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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

Logistics Outsourcing:
A Review of Basic Concepts
Latifa Fadile*1, Mohamed El oumami*2, Zitouni Beidouri*3
*
Mechanical & Industrial Engineering
Laboratory Department, School of
Technology Casablanca, Hassan II
University of Casablanca, PO Box 8012,
Oasis, Casablanca, Morocco
[email protected]

[email protected]

[email protected]

Abstract— The proliferation of new information In recent years there has been a surge of
technologies, intense business competition, publications in the field of logistics outsourcing
transactions acceleration, rapid product obsolescence, which becomes a common phenomenon nowadays.
shorter product life cycle and changing customer In other words, a firm is to delegate all or part of its
needs and requirements, have pushed firms to logistics activities to a logistics services provider. It
reorganize, to revise their businesses strategies and to
is considered as an important factor for
refocus on their core businesses. In response to these
challenges, many firms start to outsource more of competitiveness and flexibility to answer the
their business functions including the logistics ones. requirements of new economic challenges. And it is
Logistics outsourcing has become a common argued that through outsourcing their logistics
practice by many firms, whether they are local or activities, firms can gain about 9% savings and
multinational, small or large. And it has attracted 15% enhancement in capacity and quality [1].
attention of both researchers and practitioners. Despite the growing body of the literature on this
The aim of this paper is to provide a general topic, efforts to synthesize the state of art of
overview of logistics outsourcing through presenting research on logistics outsourcing have been limited,
the state of the art research in this field, exhibiting the
and there is still a lot to be learned [2], because it is
different related concepts and based on that,
suggesting future research directions. growing in importance worldwide [3].
Keywords— Logistics outsourcing, Logistics Services,
This paper focuses on the main principles of
Logistics Services Provider.
logistics outsourcing, examines, in detail, the
logistics services subject of outsourcing, provides a
detailed categorization of logistics services
1. Introduction
providers and finally points out opportunities for
future research.
In today’s highly competitive, extremely variable
and really dynamic environment, many firms are
seeking solutions in all areas of their activities, also
2. Methodology
including, or perhaps above all, logistics. One of
the business's keys performance, currently, is the This paper review is focused on refereed journal
major role of the supply chain management in papers published within the 1996-2017 period in
guaranteeing fluid flows of materials and international journals in logistics, supply chain,
information throughout a firm’s supply chain. And supply chain management, operations management,
as supply chain management becomes more transport, distribution and marketing fields,
sophisticated and the difference between what collected principally from Emerald, ScienceDirect,
firms want to achieve and what they can do in- Inderscience and Jstor. Eventually 41 articles were
house continues to grow, firms begin to realize that selected and grouped according to the relevance of
doing the right thing becomes more interesting than the research view.
doing everything. Accordingly, they are becoming
better focused and more specialized by outsourcing
activities that are far from their core businesses.

______________________________________________________________
International Journal of Supply Chain Management
IJSCM, ISSN: 2050-7399 (Online), 2051-3771 (Print)
Copyright © ExcelingTech Pub, UK (http://excelingtech.co.uk/)
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

Table 1 indicates a list of journals in which the 41 The majority of these articles (26.83%) are published
articles related to logistics outsourcing were in International Journal of Physical Distribution &
published. Logistics Management, followed by International

Table 1. Distribution of articles by journals in the period of 1996-2017

Journal title 1996-2006 2007-2017 Total %

International Journal of Physical Distribution

7 4 11 26,83
& Logistics Management
International Journal of Logistics Systems
- 2 2 4,88
and Management
Supply Chain Management: An International
1 - 1 2,44
Journal
Strategic Management Journal 1 - 1 2,44
Logistique & Management - 2 2 4,88
Transport - 1 1 2,44
European Journal of Purchasing & Supply
1 - 1 2,44
Management
Industrial marketing management 1 - 1 2,44
Management Decision - 1 1 2,44
International Journal of Operations &
1 - 1 2,44
Production Management
International Journal of Logistics 1 1 2 4,88
Management
Omega - 1 1 2,44
International Journal of Production - 2 2 4,88
Economics
Journal of Business Logistics 1 1 2 4,88
Benchmarking: An International Journal - 1 1 2,44
Asia Pacific Journal of Marketing and - 1 1 2,44
Logistics
Benchmarking for Quality Management &
1 - 1 2,44
Technology
International Journal of Business Excellence - 1 1 2,44
Industrial Management & Data Systems - 1 1 2,44
Logistics Research - 1 1 2,44
Journal of Operations Management - 1 1 2,44
International Journal of Logistics Research
1 1 2 4,88
and Applications
Transportation journal 1 - 1 2,44
British Food Journal - 1 1 2,44
Technovation 1 - 1 2,44

