Original Research

Sustainable cost reductions obtained by using a fourth party logistics provider

Lance S. Kiggell, Peter J. Kilbourn, Gert J. Heyns
Journal of Transport and Supply Chain Management | Vol 15 | a606 | DOI: https://doi.org/10.4102/jtscm.v15i0.606 | © 2021 Lance S. Kiggell, Peter J. Kilbourn, Gert J. Heyns | This work is licensed under CC Attribution 4.0
Submitted: 14 May 2021 | Published: 25 November 2021

About the author(s)

Lance S. Kiggell, Department of Transport and Supply Chain Management, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa
Peter J. Kilbourn, Department of Transport and Supply Chain Management, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa
Gert J. Heyns, Department of Transport and Supply Chain Management, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa

Abstract

Background: In a rapidly changing global business environment, the outsourcing of logistics activities to fourth party logistics (4PL) service providers is growing in popularity as a strategy for efficiency and customer service improvements. However, there are very few empirical studies on logistics outsourcing performance. In addition, there is a lack of information on the effectiveness of a 4PL model, especially from a South African perspective.

Objectives: The main purpose of this study was to determine if the use of a 4PL model to manage the courier distribution for a major retailer in South Africa was able to achieve ongoing cost savings for the client.

Method: This research entails a case study of a large non-food retailer in South Africa. Secondary quantitative distribution cost data covering a 10-year period was analysed, using a time series method. The findings were verified through semi-structured interviews of key personnel involved in the implementation and management of the outsourcing contract.

Results: The outsourcing of courier distribution management resulted in the targeted cost savings for the client organisation to be exceeded. Cost savings were consistent over a 10-year period.

Conclusion: The findings of this study supports the theory that the outsourcing of logistics functions can result in sustainable cost savings for clients if done properly. It adds to the limited body of independent evidence that exists on the matter of sustainable results obtained from 4PL outsourcing agreements.


Keywords

fourth party logistics; logistics outsourcing; contract management; courier distribution; supply chain management; sustainable cost savings

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Crossref Citations

1. Competitiveness of the Shared Economy Model for Sustainable Management of Logistics Systems
Keisha LaRaine Ingram
Applied Business: Issues & Solutions  vol: 1  first page: 10  year: 2022  
doi: 10.57005/ab.2022.1.2