoring cost.

Each term must use the same unit and shipment basis. Expected failure cost can be estimated as probability multiplied by consequence, but probabilities should be supported by credible operational evidence rather than arbitrary assumptions.

3.4 Tariff architecture

A tariff is a structured schedule of prices and conditions. Common elements include base rates, minimum charges, weight breaks, zone rates, dimensional-weight rules, fuel-index formulas, detention, waiting time, redelivery, lift-gate, residential, hazardous-material, peak-season, and customs charges.

A good tariff is transparent and auditable. It should state whether a charge is included, excluded, capped, indexed, or subject to prior approval. Fuel mechanisms are often expressed as an index-linked adjustment rather than an unrestricted discretionary surcharge. For example, a contract may define a base fuel price, a reference index, an adjustment table, and a review frequency. The formula must specify the index source, publication date, currency, lag, and treatment of extraordinary changes.

4. Contract Architecture and Service-Level Agreements

4.1 Contract components

A logistics contract typically contains:

• scope and definitions;
• pricing and invoice rules;
• volume commitments and capacity obligations;
• service standards and measurement methods;
• data, confidentiality, and cybersecurity provisions;
• liability, insurance, claims, and indemnification;
• subcontracting controls;
• business continuity and disaster recovery;
• compliance with labour, safety, environmental, customs, and anti-corruption law;
• audit rights and records retention;
• change control and continuous-improvement procedures;
• termination, transition assistance, and exit rights;
• dispute resolution and governing law.

The contract should distinguish obligations, targets, and aspirations. An SLA is effective only when its metric definitions, data source, measurement window, exclusions, reporting frequency, and remedy are unambiguous.

4.2 Designing meaningful metrics

Useful logistics metrics usually cover five dimensions:

A metric such as “on-time delivery” requires a defined appointment or promised-time window. The formula is:

The denominator must specify exclusions, such as customer-caused delays or force majeure. Excessive exclusions make the metric appear strong while concealing poor performance. Conversely, excluding genuinely uncontrollable events can prevent unfair penalties. Governance should therefore include a transparent exception process.

4.3 Incentive contracts

A fixed-price contract provides cost certainty but can weaken flexibility or improvement incentives. Cost-plus arrangements preserve provider viability under uncertainty but may reduce cost discipline. Gain-sharing, performance bonuses, service credits, and indexed pricing can align interests more effectively.

An incentive should satisfy four conditions:

1. The provider can materially influence the measured outcome.
2. The metric is reliably observable.
3. The reward or penalty is economically meaningful but not destructive.
4. The contract prevents gaming and unintended consequences.

For example, rewarding only low transport cost may encourage consolidation that increases delivery lateness. A balanced scorecard can link payment to cost, service, safety, claims, and improvement. Caps and floors are often appropriate because extreme penalties can cause financial distress and reduce service resilience.

5. Logistics Partnerships: 3PL, 4PL and Platforms

5.1 Third-party logistics providers

A 3PL performs one or more logistics activities for a shipper, such as transportation, warehousing, fulfilment, customs brokerage, or reverse logistics. The 3PL normally operates assets or manages operational resources and is accountable for defined services.

Benefits include variable capacity, specialist expertise, network density, technology, and access to management capability. Risks include loss of control, data dependence, service inconsistency, hidden charges, labour-practice failures, and concentration risk.

5.2 Fourth-party logistics and lead logistics providers

A 4PL or lead logistics provider typically designs and orchestrates a broader logistics system, coordinating multiple 3PLs, carriers, technology systems, and improvement programmes. Its value lies less in owning trucks or warehouses and more in integration, control-tower visibility, network design, and governance.

The shipper must clarify whether the 4PL is neutral or commercially affiliated with underlying providers. Conflicts may arise when the orchestrator earns margin from allocating volume to related carriers. Governance should therefore require disclosure, auditability, data access, and transparent allocation rules.

5.3 Digital freight platforms

Platforms may match shippers and carriers, automate tendering, provide dynamic pricing, support tracking, or manage freight payments. They can reduce search and transaction costs, but they also introduce algorithmic, cybersecurity, data ownership, and continuity risks. A platform contract should state who is the contracting carrier, who bears cargo liability, how data may be used, what happens during system outage, and how algorithmic decisions can be challenged.

6. Negotiation and Relationship Governance

Effective negotiation begins before the meeting. The buyer should understand its alternatives, cost drivers, demand uncertainty, service priorities, and acceptable trade-offs. The supplier’s cost structure, capacity constraints, network economics, and opportunity cost should also be investigated.

A useful negotiation sequence is:

1. establish objectives and decision authority;
2. separate interests from stated positions;
3. exchange verified information;
4. identify trade-offs across price, volume, term, flexibility, service, and risk;
5. develop multiple packages rather than arguing over one number;
6. document assumptions and concessions;
7. test implementation feasibility;
8. obtain approvals and convert agreements into enforceable language.