Total 18 23 41 100

% 44 56 100

Journal of Logistics Systems and Management, Logistics Management, International Journal of

Logistique & Management, International Journal of Production Economics, Journal of Business
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

Logistics and International Journal of Logistics Firms are constantly interrogating between the
Research and Applications (4.88%), the others “make or buy”, choosing between performing in-
journals represent 2.44%. These 41 articles were house or outsourcing.
then classified according to their research nature: Outsourcing in general, according to [4], refers to
empirical vs conceptual. 27 articles (66%) are a firm that contracts with another firm to provide
empirical in nature while conceptual ones are services that could be performed by in-house
represented in 14 articles (34%) as shown in Figure employees. Sink and Langley (1997) have added
1. that outsourcing is the result of the new business
Articles trends that have pushed firms to revise their
priorities and focus their resources on a limited
number of services including logistics ones.
In fact, much has been written during the last two
34% decades about logistics outsourcing and various
Conceptual terms have emerged to illustrate this phenomenon,
66% Empirical such as third-party logistics [1], [5]–[8], contract
logistics [1], [6], [8], contract distribution [8], and
logistics alliances [8], which generally mean the
same thing.
In the literature, several definitions have been
Figure 1. Classification of logistics outsourcing proposed to clarify the concept of logistics
literature in terms of research nature outsourcing. Sink and Langley (1997) and Millen et
al. (1997) for instance, have argued that logistics
3. Logistics outsourcing outsourcing can be defined as the use of external
suppliers to perform some or all of a firm’s
logistics services which have been performed
Based on our investigation, the main different
traditionally in-house. This definition is supported
points discussed in the logistics outsourcing
by [9], who have appended that logistics
literature are: logistics outsourcing drivers,
outsourcing has become an increasingly powerful
challenges and theories. These latter are the subject
trend in modern firms due to the significant number
of the following section.
of benefits it brings.
Although there is no doubt about the rising
3.1 Logistics importance of logistics outsourcing in business
practices, a variety of drivers and challenges of this
Over the past several years, logistics concept has development have been identified in research.
acquired great importance and has been
theoretically and practically expanded. It was 3.3 Logistics outsourcing drivers
introduced to fulfill the increasing requirement of
an integrated process that manages the materials There are several drivers reported in the literature
flows from the source of supply to the point of like motivations to why firms outsource their
consumption. This process can be allocated into logistics services, such as reducing costs [1], [10]–
three parts: [17] (due to economies of scale resulting from
 Inbound logistics: that depicts the movement higher volumes obtained), focusing on core
and storage of materials received from business [1], [4], [9]–[11], [18], [19] (by giving
suppliers. more importance to services that the firm masters
 Materials management: that covers the storage and getting rid of those that do not represent
and flows of materials inside the firm. competitive advantages), improving customer
 Outbound logistics: that describes the services [11], [12], [14], [15], [17], [20] (in terms
movement and storage of finished products of reduced customer lead-time and higher quality of
from the final production point to the customer. services), increasing flexibility [11], [14], [15], [20]
All these terms and others associated to logistics (logistics services providers, through their
terminologies are illustrated in Figure 2. expertise, are able to deal with variations in
demand), sharing risks [4], exploiting external
3.2 Logistics outsourcing definition resources [18] and globalization [6], [12]. These are
some of the drivers that have contributed to
changes in the logistics landscape and have forced
The perimeter of firms is persistently evolving.
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

Raw Finished Packaging

Assembly
material product items

Production Final
Packaging Inventory Depot
process customer

Packaging Distribution
Labelling Warehouse
items center

Supply Raw material and product management Distribution

Suppliers Logistics Customers

Supply chain

: Information : Transport : Reverse

Figure 2. Logistics flows and terminologies adapted from [21]

more firms to become interested in outsourcing 3.4 Logistics outsourcing challenges

