The Flagship Research Journal of International Conference of the Production

and Operations Management Society
Volume 1• Number 2 • July - December 2008

Collaboration and Competition between 4PL and 3PL:
A study of a fast-food supply chain
Mauro Vivaldini

Professor of Logistics
Methodist University of Piracicaba (UNIMEP)
mvivaldini@mbbrasil.com.br

Sílvio R. I. Pires

Professor of Operations and Supply Chain Management
Professor at Methodist University of Piracicaba (UNIMEP)
sripires@unimep.br

Fernando Bernardi de Souza
Professor of Operations Management
Professor at São Paulo State University (UNESP)
fbernardi@feb.unesp.br

ABSTRACT: This paper analyzes, in the form of a case study, the coordination of ten 3PL (Third-Party Logistics) by
a logistics leader (4PL - Fourth-Party Logistics). The study contributes to the understanding of the factors that
differentiate 3PL as collaborators and as potential competitors, revealing that the services they render complement
each other within the same operation.
Keywords: Supply Chain Management; Collaboration; Third-Party Logistics; Fourth-Party Logistics

ture. Additionally, the
paper highlights the
factors that differentiate
Over the last few decades, the consolidation and
4PL
and
3PL
as
practice of Supply Chain Management (SCM) concompetitors
or
cocepts has led the logistics service provider business
operators.
(3PL – Third-Party Logistics) to play a more comprehensive and integrated role with its clients. Fol- The study does not
lowing this trend, new configurations of this role intend to define a
have appeared, such as logistics integrators (4PL – position about the 4PL
Fourth-Party Logistics), which combine the manage-but to contribute to a
ment and operation of supply chain logistics (Sahay, better understanding of
the subject. Because it is
2003).
a relatively new theme
In this context and based on a case study, this article within the literature, we
focuses on the theme, examining the management bybelieve this is an
a 4PL of ten other logistics service providers (3PL) opportune moment to
for a large multinational fast-food chain operating in explore it in greater
Brazil. Although this study deals with a specific casedepth, particularly since
there are still a variety
involving 11 companies, it reveals several characterof definitions of conistics of this new type of logistics service operation. cepts and ideas, or even
INTRODUCTION

Therefore, based on the case analysis and on the 4PL of propositions of what
a 4PL actually does.
theory, the authors aim to compare a practical case
with descriptions of 4PL within the logistics litera- Based on a survey about

Logistics Providers by
Lan-gley
and
Allen
(2005), the next three to
five years will see a
growing trend for the
adoption
of
4PL
solutions (or logistic
integrators). The reason
for this is that companies
are increasingly adopting
the concepts of greater
integration within their
supply chain pro-cesses,
thus
requiring
4PL
service providers. These
providers
should
therefore offer multiple
services
of
logistics
information, operational
knowledge
and
relationships, as well as
participate directly in the
in-tegration of supply
chain processes.

17 .

. In an adaptation of the topics suggested by Bolumole (2001) and Jaafar and . However.management and the ing to the area. 2001). conducted. as well as In its initial phase. services. are still focusing specifically on issues relating to the theme of quite rare within the 3PL and 4PL and how they act within the ambit of the literature. the experience of maintaining close con-tact the client’s business. it can be stated that outsourcing with a LSP is an exception. In a complementary vision.role of the logistics evant and up-to-date sources. this prox-imity between the In the case of LSP service authors and the companies did not permit to (logistics providers). It is comfortable outsourc-ing less also important to mention that studies on the 4PL important activities provider. Silvio R. the methodological approach adopted was the case study. Furthermore. this work was founded on bib. without which adopts the 4PL management stan-dard in itsinvolving a strong operations. the logistics service relation with more provider of the fast-food chain (4PL) and ten other strategic processes of companies (3PL) were analyzed by the authors for about SCM. provider. In this This study explored phase. 2000). whether or characterize the procedure as action research. About 75% of the out-sourced activities are support services. C International Conference of the Production and Operations Management Society tegration with the management of the RESEARCH METHOD supply chain.29. (2) 4PL. 2001). but alsoAccording to Lonsdale Cox (2000). Pires. they (Coughlan and Coghlan. articles from symposia and books relat. 1991. In addition to helping the authors gain an under-standingfrequently in support of the companies. this interplay facilitated a comparisonactivi-ties than in the of the factors outlined by the theory and those observed primary chain activities. in this initial phase. M. consid-ering that many logistic activities are very important for companies’ businesses. In the second phase. Svensson (2003) believes that companies have been reducing the number of subcontractors and concentrating an increasing number of activities at one subcontractor. During the study. still not clearly defined (Yin. show that with the companies for a lengthy period enabled the Surveys companies feel more authors to garner a large amount of information and about numerous considerations concerning the pro-cess. interaction with and outsourc-ing has several employees clarified doubts and aligned the occurred more theoretical research to the practical observations. that is. the authors also analyzed the theme based on basic literature available different sources of information. pp 17 . who believes outsourcing should take into consideration the logistics provider’s competence to integrate the activities and sub-activities contracted. According to Berglund et al. and specialized national and international journals and(3) cooperative periodicals. Initially. Despite the logic of those studies. This opinion is shared by McIvor (2003). Gil. since manag-ers believe it is more advantageous to assume risks involving activities not fundamental to the compa-ny’s business (Lonsdale and Cox. generally investigates a Characterized by a contemporary subject within its real context. how it was implemented and what the including logistics results reached (Yin. and Souza.on: (1) 3PL. supply chain (SC). 1994). (1999) two factors lead companies to outsource: the size of the demand and the size of the supply chain. In this kind of method. the research aimed to identify in the literature infor-mation LITERATURE REVIEW concerning these agents and their role in the SC (Lakatos and Marconi. the outsourcing is a article fulfills a key characteristic of case studies. I.practical cases involving liographic research as a methodological approach. This augments their dependence on the supply chain. such as theses. are involved directly in In addition. Bernardini: Collaboration and Competition between 4PL and 3PL 18 Journal of Operations and Supply Chain Management 1 (2). and the variety of organizational frontiers between the subject and the real context are trans-formations. this subject. Therefore. two years. F.3PL Providers ology the study is empirical. consolidated practice in its focused to clarify the reasons for a de-cision process several sectors. in practice. since its not they take over research method protocol was not strictly followed primary activities. always prioritizing academically rel. This period enabled the authors to understand not only each company’s business. 2002). logistics management The main object investigated in this case study is a large focused on storage and multinational fast-food supply chain operating in Braziltrans-port.Vivaldini. as well as the chances that the LSP will engage in greater number of activities for one company or supply chain. its behavior. During the research. particularly with respect to its inrather than more vital ones.

