Drivers of Fifth Party Logistics (5pl) Service Providers for Supply Chain Management

Abstract

The process of the evolution trajectory of the management logistics function is tracked in the context of the theory and practice of a networked approach to supply chain management (SCM). Issues around the main competitive forces are driving reforms in deregulation, globalisation, and technological innovation resulting in fundamental changes in the way SCM is conceived and practiced. Emerging trends, such as the increasing need for strong interfirm networks, are identified as shaping the next generation of logistics resulting in management services. Important shifts are evident in purchasing and customer service functions, resulting in new management methods, business contexts, and transportation modes. Fundamental advances in SCM are largely attributable to the widespread adoption of electronic commerce in all business arenas, especially transportation and distribution. These developments have stimulated a focus on the service of logistic management as the basis of businesses cost competitiveness. Current issues and future trends are identified which are promoting firms to adopt Fourth Party Logistics (4PL) service outsourcing. Competitive pressures are leading to speculation about the future form of potential '5PL' services. Economic imperatives, technological innovation and managerial competence in the provision advanced logistics services are likely to succeed in environments capable of engendering high levels of commercial and social trust between the firms and their partner SCM service providers.