Negotiators should avoid awarding volume solely in exchange for a headline rate reduction. A carrier may offer a low rate while limiting peak capacity, adding accessorial charges, or requiring long commitments. Conversely, a shipper’s aggressive annual bid cycle may prevent providers from investing in equipment, systems, or dedicated staff.

Relationship governance should operate at three levels:

• Operational: daily exceptions, dispatch, documentation, and issue resolution.
• Tactical: monthly or quarterly performance reviews, root-cause analysis, and corrective action.
• Strategic: periodic review of network design, innovation, resilience, sustainability, and value creation.

Escalation rules should identify response times, accountable managers, and the point at which a dispute becomes a formal contractual issue.

7. Supplier Performance and Continuous Improvement

Performance management should combine measurement with learning. A dashboard is not a management system unless it leads to decisions and corrective action. The Plan–Do–Check–Act cycle is useful:

• Plan: define target, method, responsibility, and baseline.
• Do: implement the process and collect reliable data.
• Check: compare actual results with target and investigate variation.
• Act: remove root causes, standardise improvements, and revise the plan.

Root-cause analysis should distinguish a one-time incident from systemic failure. Useful methods include process mapping, the five-whys technique, Pareto analysis, and failure-mode analysis. Corrective actions should have owners, deadlines, evidence requirements, and verification.

Supplier segmentation improves governance. A strategic provider with high business impact deserves joint planning and executive review. A routine provider may be managed through standardised transactions and automated scorecards. A bottleneck provider with limited alternatives requires risk mitigation, inventory buffers, dual sourcing, or capability development.

8. Risk, Ethics and Regulation

Outsourcing transfers activities, not ultimate accountability. The buying organisation remains exposed to risks involving safety, labour standards, bribery, privacy, sanctions, customs, environmental harm, and misleading sustainability claims.

Important controls include:

• financial and insurance due diligence;
• safety records and driver-hours compliance;
• subcontractor approval and flow-down obligations;
• modern-slavery and labour-practice audits;
• data-protection impact assessment;
• cybersecurity requirements and incident notification;
• sanctions and export-control screening;
• emissions measurement boundaries and verification;
• business-continuity testing;
• conflict-of-interest declarations;
• whistleblowing and non-retaliation channels.

Ethically, buyers should avoid contract terms that make safe or lawful performance commercially impossible. Excessive detention pressure, unrealistic delivery windows, or payment practices that undermine small carriers may create hidden social costs. Responsible sourcing evaluates total value, including the welfare of workers and communities affected by logistics operations.

9. Technology, AI and Contemporary Developments

Transport-management systems, electronic proof of delivery, application programming interfaces, telematics, digital twins, and control towers improve visibility and decision quality. However, digitisation does not correct poor process definitions or inaccurate master data.

AI can support demand forecasting, carrier allocation, route planning, anomaly detection, invoice auditing, and predictive maintenance. Its use requires governance over data quality, explainability, bias, access rights, model drift, and human override. A model that recommends a carrier based on historical performance may reproduce historical discrimination or overlook newly qualified providers. AI should support accountable decisions, not obscure them.

Contemporary sourcing increasingly addresses resilience and decarbonisation. Firms may use multi-sourcing, regional capacity, alternative modes, supplier collaboration, and scenario analysis rather than optimising only expected cost. Carbon clauses should define the measurement method, activity data, emission factors, treatment of empty running, and verification process. Claims about reduced emissions should be comparable and auditable.

10. Illustrative Case: Northstar Appliances

Background

Northstar Appliances, a fictional regional manufacturer, distributes 180,000 finished units annually through 42 retail and commercial customers. It currently operates a small internal fleet and purchases overflow transport from several carriers. Delivery performance has fallen to 91%, accessorial charges are poorly controlled, and the logistics manager lacks reliable lane-level cost data.

Problem

The chief financial officer proposes a single low-price carrier contract. The operations director argues for two strategic carriers plus a 4PL control tower because demand is seasonal and product damage is costly. The organisation must choose a sourcing model without sacrificing peak capacity or operational knowledge.

Analysis

The team cleans shipment data, separates base freight from accessorial charges, and identifies that 28% of annual volume occurs in three peak months. A single-carrier bid produces the lowest nominal rate but requires a minimum volume commitment and offers weak recovery capacity. Two carriers cost 3.5% more on base rates but provide redundancy. A 4PL adds a management fee but improves tender compliance, invoice audit, and exception visibility.

The team evaluates alternatives using weighted criteria: total cost 35%, service 25%, resilience 20%, implementation and technology 10%, and sustainability and compliance 10%. It also performs a sensitivity analysis for a 20% demand increase and a major-carrier failure.

