Outsourcing purchasing services by Third Party Logistics providers: a conceptual model

Abstract

The international markets of third party logistics (3PL) are quite competitive. Most 3PL providers offer the basic services, but rarely perform value-added activities. The primary focus of this research is on third party purchase as value-added services that can be beneficially offered by 3PL providers. This paper mainly discusses transaction cost theory, third party logistics, and group purchasing organisation. A proposed framework for evaluating third party purchase offered by 3PL providers is given based on transaction cost theory. a Masters in Statistics with specialisation in operations research. He has over 30 years of research and applied research experience in Quality and Optimisation in industries and business. His current research includes alternative approaches to difficult combinatorial problems arising in supply chain management, navigating in benchmarking spaces, and interface between operations management and information systems.

Motivations and barriers to the adoption of green supply chain practices among 3PLs

“…The literature on this topic has been recently reviewed by Marasco (2008). Overall, an increasing number of contributions have focused on 3PLs so far (e.g., Ansari and Modarress, 2010;Shi and Arthanari, 2011), and this reflects the increasing popularity of logistics outsourcing and the subsequent growth of 3PL services.…”

Developing third-party purchase (3PP) services: New Zealand third-party logistics providers’ perspectives

“…While developing further value-added services, the scope of their activities will often expand from their traditional transport and warehousing based functions to encompass other elements of the value chain by providing differentiated services (Hong & Liu, 2007). One method which is increasingly gaining attention and recognition as a value-added service for customers is the inclusion of procurement activities on behalf of their key customers (Shi & Arthanari, 2011) -this is known as third-party purchasing (3PP).…”

“…The integration encourages 3PLs to enhance the benefits to clients regarding profit, inventory control, and flexibility (Power et al, 2007). One emerging service that has been proposed to reduce difficulties for clients and increase value-added services for them has been the aggregation of the management of many of the procurement functions over the supply chain -the concept of 3PP (Shi & Arthanari, 2011). The concept of 3PP broadly means that the customer firm outsources the purchasing function to the 3PL, who then have the role of a group purchasing agent.…”

“…This research is important as while growth is strong and many firms have not fully exploited outsourcing (Minonne & Turner, 2012;Palugod & Palugod, 2011), little is known about how 3PLs perceive the opportunities afforded by the development of these types of value-added services. While there are existing theoretical frameworks that highlight these opportunities (Shi & Arthanari, 2011), there is little empirical evidence that would support service providers' efforts to develop these value-added services. Existing research has focused on the 3PL providers in the emerging market of China (Shi et al, 2016a); however, there are important and significant logistics infrastructural differences between markets that can influence performance (Jiang, Frazier, & Heiser, 2007;Nguyen & Tongzon, 2010) and so further research in other markets is required.…”