Contracting for Logistics Services: A Critical Appraisal of the Outsourcing Process

Abstract

This chapter seeks to critically revisit existing third party logistics (3PL) purchasing literature with the aim of bridging the gap between academic research and industry practice regarding logistics outsourcing. This is achieved by focusing on hitherto under-emphasized issues (in the academic literature) relating to the role of the service provider, as opposed to that of the buyer, in 3PL exchange design and management, and the dynamics of the outsourcing process. Drawing on recent developments and practices in the 3PL industry and two in-depth case studies of logistics outsourcing, the study suggests that, under increasing complexity and uncertainty levels, the service provider in interaction with the buying firm significantly influences service definition, design, and evaluation throughout the outsourcing process. The exchanged service is not determined from the outset of the outsourcing process but it is (re)shaped in an iterative and ongoing fashion. Based on such findings, the chapter calls for increased emphasis on a dynamic and inter-organizational (buyer-service provider) perspective into the study of logistics outsourcing processes.