Model of Tiering in Third Party Logistics with a Service Parts Distribution Case Study

Abstract

In this article we have expanded Professor James Cooper's discussions of 'mega carriers' for one-stop shopping of logistics services to a multi-tiering model to describe different alliances in third-party logistics. To be able to support the increasing demands of shippers, a third-party logistics provider must have a portfolio with many different services, either in-house or available from a supplier network. As a consequence, third-party logistics cannot be reduced to an alliance between a single shipper and a single provider. Both the shipper and the provider are also involved in other alliances and these often strongly interact with the shipper-provider relationship. Furthermore, this relationship varies across the different phases of third-party logistics projects: design, development, implementation, and operation. Therefore, in order to broaden the picture and to extend the modelling of Cooper and others, we suggest a five-layer model with users and four tiers of logistic service providers for the description and analysis of logistics and transport industry issues in general and third-party logistics in particular. This conceptual model is then illustrated and validated by a case study describing the implementation of an alliance which involved the redesign of a European distribution operation for service parts.