This theory attempts to replace the resource based

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This theory attempts to replace the Resource based view theory and transaction cost economics theory due to their vast assumptions that customers constantly use the same thought process in ROY 2
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THIRD-PARTY LOGISTICS decision making for long periods of time. Finally, the transaction cost economics theory is central to the other theories in relevance to decision making. This theory suggests that the relation to logistics among customers is based on the cost as well as the risk when deciding upon a third-party logistics provider. Usually third-party logistics providers provide customers with benefits that include faster delivery, improved reliability, and reduced cost (Anderson et al, 2011). Different studies have shown that there are differing results such as customers showing more favoritism towards a cost focus. Application of Supply Chain Management Supply chain management integrated into third-party logistics is important, however several organizations are not succeeding at integrating internally and externally. This is primarily a result of trends of outsourcing because “a significant part of a products value-added function is committed and traced to external functions, the role of integration and how effective integration takes place is very important in the current global landscape” (Jayaram, 2010). Establishing relationships with third-party logistics providers is a contributing factor shown through positive performance. Research conducted within United States manufacturing companies discovered that using third-party logistics services received positive results on overall logistics costs, system performance, and customer satisfaction (Jayaram, 2010). Performance, integration, and establishing relationships is critical for organizations in alliance with third-party logistics providers because it monitors how well the alliance is performing, how well the information is being implemented and retained, and how well the relationship effective. “Capability provided by the 3PLs matters” (Jayaram, 2010). It can also be helpful for organizations to gain insight on how third-party logistics and supply chain management are being integrated in other regions such as Europe.
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