2004). If the the LSP based on relationprice of the service or activity is a determining factor. the terms logistics activities and functions for a company.is the same. I. and storage and transportation activities. not investing in logistics is a way to definitions services. Christopher and fragmented suppliers base. The LSP that used outsourcing to obtain ranges from the simplest 19 activity to the most sophisticated logis-tics solutions (Stefansson. the activity to be outsourced and the qualifications of its staff. services and activities in the final results of selling the Murphy (2005) point out lack of more product to the consumer. maintaining a great-er dependence on outbound processes than on in-bound ones. logistics (Bolumole. Sinkovics and Roath (2004) pointed out that the rela-tionship between the LSP and a manufacturer leads to operational flexibility that increases the competi- . origi-nated from a lack of specialization in distribution processes. LSP. from the standpoint of the comprehensive for LSP hiring company. mixture of terminology to 7• Greater flexibility and efficiency in logistics op-describe the dif-ferent services rendered by erations. Towill. M. and the fact reduce cost. Hence. second only to its experience. It is clear that this position the cannot disregard the fact that. through its activities. but Stefansson (2005) proposes the name “logistics ser-the function or activity vices intermediary”. same activities or present Authors such as Christopher and Towill (2001). nomenclature. but used are different.baum et al. is theoretical structure of essential in the development of the supply chain. the LSP is an instrument of that studies tend to partnership in the sup-ply chain due to its know-how adopt a particular view and infrastructure. (2005) 5• Coordinating logistics activities in a wider context.supply chain integration tivations and reasons for a company to outsource realized that the latter logistics services and the possible reasons why theycould be seen as part of the chain. However.. 3• The presence of a complex supply chain due to a 2001. 4• Increasing product restitution (reverse logistics). Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2). 2005). Stefansson identified from the 6• Improving and controlling the quality of logistics literature an apparent services and activities. F. that these differences are simply a matter of The initial tendency of outsourcing logistics process-es. Regardless of the relation in the logistics flow. Svenson (2003) points out that companies tend to sub-contract more activities in the outbound flow and fewer in the inbound flow. of them. Later. for researches have shown the reduction in logistics assets as one of the main causes of outsourcing these services. Silvio R. The Logistics Service Market Logistics is a key element used by companies to develop systems within their supply chains and which companies that use LSP providers consider a key element in the development of their supply chains (Rafele. most of the terms include the Technology (ICT) and logistics knowledge. contributing to the emergence of the LSP. 8• Access to new Information and Communication LSPs.29. companiesoutsourced activities are highly complex. since it ignores the importance of integrated LSP. (2005) ternal organization that carries out all or part of the pointed out. it is naturally more difficult for a company that does not invest in such assets to assume logistics operations instead of out-sourcing them. In a study that discusses This opinion contradicts the reasons presented and and defines the discussed that this provider. The degree of centered particularly on the basic logistics functions of outsourcing varies. 2001). and slight modifications in the Knemeyer and Murphy (2005) point out that price is portfolio of services one of the most important criteria in the selection of a offered. Organizations opt for a partner: that outsourced for 1• Concentrating efforts on their own business and operational and costgaining new markets.Vivaldini. in-dicating tary services. related reasons restricted 2• Reducing logistics costs and avoiding invest-mentsthe LSP’s involve-ment to the basic functions of in assets unrelated to the company’s busi-ness. below is shown a summary of the mo. C International Conference of the Production and Operations Management Society advantages and facilitate Rafiq (2005). and Souza. For Ayers (2001). As AshenLangley and Allen (2005) consider the LSP an ex. assigning it other complemen. commercial then there may be limitations and deficien-cies in the ship between users and Knemeyer and chain. pp 17 . LSPs have gained space and rendered the client more de-pendent. Pires.

