3PL Providers Research Articles

The Impact of Third-Party Logistics Performance on the Logistics and Export Performance of Users: An Empirical Study

Third-party logistics (3PL) denotes ‘a relationship between a shipper and third party which, compared with basic services, has more customised offerings, encompasses a broader number of service functions and is characterised by a longer-term, more mutually beneficial relationship’. Previous studies on 3PL generally fall into two categories. The first group examines the willingness of shippers (users), and the respective benefits and costs to them, of using 3PL services, whereas the second group concentrates on devising winning strategies for 3PL providers to better fulfil the requirements of users. This paper attempts to provide new insights on the relationship between 3PL providers and shippers by examining the impact of the performance of 3PL service providers on the user logistics and export performance of manufacturers and traders in Hong Kong. The results reveal that the timeliness of the service; pricing; and the quality of delivery of 3PL service providers are positively related to the users’ logistics and/or export performance. However, performance in customised supplementary services is not related to any aspect of the users’ logistics or export performance. The overall findings suggest that users should focus primarily on the timeliness of 3PL services, followed by the quality of delivery and pricing when selecting service providers. On the other hand, 3PL service providers are advised to focus primarily on core logistics activities, that is timely deliveries and quality handling at reasonable prices, and to downplay offerings of customised supplementary services unless they are engaged in long-term relationships with the users.

Management guidelines for third-party logistics

There is a significant amount of useful yet fragmented research in third-party logistics (3PL). This article seeks to review, summarize, and structure this 3PL research to provide a reference guide for managers interested in exploring, building, or improving logistics outsourcing opportunities. Topics covered include reasons to outsource, functions to outsource, 3PL provider evaluation, implementation and relationship success factors, contracts, and performance measures.

Linking financial performance to strategic orientation and operational priorities

PurposeAims to investigates the relationship of strategic choices of pure cost‐, pure differentiation‐, or a combination‐strategy on a composite measure of financial performance for third‐party logistics (3PL) providers in Hong Kong. In addition, it seeks to identify the importance of operations priorities underlying the respective adopted strategy, as well as the importance given to future competitive challenges for each strategy.Design/methodology/approachUses cluster analysis, ANOVA.FindingsLogistics service providers classified to follow different strategies report different financial performance, with companies adhering to the combined strategy of cost and differentiation performing best, followed by pure differentiation companies, which in turn outperform pure cost‐, commodity driven‐companies.Research limitations/implicationsFuture research may be widened to include customer, and not solely competitor, perceptions. Further studies could elaborate on technology adoption, information sharing, strategy formulation, operations practices, and benchmarking. Other studies could focus on the differences between high and low performers in terms of business performance, and the processes that enable low performers to become high performers; as well as comparing logistics strategies and practices between different countries.Practical implicationsThird‐party logistics providers, solely competing on cost and offering basic services only, need to differentiate to gain improved financial performance. Logistics companies can improve along multiple operational dimensions to achieve competitive advantage in the marketplace. Research identifies operational areas to be emphasized to drive strategy according to strategic orientation, as well as generic factors that will drive future logistics management in Hong Kong.Originality/valueLinking perceived financial performance to strategic choices of pure cost‐, pure differentiation‐, or a combination‐strategy for 3PL providers in Hong Kong.

The Technology Learning Mechanism during the Conversion Process to 3PL Providers in Chinese Logistics Companies

The Technology Learning Mechanism during the Conversion Process to 3PL Providers in Chinese Logistics Companies

Is the glass half full or half empty?

PurposeThis paper provides a comparison of users and providers of third‐party logistics (3PL) services with respect to relationship marketing elements, such as trust and communication, as well as relationship marketing outcomes, such as retention and recovery.Design/methodology/approachConstructs for the relationship marketing elements and outcomes were derived from the extant literature and modified to reflect the nature of 3PL arrangements. The relevant data were collected from separate, but consistent, mail surveys that were sent to users of 3PL services as well as providers of 3PL services.FindingsThe results indicate statistically significant differences between 3PL users and providers across eight of nine relationship marketing elements, with the lone non‐significant comparison involving the communication construct. There are also statistically significant differences between 3PL users and providers for each of the four relationship marketing outcomes.Research limitationsAlthough the present study utilized previously validated relationship marketing elements and outcomes, future research could examine other relationship marketing elements and outcomes. Future research could also investigate relationship marketing issues through dyads/matched pairs of 3PL users and providers.Originality/valueThis manuscript examines 3PL with respect to theories and/or frameworks that comes from outside the logistics discipline, an approach advocated by Stock. Moreover, the paper adds to Moore's 3PL/relationship marketing research by investigating relationship elements and outcomes. The current paper adds to the rather limited literature that incorporates both 3PL user and provider perspectives.