Approach and solution

Northstar selects two primary carriers, a qualified backup pool, and a limited-scope 4PL control tower. The contract includes:

• lane-specific base rates and an indexed fuel mechanism;
• minimum peak-capacity commitments;
• an on-time delivery target measured against agreed windows;
• damage and claims thresholds;
• service credits for persistent failure;
• gain-sharing for verified consolidation savings;
• open-book accessorial reporting;
• quarterly business reviews;
• cybersecurity, subcontracting, and continuity provisions;
• a twelve-month transition and exit plan.

The 4PL is prohibited from allocating volume to related providers without disclosure and audit approval. Northstar retains strategic network design, customer promise rules, and supplier relationship ownership.

Outcome

After implementation, Northstar reduces invoice exceptions, improves visibility, and maintains capacity during peak season. The total freight rate is not the lowest available, but total logistics cost falls because failure, accessorial, and emergency-expediting costs decline. The case demonstrates that resilience and governance can create economic value even when headline prices increase.

Learning points

1. Reliable data is a precondition for credible tendering.
2. Nominal freight rate is not total logistics cost.
3. Redundancy can be economically rational under uncertainty.
4. Partnership contracts require measurable outcomes and transparent governance.
5. Outsourcing should preserve the shipper’s strategic competence and exit capability.

Challenges and Limitations

Sourcing models are limited by imperfect forecasts, asymmetric information, changing fuel prices, uncertain regulation, and provider capacity constraints. Weighted scoring can create false precision if weights are arbitrary. SLA metrics can produce gaming, particularly when providers optimise measured outcomes rather than customer value. Long-term partnerships may reduce competitive tension, while repeated rebidding may destroy trust and discourage investment.

Managers should therefore combine quantitative analysis with scenario testing, market intelligence, contractual flexibility, and professional judgement. No contract can specify every future condition. Effective governance provides mechanisms for adaptation while protecting fairness, accountability, and commercial discipline.

Best-Practice Checklist

Before awarding a logistics contract, managers should verify that they have:

• defined the service requirement and customer promise;
• validated shipment and cost data;
• compared make, buy, and hybrid options;
• evaluated total rather than headline cost;
• tested peak, disruption, and demand scenarios;
• used transparent tender rules;
• checked provider capability, financial strength, and compliance;
• specified measurable SLAs and data definitions;
• aligned incentives with service, cost, safety, and sustainability;
• established governance, escalation, audit, and exit rights;
• protected data, critical knowledge, and continuity;
• planned implementation and supplier transition.

Chapter Summary

Logistics sourcing is a strategic design problem involving scope, market structure, governance, risk, and performance. Make-or-buy analysis should use relevant costs and include capacity, service, resilience, and capability considerations. Carrier selection requires reliable demand data, transparent tender procedures, total-cost evaluation, and a tariff that clearly defines surcharges and assumptions.

Contracts translate strategic intent into enforceable obligations. Effective SLAs specify metrics, denominators, measurement windows, exclusions, remedies, and governance. Incentive contracts should reward outcomes that providers can influence without encouraging harmful gaming. 3PLs execute logistics activities, while 4PLs and lead logistics providers coordinate broader networks; digital platforms reduce transaction costs but create data, liability, cybersecurity, and continuity issues.

Successful partnerships depend on preparation, balanced negotiation, multi-level governance, root-cause improvement, and ethical accountability. Technology and AI can improve visibility and decisions, but only when supported by sound data and human governance. The best sourcing decision is not necessarily the lowest-price option; it is the arrangement that creates sustainable total value while preserving resilience, compliance, and strategic control.

Key Terms

Make-or-buy analysis: Comparison of internal provision and external procurement using relevant costs and strategic criteria.

Relevant cost: A cost that changes as a consequence of the decision being evaluated.

Carrier selection: The process of evaluating and choosing transport providers.

Tender: A structured competitive procurement process for soliciting supplier offers.

Tariff: A schedule of logistics prices, rules, and applicable charges.

Accessorial charge: A charge for a service beyond the standard transport movement.

Total logistics cost: The combined cost of freight, handling, inventory, failure, administration, and related activities.

3PL: A third-party logistics provider performing contracted logistics activities.

4PL: A provider that integrates and orchestrates multiple logistics resources and providers.

Control tower: A coordination capability that provides visibility, exception management, and network oversight.

Service-level agreement: A contract section defining measurable service commitments and remedies.

Gain-sharing: An arrangement in which verified savings or improvements are shared between parties.

Carrier capacity commitment: A contractual obligation to provide specified capacity under defined conditions.

Supplier segmentation: Classification of suppliers according to business impact, risk, and supply-market difficulty.

Transaction-cost economics: A theory explaining governance choices through the costs of using markets and hierarchies.

