Third Party Logistics : Outsourcing Logistics in Partnerships

Abstract: The purpose of this dissertation is to contribute the body of knowledge of the outsourcing of logistics services in integrated relationships between a shipper ( e.g. a manufacturer) and a logistics service provider (e.g. a transport firm).My two studies cover the scope of third-party logistics and the interaction between the shipper and the service provider as well as the set-up of the partnerships. The focus of the dissertation could be expressed by the following questions:• Why do service buyers outsource logistics activities in the form of partnerships?• What are the long-term effects of logistics partnerships?• How are the effects of the logistics partnerships achieved?• Which factors influence the success of a logistics partnership?The method used has been a combination of four case studies and surveys of 47 European shippers and 59 US shippers. The empirical material has been analysed primarly by the use of transaction cost theory.Expected positive cost and service effects are important driving forces for the outsourcing of logistics. Linked to the cost aspects is also a desire to reduce investments. It could be a question of transforming fixed costs to variable, or to facilitate fast and radical restructuring of supply chains. Finally one of the single most important driving forces is the shipper's ambition to concentrate on core business.Logistics partnerships have been observed to have a positive effect on the following four areas at the shippers: cost, service, restructuring of supply chains, and control. The shippers believe that efficient operations, economies of scale and scope, and provider knowledge, have had positive effects on costs and service. A structural change could be achieved in a short time, as the shipper has to make only small investments in the distribution system, which can facilitate greater changes, also gaining the shipper flexibility in capacity. By outsourcing logistics activities it might also be possible to improve the measurability of cost and service performance.The success of logistics partnerships will, according to the shippers' opinions, be positively influenced by well-defined requirements and procedures, and by communication on all levels. From an operational point of view, the success of logistics partnerships is positively influenced by a low level of uncertainty and/or a high dedication of resources used.