Using fourth party logistics outsourcing to manage courier distribution

M.Com. (Business Management)Abstract: As a result of globalisation, manufacturers and retailers are finding increased competition in world markets. Companies have been forced to find innovative ways to maintain competitive advantages. Supply chain management is receiving increased attention as an area providing opportunities for better efficiency and improved customer service, and consequently is seen as a source of both competitive advantage and improved profitability. This worldwide trend in globalisation has led many organisations to outsource their logistics functions and focus on their core competencies. Outsourcing, therefore, has become an important means to improving logistics efficiency overall. This study focuses on the introduction of a fourth party into the logistics outsourcing relationship, specifically with regard to the management of courier distribution. The objective of this study is to determine if the use of a fourth party logistics (4PL) model to manage the courier distribution for a major retailer in South Africa is able to achieve ongoing cost savings. This research entails a case study of Company X (Pty) Ltd, one of the largest non-food retailers in South Africa. Distribution data covering a ten year period was analysed, and the findings extracted were then verified through semi-structured interviews of key personnel involved in the implementation and ongoing management of this contract. The main conclusion drawn from this study is that the use of a 4PL outsourcing partner by Company X to manage courier distribution was able to achieve consistent cost savings over an extended period. In addition, this occurred in an environment of weak economic growth and declining volumes, both of which had a dampening effect on the final savings achieved