Title: The value of integrated logistics and finance services of third party logistics firms

Authors: Xiang-Feng Chen, Xiaoyan Xie

Addresses: Department of Management Science, School of Management, Fudan University, Shanghai 200433, China. ' Department of Marketing, School of Management, Fudan University, Shanghai 200433, China

Abstract: The Integrated Logistics and Finance Service (ILFS), an innovative service developed by the alliance of Third Party Logistics (3PL) firm and financial institutions, offers finance and logistics solutions to optimise the availability of capital within a given budget-constrained supply chain. Comparing 3PL firm|s Conventional Logistics Service (CLS), we inspect the value of ILFS for the budget-constrained supply chain. We show that under CLS the budget-constrained retailer could not apply for commercial loans successfully because of the asymmetric information between borrowers and lenders, while under ILFS the truth is opposite. We also show that a monopolistic finance market or competitive finance market under ILFS can create value for the budget-constrained supply chain. Furthermore, the competitive finance market under ILFS could decouple the operations and finance decisions of the budget-constrained retailer.

Keywords: 3PL; third party logistics; financial services; logistics finance; supply chain management; SCM; budget constraints; budget constraints; commercial loans.

DOI: 10.1504/IJSOI.2009.029183

International Journal of Services Operations and Informatics, 2009 Vol.4 No.4, pp.333 - 351

Published online: 09 Nov 2009 *

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