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The role of an integrated logistics and procurement service offered by a 3PL firm in supply chain

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  • Jingcheng Yang
  • Kai Yu

Abstract

As an integrated part in supply chain, third-party logistics (3PL) has intrinsic connections with upstream manufacturer and downstream retailer. Using a Stackelberg game model consisting of a manufacturer, a retailer and a 3PL to explicitly capture the interaction of firms' operations decisions, this paper attempts to better understand the role of integrated logistics and procurement service (ILPS) provided by a 3PL firm in supply chain management. Compared with a supply chain without ILPS, a Pareto region, in which all the supply chain members benefit from working with a 3PL firm offering ILPS, is disclosed. We also show that the Pareto region is more likely to occur with higher demand uncertainty. Finally, we reveal that the manufacturer obtains the highest profit in the Pareto region, and that the retailer can improve his profit share as the standard deviation of demand increases.

Suggested Citation

  • Jingcheng Yang & Kai Yu, 2019. "The role of an integrated logistics and procurement service offered by a 3PL firm in supply chain," Journal of Management Analytics, Taylor & Francis Journals, vol. 6(1), pages 49-66, January.
    • Handle: RePEc:taf:tjmaxx:v:6:y:2019:i:1:p:49-66
    DOI: 10.1080/23270012.2019.1568921
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    Cited by:

    1. Yongping Xie & Yixuan Yin & Wei Xue & Hui Shi & Dazhi Chong, 2020. "Intelligent supply chain performance measurement in Industry 4.0," Systems Research and Behavioral Science, Wiley Blackwell, vol. 37(4), pages 711-718, July.
    2. Liyuan Zhu & Nan Liu, 2023. "Game theoretic analysis of logistics service coordination in a live-streaming e-commerce system," Electronic Commerce Research, Springer, vol. 23(2), pages 1049-1087, June.
    3. Hua, Shengya & Sun, Shuxiao & Liu, Zhongyi & Zhai, Xin, 2021. "Benefits of third-party logistics firms as financing providers," European Journal of Operational Research, Elsevier, vol. 294(1), pages 174-187.
    4. Zhou, Honggeng & Li, Ling, 2020. "The impact of supply chain practices and quality management on firm performance: Evidence from China's small and medium manufacturing enterprises," International Journal of Production Economics, Elsevier, vol. 230(C).
    5. He, Peng & He, Yong & Tang, Xiaoying & Ma, Shigui & Xu, Henry, 2022. "Channel encroachment and logistics integration strategies in an e-commerce platform service supply chain," International Journal of Production Economics, Elsevier, vol. 244(C).

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