The Use of Third-Party Logistics Services by Large American Manufacturers: The 2004 Survey

Abstract This article examines the findings of a survey conducted during 2004 of large American manufacturers that addressed their use of third-party logistics (3PL) services. The survey data show that the percentage of those companies using such services is at a record high level, and that users are giving a steadily increasing percentage of their logistics operating budgets to 3PL service providers. Many 3PL relationships are long-term in nature, and the service providers continue to deliver value to their clients. The movement of large American manufacturers into other geographies for sourcing, manufacturing, and sales has led many of their 3PL service providers to expand into those areas to support those activities. During the next several years, the possible adoption of radio frequency identification (RFID) technology by many of these manufacturers will pose significant challenges to their 3PL providers in attempting to meet the related needs of their clients.

The Use of Third-Party Logistics Services by Large American Manufacturers: The 2004 Survey

Abstract This article examines the findings of a survey conducted during 2004 of large American manufacturers that addressed their use of third-party logistics (3PL) services. The survey data show that the percentage of those companies using such services is at a record high level, and that users are giving a steadily increasing percentage of their logistics operating budgets to 3PL service providers. Many 3PL relationships are long-term in nature, and the service providers continue to deliver value to their clients. The movement of large American manufacturers into other geographies for sourcing, manufacturing, and sales has led many of their 3PL service providers to expand into those areas to support those activities. During the next several years, the possible adoption of radio frequency identification (RFID) technology by many of these manufacturers will pose significant challenges to their 3PL providers in attempting to meet the related needs of their clients.

Using e-commerce to gain a competitive advantage in 3PL enterprises in China

This paper presents an investigation of how the selected foreign and domestic Third-Party Logistics (3PL) enterprises in China use e-commerce to gain competitive advantages. The study starts with an introduction that illustrates how China's economic growth will hinge on the ability of logistics service providers to offer a cost-effective and efficient supply chain. Using e-commerce, 3PL providers now supply more and more value-added services to their customers. With the advent of the boom in the Chinese 3PL industry, both foreign and domestic 3PL providers came and tried to capture the huge market. This represents a theoretical background for conducting research among these 3PL enterprises. The theoretical literature on e-commerce and 3PL logistics is reviewed in order to give a framework of relevant theories and contemporary findings. Four in-depth case studies (two foreign 3PL providers and two 3PL domestic providers) are examined and eight semi-structured interviews are conducted with the senior managers and IT managers in these selected cases. A comparison of the present applications of e-commerce in the case enterprises and the difference in the ways they use e-commerce to gain competitive advantages are made. However, due to the different nature and technological level, the foreign 3PL providers could take a totally different strategy. The study also provides an insight into how they develop their technology and marketing strategies in terms of their own strengths and target markets. That could be a useful reference to relevant researchers or firms.

A framework for evaluating third-party logistics

3PL providers with advanced IT are expected to lower logistics costs and integrate the supply chain with increased productivity and growth. Here, a set of criteria for choosing the most suitable provider.

Selection of Third-Party Logistics (3PL): A Hybrid Approach Using Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP)

The use of third-party logistics (3PL) providers is becoming prevalent. The relationships associated with 3PL are typically more complex than any traditional logistics supplier relationships and they are truly strategic alliances. These relationships have become a popular way to enhance an organization’s flexibility in meeting rapidly changing market conditions, focus on core competencies, and develop long-term growth strategies. This study offers an understanding of the criticality of various 3PL selection issues and provides a list of 26 selection criteria. Using the real- life case of KVIC (Khadi and Village Industry Commission, India) organic food sector, it proposes a hybrid approach of interpretive structural model (ISM) and analytic network process (ANP) for a proper selection of 3PL service providers. This paper discusses the implications of the results in a real-life context. Further, managerial insights developed through the use of ISM- and ANP-based complementary approaches uncover the scope for improvements in the quality of supply chain practices. This paper summarizes the developed understanding of supply chain practices and identifies a few inherent limitations of the used approach.

Evaluating the Performance of Third‐Party Logistics Arrangements: A Relationship Marketing Perspective

SUMMARYBy 2005, users of third‐party logistics services may be spending an average of nearly one‐third of their total logistics budgets (compared to 20 percent today) to support 3PL services (Gooley 2000). Yet, very little research has examined managerial activities that might influence the performance of these logistics outsourcing relationships. Over the past several years, the management approach that views relationships as key assets of the organization has gained increased prominence in the priorities and practices of many companies (Gruen, Summers and Acito 2000). The current study utilizes this relationship marketing perspective as the basis for evaluating the perceived performance of third‐party logistics arrangements. In particular, the current study examines the influence of six key relationship marketing dimensions on a customer's perceptions of their 3PL provider's performance. In so doing, the article builds on research (e.g., Goldsby and Stank 2000) that focuses on potential linkages between logistical performance metrics and managerial activities. The results suggest linkages between relationship marketing activities and the perceived performance of the 3PL arrangement.