various elements of their supply chain to logistics
services providers. When outsourcing logistics services, firms can
Many other authors have discussed and studied enjoy many advantages but also have to be aware
this point by means of surveys in which logistics of the associated challenges. The most frequently
managers of user firms were asked about the logistics outsourcing challenges cited in the
drivers for outsourcing their logistics services. literature are the following: failure to select or
Table 2 summarizes the findings of six previous change logistics services providers [6], loss of
studies on the issue. control [6], [8], [17], [25]–[27], loss of customer
The findings of the six studies indicate that the feedback or contact [8], [17], dependency [25],
drivers motivating logistics outsourcing are poor services performance [17], poor coordination
numerous and can be distinguished according to efforts [17], poor information sharing [17], risk of
their operational or strategic nature. These drivers losing expertise [26] and risk of exchanging
converge with regard to the willingness of firms confidential data [6], [26], [27].
outsourcing their logistics services to restructure Min (2013) has enumerated the logistics
their global supply chain to answer the question outsourcing challenges respecting the outsourcing
of focusing on their core business. In other words, process. These challenges may include the
firms, nowadays, are often unable to satisfy the following: the identification of logistics services
technical and functional requirements of logistics that need to be outsourced, the continual evaluation
that has become too complex, they need support of logistics services providers’ performances, the
to improve the coordination of their operations, to coordination of outsourced logistics services
cope with fluctuations in volumes, to obtain lower through regular communication with selected
costs and to increase the quality of services or to logistics services providers, the preparation of a
customize their products in relation to market request for proposal (RFP) or request for quotes
expectations. They also took into account the fact (RFQ), the contract renewals and the establishment
that their success no longer depends on them of a long-term relationship with trustworthy
alone but on a network of partners able to offer logistics services providers.
them new skills and technologies. In the same context, [20] through their survey
conducted in 2010, have suggested a classification
of the challenges that the decision of outsourcing
logistics services may lead into four majors
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018
ones: the lack of logistics services provider’s services provider to meet the firm’s future growth
capabilities to meet a firm’s requirements, the needs and the logistics services provider’s lack of
incompatibility of a firm’s and a logistics services control and security.
provider’s IT systems, the failure of a logistics

Table 2. A summary of six previous studies on logistics outsourcing drivers

Drivers Identified by (Year)

Reduce logistics costs (58), increase flexibility (56),

improve service levels for the outsourced functions (52),
focus on core competencies (38), reduce capital
expenditures for logistics (31), availability of greater Sink and Langley (1997)
specialized expertise (27), improve the use of information
technology (20)
Cost reduction (69), service improvement (61), strategic
flexibility (57), focus on core competencies (53), change Van Laarhoven et al. (2000)
implementation (31)
Competencies of LSP (56), cost reduction (54),
operational flexibility (54), focus on core business (50),
Wilding and Juriado (2004)
avoiding investment (38), expansion to new markets (18),
labour considerations (6)
Focus on core competencies (69), success of firms using
3PL services (68), logistics cost reduction (62),
improved customer services (50), improve return of
assets (42), increase inventory turn (36), productivity
improvements (36), develop supply chain partnerships
(23), access to emerging technology (21), imbibe more Sahay and Mohan (2006)
flexibility in operations (17), access to unfamiliar market
(11), diverting capital investment (7), corporate
restructuring (4)
Cost reduction (78), reduction in capital investment (70),
enhance operational flexibility (60), access to new
technology (54), access to expertise (52), access to new Rahman (2011)
market (48), focus on core business (46)
Focus on core competencies (91), improve process
responsiveness (91), improve customer service (91),
improve conformance quality (91), improve process
capability and cycle time (91), reduce logistics costs (91), Rajesh et al. (2013)
improve process lead time (89), increase supply chain
flexibility (89)

Note: Figures in parentheses are percentages that refer to the share of firms outsourcing their logistics services
according to the drivers identified by the six studies.

