IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i16p10106-d888621.html
   My bibliography  Save this article

Fourth-Party Logistics Environmental Compliance Management: Investment and Logistics Audit

Author

Listed:
  • Hongyan Wang

    (College of Information Science and Engineering, Northeastern University, Shenyang 110819, China
    State Key Laboratory of Synthetical Automation for Process Industries, Northeastern University, Shenyang 110819, China)

  • Min Huang

    (College of Information Science and Engineering, Northeastern University, Shenyang 110819, China
    State Key Laboratory of Synthetical Automation for Process Industries, Northeastern University, Shenyang 110819, China)

  • Hongfeng Wang

    (College of Information Science and Engineering, Northeastern University, Shenyang 110819, China)

Abstract

To manage the environmental impact of logistics, we considered a logistics service supply chain consisting of a fourth-party logistics company (4PL) and a third-party logistics company (3PL), where the 4PL deputed the 3PL with the logistics tasks of a client. We examined the investment and pricing strategies adopted by the 4PL for the 3PL, and how factors such as logistics audits level and commitment to investment efforts affected the motivation of the 4PL’s strategy choice. The results showed that if the investment cost was low, the 4PL motivated the 3PL to make efforts by investment. Otherwise, the 4PL incentivized the 3PL by providing a high wholesale price or using a high investment level and medium wholesale price. In addition, when the rectification costs of the 3PL were sufficiently high, increasing the audit level could improve the probability of complying with environmental regulations.