satisfies its clients’ needs and expectations better than the LSP has changed in its competitors do. 8• Move toward logistics coordination solutions as a 4PL.29. Ratten (2004) highlighted that many logistics alliances have been made based on technological changes. improvement in technology and abil4PL Providers ity to provide the The LSP usually intends to maintain its services and necessary services. F. it gains confidence and enlarges its area of proposed by companies action. LSPs have expanded their services since 2• Increase the portfolio 1994. The LSP should be able to generate competencies for itsfollowing are clients. operational flex-rating new activities ibility is the most noteworthy factor.1• Evolve into a solution erates a learning curve. information and knowledge communication. business-es have services through a focused on services at the end of the supply chain. I. more activities. creating a partnership of logistics solutions. 9• Search for long term relationships. the market in the services provided. Thus. Thus. 7• Act in global markets. market. the market tends to provide more the client’s plans for opportunities for logistics companies dedicat-ed to integration and broader projects aimed at the coordination and understand the integration of activities. that dem-onstrates the manufacturers can leverage and improve theirprogress and maturity of capacities by working with LSP providers. In this case. as well as coordination. C International Conference of the Production and Operations Management Society Langley and Allen (2005) tive orientation through the impact of logistics on asserted that. 6• Continue to acquire companies and expand busi-nesses. such larger number of as equipment installation. a movement increasing the possibility of retaining the client. etc. Therefore. They should mainly synchronize ac-tivities between agents of the supply chain (aiming to gain and integrate knowledge) and operate with information and communication technology.Vivaldini. the LSP accumulates roles as it extends itsexpertise and dedicated relationship with its clients. (2003) see the logistics industry as aimprovements.. creating new abilities and provider for the competencies for the LSP. focusing on lo-gistics Halldórsson and Skjott-Larsen (2004) assert that the coordination. reach-ing a higher level of opera-tions. In this context. the fact that the manufacturer does However. based on con-tracts with duration exceeding two years. and Souza. 2005).the LSP. Chapman et al. kit activities (expand assembling. Likewise. and improved data transmission and transactions.expectations for the LSP: and should also be able to learn from its clients. turns to solutions Thus. Bienstock (2002) pointed out that the LSP should think strategically in . repair ser-vices. building up a wider portfolio of activities. thus providing greater efficiency and productivity for the chain. a better relationship is built. continue working as a logistics solutions provider. In the become involved in long run. the tendency in the contracts between LSPs needs (provide the and their clients is for greater geographic cov-erage and right so-lutions. Silvio R. clients expect to not need to develop logistics capabilities helps it achieve greater skills in internally and also improves its relationship with the service development. supply chain. Bernardini: Collaboration and Competition between 4PL and 3PL 20 Journal of Operations and Supply Chain Management 1 (2). to these authors. which has been considered a differential 3• Continuous factor for the competitiveness of LSPs (Lieb. each new client or change of clients gen. 4• Focus on the client’s However. This view indicates the LSP’s flexibility in the the supply chain through market with regard to the potential services it offers. relationship Chapman et al. This market trend has led services for its LSPs to focus on a specific segment of companies or clients) businesses. pp 17 . decisionmaking and planning. If a company required by the market. 2005). and to build Usually. seeking to fulfill their clients’ expecta-tions of of outsourced dedicated services. such as 4PLs (Lieb. relevance information and classical example of birth and development of a new in vital service. alliances with companies of the technology sector may be necessary for the LSP. which is a challenge for LSPs. (2003) reported that logistic organi-zations are redesigning their structures and relationships. for understanding and trust in the operational process andthese authors. Accord-ing these opera-tors. M. Pires. More recently. recent years. transformed from a transport service involvement of integraconcept aimed at serving all the logistics re-quirements tion rules and concepts in of a client. creating a knowledge chain that facilitates and improves data. industry-client) 5• Expand its relationship with the client. by incorpolater market performance.

terms of rules and external .