3.5 Logistics outsourcing theories

3.5.1 Transaction Cost Economics
Logistics outsourcing or in-house decision has
TCE reports that a firm’s decision to outsource its
been studied from different angles due to its
logistics services is founded on minimizing the sum
multidisciplinary nature. Three theories are
of its transaction and production costs. The
generally discussed in the literature:
principle of this theory is that outsourcing to a
 Transaction Cost Economics (TCE).
logistics services provider will take place when
 Resource-Based Theory (RBT).
there is a possibility to reduce transaction costs.
 Network Theory (NT). This principle was explained by [28], who have
mentioned that if transaction costs are low, the
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018
activity should be purchased in the market Within this theory perspective, a firm that has the
(outsourced) and if they are high, the activity ability to coordinate well with other firms in the
would be internalized (managed in-house). network can create for itself a basis for reaching a
The actions of a firm to reorganize its process to competitive advantage, which provides another
outsource more services to a logistics services theoretical motivation or driver for the need for
provider and stay competitive cannot be logistics services providers.
explained by TCE alone. The decision of We have provided an overview on logistics
outsourcing logistics services engages outside outsourcing from the view of the three theories:
firms to carry out other organizational operations TCE, RBT and NT. Each theory provides its own
which leads to the Resource-Based Theory perspective with regard to the factors that influence
(RBT). the major place of the logistics outsourcing in the
supply chain. Although each of these three theories
3.5.2 Resource-Based Theory provides different views on the role of the logistics
outsourcing in the supply chain, none of them is
RBT points out that a firm can be seen as a set wholly sufficient by itself to provide a complete
of resources which are heterogeneously explanation. Rather, the three theories are
distributed across firms, with differences between complementary to one another and in a body, they
them that last over time [29]. The term provide full support for logistics outsourcing.
‘‘resources’’ has a broad meaning, in this context Figure 3 summarizes the essential of these three
it refers to not only tangible assets, such as theories.
materials, warehouses, equipment and plants but
also to intangible assets, such as knowledge,
know-how and organizational assets. The Transaction Cost Resource-Based
principle of this theory suggests that a firm has to Economics (TCE) Theory (RBT)
insure an efficient flow of the right type of Firms outsource Firms outsource
resources from its environment in order to survive their logistics to their logistics to
and enhance its performance [30]. a LSP in order a LSP in order
According to [31], all logistics services can be
to minimize their to access to a
outsourced, enabling the firm to access to a wide
transaction costs larger range of
range of resources it does not possess, to maintain
competitiveness in the marketplace and to get resources
access to complementary resources. However, the Network Theory
fact of having access to complementary resources (NT)
does not fully explain the reason why firms Firms outsource
outsource their logistics services to logistics
their logistics to a
services providers which leads to the Network
Theory (NT). LSP in order to
take advantages
of third party
3.5.3 Network Theory
relationships
NT emphasizes that outsourcing permits the
firm to manage its supply chain as a single entity Figure 3. Logistics outsourcing theories adapted
through the application of relationship building from [13]
and network coordination. This view supposes
that it is necessary for firms to exchange 4. Logistics services
resources [32]. The principle of this theory is that
a firm needs resources that are often controlled Today there is a renewed interest for the logistics
and managed by other firms, and these resources services field. The main reasons for this situation
can be procured only by making relationships and are the steady growth of the logistics services
interacting with these firms. market and the vital importance of logistics
NT provides an explanation for the growth of services providers in the supply chain. But before
logistics outsourcing and focuses on the detailing this concept, it proves important to start,
formation of relationships and alliances between first, with a brief overview of the notion of
firms. “service”.
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

A service, in general, can be defined as an action the first and the second level can be covered by the
performed to satisfy a requirement or to fulfill a concept of basic logistics services, and the other
demand. It is about incorporeal products such as levels can belong to advanced services, as proposed
accounting, insurance, consultancy, expertise or by [37].
transportation. And as reported by [33], a service To date, the research has largely tried to answer
is different from a good from the fact that it is: the question of “why” firms outsource their
intangible (because it is a performance rather than logistics, but gaps subsist concerning the question
an object and no transfer of possession or of “what” they outsource. The literature provides
ownership takes place when it is sold), almost no guidelines on which operations can be
inseparable (because its production and its outsourced. Therefore, the question of “what to
consumption take place simultaneously. In other outsource” remains one of the key questions in
words, a service is consumed during its research.
production and that’s what we call the In fact, from the original classic vision that
“servuction”), heterogeneous (because its focused on the outsourcing of transport and
performance often varies from supplier to warehousing services, today we have moved to a
supplier, from customer to customer and from day vision that puts a great emphasis on outsourcing.
to day) and perishable (because it cannot be However, it can be observed that the traditionally
stored). outsourced services, such as transport and
All these characteristics remain valid for warehousing, remain by far the main services of
logistics services which are numerous and which logistics services providers, even if they
cover all the supply chain’s links. Therewith, it is increasingly integrate other services into their
important to classify logistics services for offers.
outsourcing research. In fact, in recent years, The logistics services that can be outsourced are
logistics services have attracted much attention obviously numerous and range from execution
from research teams and various classifications activities, such as transportation, to planning
have been presented in the literature. activities, such as transportation planning [35].
Hsiao et al. (2009, 2010) for example, have According to [1], logistics services that can be
classified logistics services into four levels, outsourced are: warehouse management, shipment
making the distinction between execution and consolidation, fleet management, order fulfillment,
planning and control services in operations product returns, carrier selection, logistics
management: information systems, rate negotiation, product
 Level 1: it refers to transportation and assembly, order processing, inventory
warehousing services. replenishment, order picking, inbound and
 Level 2: it refers to value-added services like outbound transportation, labelling and packaging,
packaging and labeling. distribution, custom clearance and forwarding,
 Level 3: it refers to planning and control import and export management and customer
services, such as inventory management and services.
transportation management. And for [38], the most outsourced logistics services
 Level 4: it refers to distribution network are: transportation, packaging, transportation
management services. management, inventory management and
Whereas, for [25], [36] there are just three types distribution network design.
of logistics services depending on the needs and So as to have a clear and deeper idea about the
requirements of firms: basic services, customized frequently outsourced logistics services by
or value-added services and advanced or strategic manufacturers, we have analyzed twelve previous
services. studies on the issue. The chosen studies date from
There is another classification proposed by [37], 1997 to 2016 in order to identify trends in the
where they have distinguished two types of chronological progression of outsourcing of
logistics services: basic logistics services and logistics services over time.
advanced logistics services (See Figure 4 for Accordingly, we have decomposed logistics
more details). This classification was adopted and services into three categories:
confirmed as well by [11] who have grouped the  Category 1: it refers to basic logistics services.
three types of logistics services given by [25],  Category 2: it refers to value-added logistics
[36] into two ones. Actually, they have integrated services.
the second type (customized or value-added  Category 3: it refers to advanced logistics
services) into the concept of advanced services as services.
suggested by [37]. The same idea was applied to Table 3 summarizes the findings of these twelve
the classification proposed by [34], [35], in which studies.
 Category of Rahman (2011) Min (2013) Bakar and Jaafar (2016)
logistics services