A supply chain diagnostic tool

How can a third‐party logistics (3PL) provider decide whether or not there is a viable opportunity to serve the needs and desires of potential clients? To answer this question, a tool is needed that can help determine if there are problems, inefficiencies, or needed improvements in a client's, or a potential client's, supply chain that the 3PL can effectively address. Most diagnostic tools currently in use in supply chain analysis are large, quantitative, and time‐consuming. This paper describes a qualitative diagnostic tool designed for more rapid analysis. The research and managerial implications of this tool are also discussed.

The decision-making on an in-house logistic division’s operation strategies

This paper mathematically proves under which situations a firm should run its in-house logistic division as a cost center, as a profit center, or as an outsourced logistic to 3PL providers. By studying the effects of queuing delays and users’ related costs on the decision of a time-sensitive in-house logistics division, this research concludes that to maximize the value of an organization as a whole, the in-house logistics division should work as a deficit center. If operated as a profit center, an in-house logistic division will bring quicker service to its customers, but at a higher price and lower utilization.

CEO Perspectives on the Current Status and Future Prospects of the Third- Party Logistics Industry in the United States: The year 2003 Survey.

This article, based upon a survey conducted in 2003, examines the views of the CEOs of 20 of the largest U.S. based third-party logistics providers concerning such matters as the industry’s dynamics, opportunities, and problems. In addition, it covers their opinions related to a number of important developments such as 3PL provider focus on specific industry verticals, the increasing customer selectivity of providers, the impact of the recent recession on the 3PL industry, and the movement of 3PL providers into China. CEOs estimates of future company and industry revenue growth rates are also provided. Finally, the implications of this data to both users and providers of 3PL services are also explored.

LOGISTICS SERVICE PERFORMANCE: ESTIMATING ITS INFLUENCE ON MARKET SHARE

The research examines the relationships among three dimensions of logistics service performance (operational, relational, and cost performance), customer satisfaction, customer loyalty, and market share. Perceptions of customers of third party logistics (3PL) providers are used to assess 3PL performance constructs. Of the three dimensions of service performance, relational performance is the single most important factor in engendering customer satisfaction. The research supports the strong relationship between customer satisfaction and loyalty identified in previous studies. It also establishes an empirical link between customer loyalty and a measure of market share that is anchored by objective, secondary data.

Applying collaborative transportation management models in global third-party logistics

With the trends of e-commerce and globalization occurring in the economy, an effective global supply chain (GSC) management has become a business necessity for a multinational corporation seeking to secure market share. Although there has been much discussion on how a company gains competitive advantages through GSC management, the physical distribution of order fulfilment is less discussed in the literature. Global third-party logistics (3PL) has developed into an alternative for the needs of global distribution. In this paper, the authors present a new application of collaboration in GSC execution, namely collaborative transportation management (CTM), which can be used to reduce delivery time and improve delivery reliability. A case study is illustrated: The application of CTM by a 3PL provider in a notebook computer GSC. The implementation results show that the delivery cycle time and the total cost are simultaneously reduced.

The Use of Third-party Logistics Services by Large US Manufacturers, The 2000 Survey

This paper examines the findings of a survey of the chief logistics executives of Fortune 500 manufacturers concerning their use of third party logistics services (3PL). The survey determined that, as a group, their use of those services has reached an all-time high, as has the percentage of their logistics budgets being given to 3PL providers. The typical 3PL user identified in this survey uses a wide variety of those services and buys them from multiple providers. While many 3PL users also rely upon 3PL providers for information technology support, less than one-third of them use those providers to support their E-commerce initiatives. Users are generally well satisfied with the impact of 3PL services on their companies, and are most satisfied with the impact on logistics costs, logistics service levels, and customer service.

Transition or Transformation?: Emerging Freight Transportation Intermediaries

During the past 2 years, traditional freight transportation intermediaries, which include freight forwarders, brokers, and third-party logistics (3PL) providers, have been joined by new intermediaries. The main drivers in the development of these new companies are advances in information and communications technologies, development of web-based or online freight transportation marketplaces, and worldwide emergence of business-to-business electronic marketplaces and business-to-consumer e-tailers. Advances in information technology enable many new operational paradigms and, potentially, the efficient integration of supply chains. These new companies are examined, including their potential benefits and costs of shifting from traditional 3PL to these online service providers. Also addressed is the extent to which changes in the industries appear to be more of a transition than a large-scale transformation.

The Year 2001 Survey: Ceo Perspectives On the Current Status and Future Prospects Of the Third Party Logistics Industry In the United States

On a global basis, the use of third party logistics (3PL) services has grown dramatically in recent years. This article is based on a survey of the CEOs of 20 of the largest U.S. based 3PL providers. It examines their views concerning such matters as industry dynamics, opportunities and problems. It also documents their views related to such current industry issues as the merger and acquisition movement, the impact of the economic slowdown on their business, and their projections of company and industry growth rates.