liability. Hoek (2006) and the Supply Chain Executive Board (2005) make the following observations about the role of 4LP in this type of manage2• A candidate for 4PL ment. but does not get involved in demonstrate its rethe discussion of strategy and logistics con-cepts. and Souza. 3• The LSP model requires more assets than the 4PL. (2004). Tables 1 and 2 summarize the considerations of Hoek (2006). (2004) and Hoek (2006) argue that they must have well defined strategies to begin the transition process. since the latter is more dedicated to the coordina-tion process. M. In their opinion. to maintain its position and support the relationships with its clients. . Silvio R. (2004): reputation. designs and imple-ments new solutions in the supply chain. Visser et al. F. the 4PL suggests. Thus.29. 2006) 21 traditional LSP simply provides operational services. C International Conference of the Production and Operations Management Society information resources. and find supply chain. but its client con-trols in certain activities the strategy for the basic concepts used in the and sectors. specialize 1• The LSP leads the operation. Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2).Vivaldini. Further more. must invest in its image and Visser et al. Visser et al. Pires. pp 17 . the 1• lack of these skills may explain the slow development of the 4PL. and provides studies for its client to improve the chain.. while the Table 1 – LSP and 4PL Factors (Hoek. The LSP improves the effective new ways to operation of the chain. I. they must understand the importance of investments in information and communication technology to achieve this objective. in the coordination of the chain. 2• The 4PL suggests how to reconfigure the supply Hoek (2006): chain in terms of space and functionality in order to cut costs and improve services. comparing the development of services provided by LSPs and 4PLs. Considering that the LSP is a natural candidate to evolve their services into a 4PL. instead of sim-ply operating the physical transportation of the product. The innovation is by the fact that the 4PL presents other priorities in relation to the traditional logis-tics company. The 4PL devel-ops 1• The 4PL participates intense knowledge and logistics competence. 2• Becoming a 4PL lifts the traditional LSP to a posi-tion of product flow coordinator.

Factors 3PL 4PL Involvement in services provided in the supply chain Physical movement and execution Operation coordination and administration Intensity of assets to provide services High – vehicles. policies and priorities . storage equipment Low – information and communications system Intensity of knowledge Low – standard tasks High – organization of product flow Dependence on the manufacturer to supply the demand Medium – low cost change and several service providers High – the manufacturer has orders to fill and depends on its suppliers Contact point at the manufacturer’s Negotiated contract Dedicated contract and strategic coordination of the supply chain Performance Possibly limited in gains and results More wide-ranging measures. including clients and suppliers. involving client service and results in the supply chain Shared information Limited because it impacts only the execution More wide-ranging.

Bernardini: Collaboration and Competition between 4PL and 3PL 22 Journal of Operations and Supply Chain Management 1 (2). customer service. Cooperative Management and the Role of LSP According to Sahay (2003). Like the LSP. increased revenue and direct action in the client’s supply chain Keeping the client through high dependence on the information system and low reliance on own assets Supply Chain Executive Board (2005): • Failure to serve the client by focusing on strategies that concern the LSP. 1• The 4PL offers logistics services for the supply chain. operation site. and Souza. In short.. 1• Many companies are reluctant to outsource activ-ities to the 4PL. Silvio R. 4• In consultancy services for the supply chain. of services. tools can help the relationship and im-prove the services contracted with the 4PL. contracted Share profits according to preestablished objectives. 3• With distribution services. the LSP should not be seen solely as the outsourcing of logistics services. taking on . such as operational performance. pp 17 . as well as its ability to act within the chain. The 4PL consolidates the logistics needs of many companies. A transportation and storage site. common denominator in the various consider- ations concerning the evolution of LSP is the coor-dination of the supply chain activities with its cli-ents. The innovations of patterns presented lie in the coordination of other outsourced companies and the greater strategic involvement with the SCM. believing they will lose control of the LSP performance and jeopardize the service to their clients. 2006) Advantages • • • Risks • Migration to added value service. the proposals confer new responsibilities on the LSP. such as managing the LSP. Its technological capacitation is also essential for the implementation and 4• Implement objectives according to the level integration of services. it must have on-line location tools and customer services able to make the transport operations visible. F. the 4PL acts as a 2• Control total provider within the supply chain. Several other services can also be included.29. management quality.Vivaldini. the 4PL can use the LSP’s assets or its own to deliver products to the client. the 4PL can analyze the information flow process to redesign a more efficient chain. This includes identification of the best alternatives of transpor-tation. or delivery frequency. the 4PL coordinates storage. the most common be-ing 5• management of the LSP. It must also manage 3• Agree claims and payments of contractors. which gain from this scale and obtain advantages in negotiations with the LSP. such as packaging and assembly. Pires. shipments and delivery. as well as a new denomination. the 4PL is responsible for ensuring the most efficient and low cost storage. and cost and control systems competencies. such as: 2• With the LSP. on performance measures to evaluate op-erations. Some compa-nies use the 4PL as a logistics leader to manage the LSP. 5• The types of activities of the 4PL depend specifical-ly on each company’s needs. To this end. In short. The diversity of activities executed by the LSP. C International Conference of the Production and Operations Management Society Table 2 – Advantages and risks in the transition from LSP to 4PL (Hoek. M. with the possibility of saturating the market and transforming its services into commodities • Mixing different market and business models in a single organization. ship-ment and deliveries. I. which are not necessarily in line with the client’s needs Corroding and compromising the relationship while implementing the competencies • Few barriers to enter the market. providing am-ple opportunity for cost reductions. but as a business relationship committed to the client’s business. and getting away from low profitability jobs Expansion of relationship with the client.

Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2). which and With up-to-date information and communicationtechnology technology. 2004) when defining 4PLs as integrators orwith multiple activities logistics leaders in a coordinating function that is can reduce the number of suppliers. favor the integration process and can be used by the LSP to improve the operation-al processes of the supply chain.Vivaldini. not only its physical operational structure such as facilities and equipment. when Chapman et al. C International Conference of the Production and Operations Management Society al. new configurations are presented for lo-coordination. but also technological components that facilitate its relation-ship with the client. and (3) considering the analy-sis of factors that surround the relationships within these companies. such as its complexity. Halldórsson and Skjott-Lars-en. in the supply chain as 6• Operational size – Ascertain with the client if there com-panies integrate is operational capability to perform the con-tracted their processes with services.29.. with the cialized it becomes. technological support for data transfer and demand management. This idea is defended by Sinkovics logistics in-termediary and Roath (2004). agility. leading to broader than a simple operation. gistics management by the LSP.Authors such as Cox ternal and external operations.(200b). adding to results. and Souza. (2) consid-ering the 3PL studied. CASE STUDY AND RESULTS The case study presented here was conducted based on three approaches and/or considerations: (1) con-sidering the 4PL and the fast-food chain. through its own structure and. 2006. (2004) highlight the new responsibilities for the client. as several authors suggest (Hoek. pp 17 . considering the actions. and joint action 2• Culture – Knowledge of how to deal with its own with several agents and internal culture and with the different cultures of activities. munication. technological tools allied to new management methods such as CPFR are instruments that should be part of the structure and knowledge base of the LSP. requires transactions has become a powerful tool for the LSP. what was observed by Hoek (2006). The greater the number of services theof this provider in the LSP incorporates into its portfolio the more spe. as in Thus. . enhances the performance ofactivi-ties manager the chain. Silvio R. their agents. (2003) report that clients want to have needed.. even basic ones such as storage and transport. The LSP expertise in performing its activities. need for 1• Structure – Sufficient to serve the client’s flow. Langley and Allen (2005) and Visser et Pires (2004) and Christopher (2006) concerning the right choice of partners in the 23 sup-ply chain.supply chain. It is important to understand the importance of as-sets for the LSP. involving several agents as well as gaining new activities and clients. These tools. tends to Stefansson (2005) contribute to the businesses of companies that lack presents the idea of a such know-how. These authors argue that for the SCM it is better to have fewer committed suppliers than many scattered and uncommitted ones. and is complemented by the pos. 4• Measures and rewards – Ability to evaluate its in. such as the LSP. Langley and Allen. In that it can carry out coordination and innovationgeneral. 2005. according to Fliedner (2003) and Jhaukh-aria and Shankar (2004). 2005. is acknowledged byscope and responsibility several actors.. Langley and Allen. 2003. indirect management of third parties. I. Vis-ser The adoption of the LSP et al. the business opportunities for the its clients. In this aspect. Hoek (2006) and Fawc-ett and Magnan rewards and penalties. performing the synchronism of several activities coordinated by one role of coordinator and agent. Thevices. thus gaining more clients and evolving trend of acting businesses (Lieb. M. 2005. (2002) mention the 5• Consensus/Integration – Maintain consensus andpossibility of the integration between the agents during operation-al LSP gaining more space practices. using third an LSP with the ability to develop logistics services soparty structures.as a way to improve sibility of reaching new markets through the use of costs and widen serLSPs that already act in differentiated markets. F. Pires.processes and the 2004). can be consid-ered 3• Communication – Be prepared for real-time com-LSP innumerable. Pagell (2004) suggests several importantdifferent factors points the LSP should observe in the integration of associated with the operational services in supply chains: supply chain. in the coordination of Chapman et al.