Fleet management (41) Customs clearance (60) Freight forwarding (69)

Int. J Sup. Chain. Mgt

Shipment consolidation Port services (56) International transportation

(27) Freight forwarding (45) (68)
Single service

Handling focus

Shipment management (40) Domestic transportation

Basic logistics services

Execution of activities

Basic logistics Shipment consolidation (34) (56)

Stable service definition
Tangible service definition

services Freight brokering (33) Warehousing (23)

Inbound traffic control (20)
Outbound traffic control (16)

Order fulfillment (59) Freight bill payment (47) Reverse logistics (40)
Order processing (27) Import / export Invoicing (21)
Product returns (27) documentation (40) Order processing (21)
Value-added Product assembly / Product packaging / labeling Value-added services (17)
logistics services
installation (9) / marking (16)
Returned good (14)
Degree of complexity of services

Warehouse management Security management (24) Inventory management (15)

(64) E-logistics (19) Logistics IT system (15)
Carrier selection (23) Returned good management
Figure 4. Logistics services classification adapted from [37]

Advanced (14)
Table 3. A summary of twelve previous studies on logistics services

logistics services Warehouse management

(14)
Value-adding focus

Carrier negotiation and

Management of activities
Advanced logistics services

contracting (11)
Multiple and bundled services
Intangible outcome requirements

Inventory management (11)

Demand
Development and reengineering of solutions

Note: Figures in parentheses are percentages that refer to the share outsourcing these
of firmsforecasting / logistics services as identified by the twelve
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Vol. 7, No. 3, June 2018

studies. (Continued) planning (3)

 Int. J Sup. Chain. Mgt
Category of Sohail and Sohal Hong et al. (2004) Sadiq Sohail and Saad Sahay and Mohan (2006) Ansari and
logistics services (2003) Al Abdali (2005) Modarress (2010)

Shipment Freight forwarding Shipment consolidation Outbound transportation Inbound freight (86)
consolidation (58) (61) (28) (56) Outbound freight (74)
Fleet operations (49) Transportation (44) Inbound transportation (52) Customs brokerage
Warehousing (38) Custom clearing and (68)
Distribution (26) warding (51) Freight consolidation
Basic logistics
services Outbound warehousing (34) (58)
Consolidation (29)
Fleet management (29)
Inbound warehousing (29)
Distribution (23)
Outbound traffic control (16)

Freight payment (42) Value-added services Freight payment (19) Labelling and packaging Freight bill payment
Order fulfillment (11) Order fulfillment (17) (29) (43)
(30) Product assembly / Order picking (27)
Value-added Product returns (20) installation (15) Reverse logistics (22)
logistics services Order processing Order fulfillment (20)
(15) Order processing (19)
Product assembly / Assembly / installation (13)
installation (11)
Carrier selection (39) Logistics information Carrier selection (33) Import / export management Warehousing
Rate negotiation (37) systems (14) Inventory replenishment (34) management (65)
Warehouse Logistics system (14) Inventory management (23) IT logistics (62)
Advanced management (33) design (11) Information systems (10) Rate negotiation (22) Consulting (37)

Vol. 7, No. 3, June 2018

logistics services
Inventory Selected manufacturing (16) Global logistics (28)
replenishment (24) Inventory management (11)
Logistics information Demand forecasting /
systems (21) planning (3)

61
Note: Figures in parentheses are percentages that refer to the share of firms outsourcing these logistics services as identified by the twelve studies. (Continued)
 Int. J Sup. Chain. Mgt
Category of Millen et al. (1997) Boyson et al. (1999) Van Laarhoven et al. (2000) Larson and Gammelgaard (2001)
logistics services

