Article
Third Party Logistics – From An Interorganizational Point Of View
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.