develop-ing new products. pp 17 ..29. besides their daily activities in the routine of the fast-food network. has about 300 employees. C International Conference of the Production and Operations Management Society viders that have been in the Brazilian marketplace 4PL and the Fast-Food Network During its trajectory in the country. – LSP: responsible for stocking and purchasing management. transfer to other distribution cen-ters within the country. selecting suppliers. and its op- . Pires. – Suppliers: responsible for the quality of production. defining promotions and advertising. can be described as follows: Company 1 – Located in the state of São Paulo. proving what the literature identifies as the natural evolution within the seg-ment. sharing missions. which delegates to the logistics provider the responsibility of supplying restaurants. Focus Company Information Information Inbound LSP Outbound Supply Figure 1: The Supply Chain of this study It is important to note the this fast-food network structure in figure 1. financial management of the chain. To support its operations. the fast-food chain has developed a relationship of commitment with its suppliers. and solving conflicts in the chain. I. F. a storage warehouse in the city of São Paulo. field service and coordina-tion of the supply operations in the chain. and Souza. supplying restaurants storage. taking advan-tage of its structure and relationship with its clients. The 3PLs The ten companies from this study are logistics pro- for more than ten years. beliefs and values. The companies. each agent’s role in the supply chain can be summarized as follows: – Fast-Food network: responsible for operating the restaurants. and kit assembly. its services and operations have expanded in the last four years. it has given most of its suppliers exclusivity with the restaurants. Bernardini: Collaboration and Competition between 4PL and 3PL 24 Journal of Operations and Supply Chain Management 1 (2). M. and its logistics services provider (LSP) has assumed the responsibility of acting as the SCM. It has been operating for 25 years. prices and products. and have worked with the 4PL for over five years. objectives. and contracted sub-operators in every state of the country. it has about 35 employees. distribution and transport. coordinating not only delivery and distribution but also the inbound process with its suppliers. whose names have been omit-ted here. it now has its own vehicles for transporting cold and dry products. Silvio R. logistics planning. Company 2 – Has several branches specialized in the storage of frozen and chilled products.Vivaldini. This position has clearly strengthened collaborative behavior. assessing and standardizing processes. and has been operating in the logistics market for 11 years. retail dis-tribution. development of new products and the operation of inbound logistics. uses its own ve-hicles for transporting frozen products. Although its business focuses on air shipping. creating strategic business plans. All of them have expanded their activities over time. Figure 1 illustrates the relationships between the parties in the above mentioned supply chain. On the other hand. The ten companies were chosen due the importance of their services to the 4PL. In this relationship. favors the use of the 4PL pattern in the management process.

It has 450 employees and 12 Catarina. Firestone. Parmalat. and outsourced services. Janeiro and Paraná. distinct industrial segments such as Sadia. but it also has BSG-Continental. and operates a container Company 3 – This firm has been operating in thetermi-nal in Santa market for 34 years. Cabot and Flintink. maintenance. with administra- . but also offers stor-age and transport solutions for its clients’ products. Its main branches in the country. such as Kraft-Foods. Danone. It operates dedicated operations and with transport. storage. Rio de Company 5 – Dedicated to customs operations. It works not only with the management of import and export processes. Company 4 – This is a large cooperative in the trans-port Perdigão. Sara-Lee. branches in the states of São Paulo. Nestlé. etc. tation.eration focuses on the fast-food segment. It has 350 permanent employees and 40 storagePetrol. has been Brasken. this firm services many large clients such as Arcor. Suzano specializing and incorporating its operations to large clients. It has been in operation for 16 years. and others. segment which. assembly and packaging stor-age for clients of services. dealing with clients from business is transpordifferent segments. in its 17 years of operation.

and newsagents. It alsoby the 3PL and the 4PL providers. It serves demand peaks they are carried out for for several clients. the 3PLs offer air transport. packaging and maintenance services thanks to the recommendation of the 4PL. It has know-how in the internal man-other companies from 3PL group. services contracted by Company 6 – Specializes in kit line assembly. M.Vivaldini. customs. agement of storage and transport equipment. It provides sededicated physical structure. particularly for bookstorespartner companies. which acts in the maintenance and carried out by the 4PL. It operates according to the 4PL pattern. I. without using a chilled goods. equipment and assemblypremises for specific lines for these processes. It also acts as intermediary in versatility and mobility of workers.29. the 3PLs generally do not allow this fact to generate a major conflict. Pires.its cli-ents. light: Table 3 – Main activities provided by the 3PL and 4PL of this study 25 – Although they all compete with each other in many activities. and has 90 large employees. This table coordinates the transportation of goods to its units. what they do for the 4PL and what they execute in the marketplace. with some aging and re-packaging of goods and magazine in.packaging lines on its serts. It also operates in transport services with retail goods distribution. – The fast-food network is aware of all these service providers. F. Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2). Table 3. compares Company 7 – Works with dry goods storage. It has storage areas. below. C International Conference of the Production and Operations Management Society Company 10 – This is a customs tive headquarters in the city of São Paulo. Since many activities in Company 9 – This is a service provider with about the supply chain are not 30 employees. and has 4 the activities executed storage units in metropolitan São Paulo. pack. hicle maintenance. Silvio R.makes them competitors tailor-made. warehouse facility for and frozen focusing on imports and exports.in the market. performing large an operations on a short-term basis. – Their mutual relationships favor the recommen-dation of each other’s services. rental of storage equipment. providing temporary vehicles andthe fast-food network by workers. pp 17 . .. servic-the ing clients with technological tools developed overInteresting aspects of this relationship come to several years of experience. The company has a great contracts. either among themselves or to other clients they serve. and Souza. indicates the similarity Company 8 – Participates strongly in supermarket of their activities. It offers vehicle rental to several segments. which chains. This is a risk for the 4PL. managing third parties lection and shipment directly involved in these types of operation. as well as management services and ve. As an example.