Fleet management (53) Warehouse operations Storage (87) Outbound transportation (82)
Shipment consolidation (29) Line haul (81) Warehousing (72)
(42) Fleet management (17) Emergency transport (70) Logistics planning (64)
Network based transport (70) Inbound transportation (62)
Basic logistics
Tracking and tracing (64) Shipment consolidation (62)
services
Merge-in-transit (36) Track and trace (44)
Inbound warehousing (29) Fleet management (42)
Distribution (23)
Outbound traffic control (16)
Order fulfilment (33) Freight payment (57) Order picking (79) Customs clearance and duty
Product returns (33) Packaging (15) Inventory administration (64) processing (61)
Order processing (16) Product returns (15) Labelling (52) Pick and pack (59)
Product assembly & Order processing and Customisation (26) Labelling/Packaging (51)
Value-added installation (13) fulfilment (10) Assembly (19) Returns/Reverse logistics (51)
logistics services Freight payment (9) Invoicing(18) Order processing (47)
Order entry (11) Invoicing (46)
Payment processing (31)
Assembly (23)
Cross-docking (21)
Warehouse management Carrier selection (24) Forecasting (2) Inventory management (61)
(47) Rate negotiation(24) EDI (56)
Carrier selection (27) Information systems (20) Web-based linking (56)
Advanced Logistics information Shipment planning (17) Inspection/Quality control (39)
logistics services
systems (22) Inventory management Information systems management (33)

Vol. 7, No. 3, June 2018

Inventory (8) Management reports (33)
replenishment(13) All supply chain Supply chain design (29)
Rate negotiation(11) functions (10)

62
Note: Figures in parentheses are percentages that refer to the share of firms outsourcing these logistics services as identified by the twelve studies.
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

The following conclusions can be drawn from the firm’s supply chain (from the first supplier to
Table 3: the final customer), also because he is actively
 Logistics services have diversified over the involved in managing the interfaces between its
time. various components. For [13], a logistics services
 All the twelve studies indicate that basic provider has been seen as an “orchestrator”. The
logistics services are the most outsourced, term “orchestration”, in this context, signifies the
because many firms still prefer to keep most of activity of managing and coordinating to facilitate
the logistics process in-house and outsource the supply chain management best practices.
only the most basic services of warehousing Thus, the evolution of the definitions has followed
and transport to logistics services providers. the evolution of the services that the logistics
 Advanced logistics services have a low priority services providers offer in order to succeed within a
in outsourcing, despite the large-scale very competitive marketplace [21]. Logistics
investments made by logistics services services providers, nowadays, strive to become
providers in information technologies. large in size with the ability to offer advanced
 Almost all logistics services can be outsourced, logistics solutions. And the literature has
because for each logistics service that conceptualized these developments by
researchers have embodied in their surveys, distinguishing different types of logistics services
there has always been at least one firm providers based on their ability to adapt their
outsourcing that service. services to their customers and their ability to solve
the logistics problems they face.
EJ (1993) peeps out to be the first to suggest two
5. Logistics services provider basic types of logistics services providers:
operations-based third party logistics vendors and
For reasons of rationalization of practices and
information-based third party logistics vendors.
with a view to focus on core business, firms tend to
Later, the same author has modified this
outsource their logistics services. This massive use
classification by suggesting the following four
of logistics services outsourcing has led to the
types of vendors (logistics services providers):
emergence of a new actor, the logistics services
 Asset-based vendors: they refer to firms which
provider which now occupies a central place in the
provide physical logistics services through the
supply chain and has begun to diversify his offers,
use of their own assets. It is generally about a
ranging from conducting operations to piloting the
trucks fleet or a group of warehouses or both.
whole supply chain.
The term logistics services provider is applied as  Management-based vendors: they refer to
a synonym for similar terms such as outsourcer, firms which are involved in providing logistics
carrier, forwarding firm, transport firm, logistics management services through databases
services firm and third-party logistics provider [40]. systems and services consulting. These firms
And it has been defined in numerous ways in the do not own transportation or warehouse assets.
literature. Hertz and Alfredsson (2003), for  Integrated vendors: they refer to firms that own
example, have stated that a logistics services assets, typically trucks, warehouses or a
provider ( the outsourcer ) is an external provider combination of both. However, they are not
who manages, controls, and carries out logistics limited to the use of their own assets and will
services on behalf of a firm (the service user). For contract with other logistics services providers
[5], a logistics services provider is a service if required.
provider who is able to assume some or all of a  Administration-based vendors: they refer to
firm's logistics services. And [14], in his definition, firms which mainly provide administrative
has added a very important point which is the management services such as freight payment.
added value provided by the logistics services This classification has been, in part, adopted by
provider to a firm’s business. [44]. These latter have allocated logistics services
In fact, the logistics services provider should not providers into two categories: asset-based logistics
be considered as an additional intermediary but he services providers and non-asset-based logistics
needs to be treated as a separate industry [16]. services providers. And [45] have suggested a
Actually, many authors, in the literature have classification closer to that suggested by [43]. In
supported this vision. Roveillo et al. (2012), for fact, they have distinguished three types of logistics
instance, have looked at the logistics services services providers:
provider as a “logistics integrator”, because his  Classical logistics services providers: they
presence is of paramount importance throughout carry out physical operations related to the
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

