Third party logistics – from an interorganizational point of view

TLDR

Third‑party logistics (3PL) adoption is spreading across industry, driven by transaction‑cost and network‑theory concepts that frame its development. The study constructs a theoretical framework to explain the motivations behind 3PL arrangements. Transaction‑cost analysis identifies when 3PL contracts are preferable to market or hierarchy, while network theory explains cooperative dynamics, and the framework is illustrated through three case studies. 3PLs serve not only cost‑saving purposes but also strategic advantages by enhancing service and flexibility, and success depends on human‑resource investment and attitude change.

Abstract

The adoption of third party logistics is becoming widespread in the industry. Discusses various definitions of third party logistics and the theoretical background for the development of third party arrangements, including both transaction cost theory and network theory. A theoretical framework is then developed to explain the role and motivation for this development. Transaction cost analysis (TCA) explains the conditions under which third party agreements become preferable to the classical choice between market and hierarchy. Network theory explains the dynamics in third party cooperations. Three specific cases of third party logistics are included and analyzed on the bases of the theoretical framework. Concludes that third party logistics are not merely a means to cost efficiency, but also as a strategic tool for creating competitive advantage through increased service and flexibility. Furthermore, the discussion points to the importance of investment in human resources and change in attitudes as part of the success of third party arrangements.