4PL Intermediation: Exploring Dimensions of Social Capital

4PL Intermediation: Exploring Dimensions of Social Capital

Nejib Fattam (International University of Tunis, Tunisia) and Gilles Paché (Aix Marseille University, France)
Copyright: © 2017 |Pages: 22
DOI: 10.4018/978-1-5225-2133-4.ch004
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Abstract

The 2000s have seen the increased development of a different type of logistics service providers known as fourth party logistics (4PL) service providers. Those providers are now very involved in the short-term “transient” logistics needed by large retailers to organize the supply chain for some of their promotional activities that only last few days, or NGO to organize efficient relief operations after a disaster. Hence, 4PL firms can be considered dynamic assemblers of logistical resources they capture from partners in order to satisfy clients. A major criterion required for a successful 4PL intermediation is trust, as key element of social capital, and this chapter discusses the importance of trust in the efficient operations of this transient or ad hoc relationship between the 4PL and the client.
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Introduction

For large retailers and manufacturers, the outsourcing logistical activities to logistics service providers (LSP) has been an important issue for about thirty years. It led to the creation of powerful companies such as Kuehne+Nagel, Norbert Dentressangle, Geodis and FM Logistic, that offer their clients customized logistical services that integrate a multitude of components (transport, order preparation, stock management, creation of promotional packs, etc.). Within the logistics industry, the 2000s have seen a new actor emerge, called fourth party logistics providers (4PL firms), whose role is to conceive, organize and coordinate a supply chain on clients’ behalf. By mobilizing logistical resources from multiple partners (transporters, warehouse keepers, etc.), 4PL firms offer turnkey solutions that include product routing activities, logistical engineering (control of flows), management and monitoring of processes in terms of quality, performance, traceability, etc., including the evaluation, selection and supervision of partners. 4PL firms position themselves as an LSP, a “logistical resources assembler,” which plays an increasingly important role in supply chains (Cézanne and Saglietto, 2015, 2016).

Nowadays, 4PL intermediation is highly suited to numerous management situations. A large retailer organizes in a large-scale promotional operation its stores for about ten days to showcase products of an exotic country. A manufacturer launches a new product by installing a pop-up store on the square in front of the Gare de Lyon train station in Paris. An NGO sets up a one-off provisioning operation for people affected by a natural disaster. Such situations are common today, but what is less common is the fact that logistical operations most likely rely on transient logistics built for the occasion, which are deconstructed shortly after the operation. This raises the question of the memorization of various implemented logistical sequences (Paché, 2007). These transient logistics contrast sharply with the conventional logistical schemes built to manage recurring product flows, whose presence on various markets depends on repetitive logistics on a long-term basis, which may be set out in multi-year logistical contracts. Thus, transient logistics now represents one of the major evolutions of western economies; its analysis is essential to understand the functioning of 4PL intermediation.

4PL intermediation is an interesting application of the model proposed by Spulber (1999). This author distinguishes four functions of intermediation that justify the value of intermediaries in modern economies:

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