transport, handling, warehousing and storage  Second Party Logistics (2PL):

of intermediate or finished products of their When manufacturers began to extend their
customers. business geographically, it became tough for them
 Value-added logistics services providers: they to manage all the logistics operations by own. Then
include the management of industrial or the concept of Second Party Logistics (2PL) came
commercial operations (for example delayed in the market. These 2PL manage the simple
differentiation), administrative operations (for execution of physical operations related to transport
example invoicing) and informational [45], and consequently they offer a single function
operations (for example tracking and tracing of in the supply chain as depicted in Figure 6.
products).
 Dematerialized logistics services providers:
they have no physical resources and they build
their services by mobilizing resources from Manufacturer 2PL
2P Final customer
specialized subcontractors and ensuring their
overall coherence through a total control of
information flows.
There is another classification given by [41], Transport
where they have distinguished between four types operations
of logistics services providers:
 Standard logistics services providers: they Figure 6. Schematization of the role of Second
perform the most basic operations of logistics Party Logistics
such as picking, warehousing and distribution.
 Service developers: they provide advanced  Third Party Logistics (3PL):
value-added services to their customers such as Thereafter, the 2PL develop their capabilities in
tracking and tracing, cross docking and handling logistics functions and also integrate
specific packaging. different services provided before separately, which
 Customer adapters: they offer services at the leads to the emergence of a new family of logistics
request of the customer. They improve services providers which is the Third Party
logistics services and do not develop new ones. Logistics (3PL). These 3PL can provide in addition
to transport and warehousing, value-added
 Customer developers: they are the highest level
operations such as cross-docking and delayed
of logistics services providers. They integrate
differentiation as indicated in Figure 7.
themselves with customers and take over entire
logistics functions.
Conventionally, the lexicon of logistics terms
proposes distinguishing the five main families of Final customer
Manufacturer 3PL
2P
logistics services providers (1PL, 2PL, 3PL, 4PL
and 5PL) present on the market, according to the
complexity of their system of offer:
 First Party Logistics (1PL): Transport operations + Warehousing operations
This term is used for those manufacturers that + Value-added operations
carry out their logistics by themselves. They own
all logistics assets and manage all their logistics
Figure 7. Schematization of the role of Third Party
operations in-house as shown in Figure 5.
Logistics

 Fourth Party Logistics (4PL):

IPL Fourth Party Logistics (4PL) is the next evolution
Final customer
(Manufacturer of logistics services providers and it was developed
) on the basis of 3PL. 4PLs differ from the other
providers (1PL, 2PL and 3PL) in the sense that they
Management of logistics operations in-house have no tangible assets. They have no physical
means (trucks or warehouses) and their role is
Figure 5. Schematization of the role of First Party similar to that of logistics consultants who provide
Logistics engineering services. The concept of 4PL should
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

operations and his position in relation to other

not be confused with that of LLP (Lead Logistics
providers. This is illustrated in Figure 9.
Provider). Actually, the two providers offer the
From the figure below it can be deduced that a
same logistics services but the existing difference
4PL can play three different roles depending on
lies in the means used. A 4PL, as we have seen, is
his relationship with his customers and other
a non-assets provider, whereas a LLP is a mixed-
providers:
assets provider because he carries out his
 Synergy Plus: in this role, the 4PL is placed
customers logistics services by using his own
alongside one or more logistics services
resources and those of other LSPs.
providers (2PL and 3PL) towards several
In the literature, a 4PL can be seen as a
customers. It is about cooperation between the
“transaction center” [46], as a “supply chain
other logistics services providers and the 4PL,
integrator” [32], [47], as a “business process
in a relationship that allows taking advantage
outsourcing (BPO) provider” [48] and as a
of the resources and competencies of each
“coordinator” [21] by dint of his ability to manage
one.
the resources of its own organization with those of
complementary logistics services providers as can  Solution Integrator: in this role, the 4PL is
be seen in Figure 8. considered as a solution integrator, because
he can manage and build an integrated
supply chain with many other logistics
n 2P
2PL services providers (2PL and 3PL) towards
Final a single customer.
Manufacturer 4PL
2P
customer  Industry Innovator: in this role, the 4PL
n 2P
3PL
synchronizes a group of customers in order
to bring the supply chain to high efficiency,
thanks to technologies and operational
strategies.
Management of the global supply chain Referring to the definitions presented
previously, we can deduce that a 4PL is a
Figure 8. Schematization of the role of Fourth Party response to the multiplication of actors in the
Logistics supply chain. He designs both the logistics
architecture and the information system
This term of 4PL was filed by the consulting applying to the firm's integrated processes.
cabinet Accenture as a registered trademark in
However, he does not execute in person the
1996. And the definition given at the time was as
follows: «the 4PL is an integrator that assembles corresponding physical flows, which are
its own resources, capabilities and technology and entrusted to other logistics services providers.
those of other service providers to design and His principal mission is to coordinate the
manage complex supply chain ». network of partners of the integrated firm
And in 2000, the same cabinet proposed a (suppliers, distributors, customers, 2PL, 3PL,
segmentation of the action of 4PL in three etc.) as illustrated in Figure 10.