Suggested Citation

  • Hongyan Wang & Min Huang & Hongfeng Wang, 2022. "Fourth-Party Logistics Environmental Compliance Management: Investment and Logistics Audit," Sustainability, MDPI, vol. 14(16), pages 1-20, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10106-:d:888621
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/16/10106/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/16/10106/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gong, Fengmei & Kung, David S. & Zeng, Tong, 2018. "The impact of different contract structures on IT investment in logistics outsourcing," International Journal of Production Economics, Elsevier, vol. 195(C), pages 158-167.
    2. Liu, Xiaotong & Zhang, Kai & Chen, Bokui & Zhou, Jun & Miao, Lixin, 2018. "Analysis of logistics service supply chain for the One Belt and One Road initiative of China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 117(C), pages 23-39.
    3. Kut C. So, 2000. "Price and Time Competition for Service Delivery," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 392-409, April.
    4. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    5. Weihua Liu & Xiaoyu Yan & Wanying Wei & Dong Xie & Di Wang, 2018. "Altruistic preference for investment decisions in the logistics service supply chain," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 12(4), pages 598-635.
    6. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    7. Sirish Kumar Gouda & Haritha Saranga, 2018. "Sustainable supply chains for supply chain sustainability: impact of sustainability efforts on supply chain risk," International Journal of Production Research, Taylor & Francis Journals, vol. 56(17), pages 5820-5835, September.
    8. Felipe Caro & Prashant Chintapalli & Kumar Rajaram & Chris S. Tang, 2018. "Improving Supplier Compliance Through Joint and Shared Audits with Collective Penalty," Manufacturing & Service Operations Management, INFORMS, vol. 20(2), pages 363-380, May.
    9. Choi, Tsan-Ming & Chiu, Chun-Hung, 2012. "Mean-downside-risk and mean-variance newsvendor models: Implications for sustainable fashion retailing," International Journal of Production Economics, Elsevier, vol. 135(2), pages 552-560.
    10. Liu, Wei-hua & Xie, Dong & Xu, Xue-cai, 2013. "Quality supervision and coordination of logistic service supply chain under multi-period conditions," International Journal of Production Economics, Elsevier, vol. 142(2), pages 353-361.
    11. Hsiao†Hui Lee & Cuihong Li, 2018. "Supplier Quality Management: Investment, Inspection, and Incentives," Production and Operations Management, Production and Operations Management Society, vol. 27(2), pages 304-322, February.
    12. Niu, Baozhuang & Dai, Zhipeng & Liu, Yaoqi & Jin, Yong, 2022. "The role of Physical Internet in building trackable and sustainable logistics service supply chains: A game analysis," International Journal of Production Economics, Elsevier, vol. 247(C).
    13. Niu, Baozhuang & Mu, Zihao, 2020. "Sustainable efforts, procurement outsourcing, and channel co-opetition in emerging markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 138(C).
    14. Wu, Qing & Mu, Yinping & Feng, Yi, 2015. "Coordinating contracts for fresh product outsourcing logistics channels with power structures," International Journal of Production Economics, Elsevier, vol. 160(C), pages 94-105.
    15. ManMohan S. Sodhi & Christopher S. Tang, 2018. "Corporate social sustainability in supply chains: a thematic analysis of the literature," International Journal of Production Research, Taylor & Francis Journals, vol. 56(1-2), pages 882-901, January.
    16. Emel Aktas & J. M. Bloemhof & Jan C. Fransoo & Hans-Otto Günther & Werner Jammernegg, 2018. "Green logistics solutions," Flexible Services and Manufacturing Journal, Springer, vol. 30(3), pages 363-365, September.
    17. Soo-Haeng Cho & Xin Fang & Sridhar Tayur & Ying Xu, 2019. "Combating Child Labor: Incentives and Information Disclosure in Global Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 692-711, July.
    18. Erica L. Plambeck & Terry A. Taylor, 2016. "Supplier Evasion of a Buyer’s Audit: Implications for Motivating Supplier Social and Environmental Responsibility," Manufacturing & Service Operations Management, INFORMS, vol. 18(2), pages 184-197, May.
    19. Nikoofal, Mohammad E. & Gümüş, Mehmet, 2020. "Value of audit for supply chains with hidden action and information," European Journal of Operational Research, Elsevier, vol. 285(3), pages 902-915.
    20. Nicolaj Siggelkow, 2002. "Misperceiving Interactions Among Complements and Substitutes: Organizational Consequences," Management Science, INFORMS, vol. 48(7), pages 900-916, July.
    21. Mohammad E. Nikoofal & Mehmet Gümüş, 2018. "Quality at the Source or at the End? Managing Supplier Quality Under Information Asymmetry," Manufacturing & Service Operations Management, INFORMS, vol. 20(3), pages 498-516, July.
    22. Schaefer, Scott, 1999. "Product design partitions with complementary components," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 311-330, March.