Relational governance: Coordination based on trust, collaboration, adaptation, and repeated interaction.

Total cost of ownership: The full lifecycle cost of acquiring, operating, managing, and exiting an arrangement.

Control risk: The risk that outsourcing reduces visibility, authority, or operational influence.

Supplier performance management: The systematic measurement, review, and improvement of provider outcomes.

Platform provider: A digital intermediary that facilitates logistics transactions, information exchange, or coordination.

Review Questions

Short Answer Questions

1. What is the difference between a headline freight rate and total logistics cost?
2. Why should make-or-buy analysis include strategic and risk considerations?
3. What are the principal roles of a 3PL and a 4PL?
4. What information should an SLA metric define?
5. Why can a single-carrier strategy create resilience risk?

Long Answer Questions

1. Explain how transaction-cost economics and the resource-based view provide different perspectives on logistics outsourcing.
2. Design the major stages of a competitive carrier tender for a manufacturer with seasonal demand.
3. Discuss the advantages and risks of fixed-price, cost-plus, and incentive-based logistics contracts.
4. Explain how supplier performance management can move beyond dashboard reporting to continuous improvement.
5. Evaluate the ethical, regulatory, and cybersecurity responsibilities of a shipper using a digital logistics platform.

Analytical / Application Questions

1. An internal fleet has annual fixed costs of $435,000 and variable cost of $8.20 per shipment. An external provider charges $155,000 annually plus $11.00 per shipment. Calculate the break-even volume and explain two qualitative factors that could change the decision.
2. A carrier offers a 6% lower base rate but excludes peak capacity, applies several accessorial charges, and has weaker damage performance. Develop an evaluation approach that determines whether the offer creates genuine value.
3. Design a governance model for a 4PL coordinating three carriers. Identify operational, tactical, and strategic meetings; propose suitable metrics; and explain how conflicts of interest should be controlled.

Multiple Choice Questions with Answers

Question 1

Which cost is most appropriate for a make-or-buy comparison?

A. A sunk cost that will not change under either option

B. An avoidable cost that changes with the sourcing decision

C. A historical cost allocated arbitrarily across departments

D. A cost excluded because it is difficult to estimate

Correct Answer: B. An avoidable cost that changes with the sourcing decision

Question 2

What is the principal distinguishing role of a 4PL?

A. Owning every vehicle used in the network

B. Manufacturing the goods being transported

C. Orchestrating multiple logistics providers and resources

D. Setting government freight regulations

Correct Answer: C. Orchestrating multiple logistics providers and resources

Question 3

Which item should be specified in an on-time-delivery SLA?

A. Only the provider’s preferred reporting format

B. The measurement window and eligible-delivery denominator

C. A target without any definition of lateness

D. The shipper’s annual marketing budget

Correct Answer: B. The measurement window and eligible-delivery denominator

Question 4

A tariff is best described as:

A. A schedule of logistics prices and applicable charging rules

B. A list of employees authorised to drive vehicles

C. A warehouse floor plan

D. A carrier’s internal safety manual

Correct Answer: A. A schedule of logistics prices and applicable charging rules

Question 5

If internal provision costs 435,000 + 8.20Q and outsourcing costs 155,000 + 11.00Q, what is the break-even volume?

A. 50,000 shipments

B. 75,000 shipments

C. 100,000 shipments

D. 150,000 shipments

Correct Answer: C. 100,000 shipments

Question 6

Which incentive-contract design is most likely to create gaming?

A. Balancing cost with service and safety measures

B. Rewarding only the lowest transport cost

C. Using verified savings for gain-sharing

D. Defining measurement rules before implementation

Correct Answer: B. Rewarding only the lowest transport cost

Question 7

Why is demand data important in a logistics tender?

A. It allows bidders to price capacity using common assumptions

B. It guarantees that future demand will be exact

C. It eliminates the need for contract negotiation

D. It prevents all transport disruption

Correct Answer: A. It allows bidders to price capacity using common assumptions

Question 8

Which governance level normally addresses daily dispatch exceptions?

A. Operational governance

B. Strategic governance

C. Board governance only

D. Legislative governance

Correct Answer: A. Operational governance

Question 9

What is a major risk of a digital logistics platform?

A. It makes data ownership and cybersecurity irrelevant

B. It can create algorithmic, liability, and system-continuity risks

C. It eliminates the need for contracting carriers

D. It guarantees that every shipment is profitable

Correct Answer: B. It can create algorithmic, liability, and system-continuity risks

Question 10

Which principle best supports responsible outsourcing?

A. Transfer all accountability to the provider

B. Choose the lowest quoted rate regardless of consequences

C. Retain control of critical knowledge and govern external performance

D. Exclude labour and environmental issues from procurement

Correct Answer: C. Retain control of critical knowledge and govern external performance