Service Freight and fleet management Company 1 x Storage 2 3 x 4 x x x Distribution x x x Kit assembly / Packaging x x x Customs services x Maintenance of storage equipment Vehicle and equipment rental 6 7 x x x x x x Customer service / Call center x x x x x x Air fleet services x x x x x x x X x x x x x X x 4PL x X x Client stock management services Logistics studies / Projects 10 x x x Fiscal support / collection and administrative 9 x x x Product recovery / Reverse logistics 8 x x x Fleet maintenance 5 x x X x x x X x x .

which is not always the case with 3PLs The 4PL must build a strong commercial reputation This aspect is important in the 4PL – its reputation is greater than that of the 3PL The managerial scope of the 4PL is large in the chain The 4PL acts in practically the entire chain The 4PL is responsible for the chain’s integration and focuses on adding value to the chain’s business This a key aspect of the 4PL in the chain The logistics strategy and operational structure are attributions of the 4PL This also applies in the chain – 3PLs follow the 4PL The 4PL focuses on the chain’s business results This is also true of the chain – with strong focus on key indicators for the chain Complementary Considerations with suppliers of the Because the fast-food network has a strong name infast-food network. but on technology and know-how The 4PL is a combination of assets. the 4PL tries to contract only their most specialized services. even if the with the 3PL. pp 17 . especially those that have contracts department of the 4PL. display a certain interest in maintain-ing respon-sible for contact with the fast-food network.. This indicates that. the 4PL provider is strong in assets and in the direct execution of several activities. This seems observed here is the to be one of the factors that improve the balance in absence of 3PL their relationship with clients. their common interests make them potential different area. the agents mentioned in this study generally use the relationship with the 4PL as a differen. contrary to the literature.29. Listed below are the main factors favoring the re-lationship between the 3PL and the 4PL that makes them cooperators and the principal conflicts that make them competitors. Table 4 compares the 4PL described in the literature to the case studied here. which suggests its role is restricted to the management of 3PLs. . the actual executors of operations. However. Bernardini: Collaboration and Competition between 4PL and 3PL 26 Journal of Operations and Supply Chain Management 1 (2).Vivaldini. technology and know-how Having IT support is a key feature of a 4PL The 4PL is strong on IT. they have generated new managers reach an business with each other and internal agreement about which contracting area is to manage the 3PL. seemingly believing conducting the this will make them available to compete in an eventual relationship contracted new sourcing process. F. M. management centralized in only one sector or The largest 3PLs. Although the 3PL should carry out several activities. the market. I. There is relative difference in terms of assets. In this case study.Another interesting fact tial in their efforts to recruit new clients. the 4PL competitors. Silvio R. Pires. If a 3PL relationship between them is profes-sional and free of can provide services in a conflicts. and Souza. C International Conference of the Production and Operations Management Society The 4PL characteristics described in the literature correspond to those observed in this case study. with other large companies outside the supply chain of Each 4PL manager is this study. Table 4 – Comparison of the literature and the case study Literature Comparison with the studied case The 3PL tends to become a 4PL Three of the ten 3PLs clearly intend to become 4PLs The 4PL is not based on assets.

Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2). and learn this pattern. Pires. one complementing the deficiency of the other or even generating business between them. F. the existing literature and the observations in this 3- 27 case study. 3PLs and 4PL. I. there is implicit 1The 3PLs cover services that the 4PL is not competition among the able to or not interested in executing.29. network adds value to 3PL businesses. guiding them in the 3the structure and assets characteristics of the fast-food network business. according to criteria defined 4The fast-food by the 4PL. which is a new sourc-ing process. so they literature is clearly still in may abandon the 4PL. the 3PL focuses only on the2Participation in activ-ity that is the object of the contract. 6They all work with short-term contracts. a tool to compare characteristics that help to under-stand the role of the price of services. and Souza. the phase of outlining concepts on the theme. Even so. M. making the relation an inter-esting business for everyone. the marginal. of the fast-food network. representing little in terms of input. nesses in the supply chain. more than one agent working within its 8Providing services linked to the fast-food supply chain operations. 2When contracted. 3PLs and the 4PL. they work side by side and manage the conflicts. it transferring the same adjustments to the 3PL. The study also reveals that several factors character-ize positions that make the 3PL and the 4PL coopera-tors. 2The 4PL knows that some of the 3PLs have the po-tential to work directly with the fast-food network. either in regional actions or even taking over FINAL REMARKS all the activities. which would mean the end of comprehensive busibusiness with the 4PL and the fast-food network. a key factor is information .. 4The 3PLs trained employees in the 4PL to Most 3PLs lack carry out the activities. a 4PL to the management 5For some 3PLs the service executed is of several 3PLs. Silvio R. and a “standard model” 7Service prices are based on negotiations for this new logistics between the 4PL and the fast-food network. was possible to estab-lish 8As the 3PLs expand their business. business has not yet been established. one of the few points of consensus among the authors is that the 4PL will always be linked to the improvement of the SCM system and the service pat-tern should be based on integration and logistics so-lutions. that supports 6The 3PLs personalize assets for the operations operations. 5None of the 3PLs develop projects. However. if companies began to contract logistics agents that are able to manage their chain. that the 4PL has. With regard to competition. A company operating along the lines of a 3PL would hardly be able to carry out all the activities in a sup-ply chain. following indicators interested in having guided by the businesses with the fast-food company. a fact Competitors: that hin-ders their 1The 3PLs know that the 4PL can invest in expansion to more activities they execute. Other factors make them competitors.Vivaldini. they a direct relation between become a threat to the 4PL. and the strict requirements of fast-food network helps the 3PLs understand opera-tions. 3- Investments in technology belong to the 4PL. Also. Furthermore. in the 3PLs. This is clear in the pattern adopted between the fastfood network and the 4PL studied here. the 5The 3PLs explore the chain. Further more. this would lead increasingly to the emergence of the figure of a 4PL. gaining new especially information technology contracts through it. Analyzing the real case presented here it is which renders the 3PLs dependent on it in this area. pp 17 . the management pattern Cooperators: 1- The 3PLs know all the performance indicators between the 4PL and the they must satisfy. possible to note a series of 4The 4PL has. like the interest in fast-food company accounts. network does not appear 7Results are shared. C International Conference of the Production and Operations Management Society In terms of quotations and service pricing.

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capabili-ties. He manager in ais an expert in Theory of large heavyConstraints (TOC) with a equipments Certification for Practitioners in the company inTOC Fundamentals Exam and in Brazil.. of disturbances in firms Journal of Business Logistics.Vol. He has 25 years of Operations practical experience in Operations and SupplyManagement.ERSA 2004 Congress. K. com. He has Production a Doctor-ate.29. E-mail: the (Institutofbernardi@feb. 2. Strategic orientation. Structuring and managing experience in Industrial and Supply Chain Management in large industries and logistic providers. Salden. Yin. He has Switzerland. Vol. No. Available at www. Nowadays he is the Operation Director at Martin-Brower in Brazil. Vol. and Souza. Developing fourth4PL relationships. G.Doctoral He is a professor of Logistic at the degree from Methodist University of Piracicaba(EESC-USP) in (UNIMEP). . 2001. G. pp 17 . Konrad. pp. 43-55. with focus on Formerly he Production Planning Control and was aSupply Chain Management. R. F. (2004). M. Chain E-mail: sripires@unimep. (2004).sceb. evidence on the relevance of dynamic transaction-cost 29 theory for analyzing a logistic system inno-vation. athe TOC Supply Chain Logistics by visiting the TOC International Certification researchOrganization (TOCICO). 25. Sílvio R.. No. Subcontractor and customer Sinkovics. (2005). pp. inbound and out-bound Stefansson. C International Conference of the Production and Operations Management Society Svensson. Pires has a Bachelor’s. 2. party services: empirical accessed on 03/30/05. Management at MethodistFernando Bernardi de Souza is an University ofassociate professor of Operations Piracicaba Management at the São Paulo State (UNIMEP). Master’s and Planning andBachelor’s degree in Production Control Engineering from (USP-EESC). He also conducted He is a fullseveral projects for large companies professor ofoperating in Brazil.. Collaborative logistics management and the logistics flows. 8. Th 44 European Regional Science Association . Roath. A.Journal.br. University. Email: mvivaldini@m artinbrower. I. ed. Silvio R. School in Spain.com.executiveboard. 36.fro AUTHOR’S BIOGRAPHY m (UFSCar).and a degree in Production Engineering. Supply Chain role of third-party service providers. conducted some consulting projects and a visitingfor large Brazilian companies pro-fessor atoperating in Brazil. No. He has 20 years of Production de Empresa) portugues Business Engineering.Vivaldini. pp. Pires.br . Bernardini: Collaboration and Competition between 4PL and 3PL Journal of Operations and Supply Chain Management 1 (2). E. São Paulo: Bookman.unesp. R.br. Visser. 76-92. 1. R. 2. . 4156.. Supply Chain Executive Board (2005). International Journal Of Management: an Interna-tional Physical Distribution & Logistics Management. (2003).. Estudo de Caso: Planejamento e Método. Mauro Vivaldini has a Master’s. K. sourcing and the occurrence and performance in manufacturers – 3PL relationships. and uses professor atintensely the TOC in his under and IMD ingraduating courses. inand a Administration and a DoctorateMaster’s. I.