    23. Li Chen & Hau L. Lee, 2017. "Sourcing Under Supplier Responsibility Risk: The Effects of Certification, Audit, and Contingency Payment," Management Science, INFORMS, vol. 63(9), pages 2795-2812, September.
    24. Muhammad Kamran Khalid & Mujtaba Hassan Agha & Syed Tasweer Hussain Shah & Muhammad Naseer Akhtar, 2020. "Conceptualizing Audit Fatigue in the Context of Sustainable Supply Chains," Sustainability, MDPI, vol. 12(21), pages 1-11, November.
    25. Huang, Min & Tu, Jun & Chao, Xiuli & Jin, Delong, 2019. "Quality risk in logistics outsourcing: A fourth party logistics perspective," European Journal of Operational Research, Elsevier, vol. 276(3), pages 855-879.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiayu Chen & Anyan Qi & Milind Dawande, 2020. "Supplier Centrality and Auditing Priority in Socially Responsible Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1199-1214, November.
    2. Qi Feng & Chengzhang Li & Mengshi Lu & J. George Shanthikumar, 2022. "Implementing Environmental and Social Responsibility Programs in Supply Networks Through Multiunit Bilateral Negotiation," Management Science, INFORMS, vol. 68(4), pages 2579-2599, April.
    3. Liu, Weihua & Wei, Wanying & Choi, Tsan-Ming & Yan, Xiaoyu, 2022. "Impacts of leadership on corporate social responsibility management in multi-tier supply chains," European Journal of Operational Research, Elsevier, vol. 299(2), pages 483-496.
    4. Li Chen & Shiqing Yao & Kaijie Zhu, 2020. "Responsible Sourcing Under Supplier-Auditor Collusion," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1234-1250, November.
    5. Gao, Ruoxin & Yao, Shiqing & Yang, Ruina, 2024. "Responsible audit and consumer awareness under collusion risk," European Journal of Operational Research, Elsevier, vol. 314(2), pages 466-476.
    6. Retsef Levi & Somya Singhvi & Yanchong Zheng, 2020. "Economically Motivated Adulteration in Farming Supply Chains," Management Science, INFORMS, vol. 66(1), pages 209-226, January.
    7. Liang, Yong & Sun, Peng & Tang, Runyu & Zhang, Chong, 2023. "Efficient resource allocation contracts to reduce adverse events," Other publications TiSEM 0bcf44d9-d0ac-4231-beaf-8, Tilburg University, School of Economics and Management.
    8. Han Zhang & Goker Aydin & Rodney P. Parker, 2022. "Social Responsibility Auditing in Supply Chain Networks," Management Science, INFORMS, vol. 68(2), pages 1058-1077, February.
    9. Basak Kalkanci & Erica L. Plambeck, 2020. "Reveal the Supplier List? A Trade-off in Capacity vs. Responsibility," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1251-1267, November.
    10. Tim Kraft & León Valdés & Yanchong Zheng, 2020. "Motivating Supplier Social Responsibility Under Incomplete Visibility," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1268-1286, November.
    11. Chan, Hau-Ling & Wei, Xiaoyong & Guo, Shu & Leung, Wing-Hong, 2020. "Corporate social responsibility (CSR) in fashion supply chains: A multi-methodological study," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).
    12. Albert Y. Ha & Weixin Shang & Yunjie Wang, 2023. "Supplier Audit Information Sharing and Responsible Sourcing," Management Science, INFORMS, vol. 69(1), pages 308-324, January.
    13. Vibhuti Dhingra & Harish Krishnan, 2021. "Managing Reputation Risk in Supply Chains: The Role of Risk Sharing Under Limited Liability," Management Science, INFORMS, vol. 67(8), pages 4845-4862, August.
    14. Shi, Xiutian & Chan, Hau-Ling & Dong, Ciwei, 2020. "Impacts of competition between buying firms on corporate social responsibility efforts: Does competition do more harm than good?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 140(C).
    15. Jónas Oddur Jónasson & Kamalini Ramdas & Alp Sungu, 2022. "Social impact operations at the global base of the pyramid," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4364-4378, December.
    16. Feryal Erhun & Tim Kraft & Sytske Wijnsma, 2021. "Sustainable Triple‐A Supply Chains," Production and Operations Management, Production and Operations Management Society, vol. 30(3), pages 644-655, March.
    17. Zhang, Manman & Zhang, Juliang & Sun, Yue & Cheng, T.C.E., 2022. "How to outsource production considering quality management: Turnkey or buy-sell?," Omega, Elsevier, vol. 113(C).
    18. Hao Liu & Haodong Chen & Hengyi Zhang & Haibin Liu & Xingwang Yu & Shiqing Zhang, 2022. "Contract Design of Logistics Service Supply Chain Based on Smart Transformation," Sustainability, MDPI, vol. 14(10), pages 1-17, May.
    19. Lou, Yaqi & Feng, Lipan & He, Shuguang & He, Zhen & Zhao, Xiukun, 2020. "Logistics service outsourcing choices in a retailer-led supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    20. Yuyan Wang & Zhaoqing Yu & Liang Shen & Runjie Fan & Rongyun Tang, 2021. "Decisions and Coordination in E-Commerce Supply Chain under Logistics Outsourcing and Altruistic Preferences," Mathematics, MDPI, vol. 9(3), pages 1-23, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10106-:d:888621. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.