Fourth-party logistics: A case study on performance measurement

Abstract: The number of Fourth-Party Logistics providers (4PLs) is growing. Researchers have expressed the importance of measuring the performance of a business, but still there are only a few customised performance measurement frameworks developed for logistic service providers. This Master Thesis addresses this issue by performing a multiple case study at two 4PLs that are operating in separate industries, one in reverse logistics and the other in the construction industry. Previous research agrees that performance measurement frameworks have to be comprehensive and at the same time provide the right information in an understandable way. The Balanced Scorecard and the EFQM Business Excellence Model address this issue with different approaches and have been used in further developments of new frameworks. The empirical study found that none of the studied businesses had a well-developed framework for their performance measurement and therefore the alignment between their measurements and their business strategy was affected. Performance measurement frameworks, which have a wide application, do not have a flaw that make them unsuitable to use for a 4PL. Managers in the researched businesses therefore see a need for frameworks that are easily implemented and are customised to their specific situation. Moreover, the study found that no alignment had been developed yet between the customer and the 4PL. The businesses strive to align their KPIs among the partners they are cooperating with, down the supply chain, but are not interested in communicating them to their customers. Offering their customers full transparency might affect the businesses’ processes. Research connected to performance measurement specified to 4PLs and Logistic Service Providers (LSPs) in general is needed since the currently available research leaves space for uncertainties and further discussion.