Synergy Plus Solution Integrator Industry Innovator

LSP1 LSP1
00 LSP2 LSPn
0
4PL
4PL C 4PL
LSP2

C1 C2 Cn LSPn
00 C1 C2 Cn

4PL : 4PL Organization LSP : Logistics Services Provider C :

Customer
Figure 9. The three roles of a Fourth Party Logistics adapted from Accenture
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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

Management of logistics 1PL

operations in-house (Manufacturer)

Logistics outsourcing

2PL
2P 4PL
2P 3PL
2P

Transport operations +
Transport operations Management of the global
Warehousing operations +
supply chain
Value-added operations

Final customer

Figure 10. Schematization of the links between the different types of LSPs

 Fifth Party Logistics (5PL):

The fifth and the final family of logistics services He possesses no typical assets, he has no physical
providers is the Fifth Party Logistics (5PL). 5PL is a presence but he forms a web-based system that
new concept in logistics outsourcing and it is about provides information to the range of participants
the management of all parties of the supply chain in under his control [25].
conjunction with e-business. Other terms in the The logistics services providers’ families present
literature are used to depict this family of logistics in the literature demonstrate the extent of the skills
services providers, such as “virtual logistics services of the actors in this sector and the variety of
provider” and “info-mediary”. The major focus of a situations encountered. While logistics services
5PL is to offer automated and intelligent systems providers are primarily regarded as
able to improve the performance of the supply chain “subcontractors” in a first phase, they became, in a
and the key of success of this emerged family is the later stage, “co-designers” and even “designers”
integration of information technologies and and “managers” of the supply chain, in an
computer systems. Like the 4PL, a 5PL is almost innovative and creative approach. Figure 11 gives
wholly virtual. a summary of these main logistics services
providers’ families.

5PL Management of all parties of the supply

E-Business chain in conjunction with e-business

4PL Management of the whole supply chain

Network integrator

3PL Management of complex services

Forwarding /Contract logistics

2PL Management of transport operations

Forwarder

1PL Management of logistics by the

Manufacturer manufacturer

Figure 11. A summary of the main logistics services providers’ families

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Int. J Sup. Chain. Mgt Vol. 7, No. 3, June 2018

6. Conclusion and future research

suggested research agenda », Int. J. Phys.
In this paper, 41 articles on logistics outsourcing, Distrib. Logist. Manag., vol. 41, no 1, p.
published in the period of 1996-2017, are analyzed 16‑31, févr. 2011.
in depth to identify the main related concepts in the [3] R. Rajesh, S. Pugazhendhi, K. Ganesh, D.
literature: logistics outsourcing drivers, challenges Yves, S. C. Lenny Koh, et C. Muralidharan,
and theories, logistics services and logistics « Perceptions of service providers and
services providers. customers of key success factors of third-
Thus, based on the present review, classification party logistics relationships – an empirical
and analysis of the articles, some suggestions for study », Int. J. Logist. Res. Appl., vol. 14, no
future research can be taken into account. Indeed, 4, p. 221‑250, août 2011.
despite the considerable development achieved [4] R. Rajesh, K. Ganesh, et S. Pugazhendhi,
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claiming to be exhaustive, some suggestions are J. Bus. Excell., vol. 6, no 1, p. 37–58, 2013.
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empirical in nature and are generally related to logistics services », J. Bus. Logist., vol. 18,
a specific region or country. Moreover, we no 2, p. 163, 1997.
have noticed a total absence of studies in the [6] M. Abdur Razzaque et C. Chen Sheng,
Moroccan context, whether within firms or « Outsourcing of logistics functions: a
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would be interesting to do more studies in this Logist. Manag., vol. 28, no 2, p. 89‑107,
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