Research On Contract Design For Fourth Party Logistics Delivery Risk Management

Fourth party logistics (4PL) is famous for its powerful ability to integrate and manage logistics in academia and industry. It is an important responsibility of 4PL to manage and supervise the third party logistics (3PL) operating process, and manage logistics delivery risk for outsourcing logistics client. The 3PL’s delivery process is exposed to many risks, such as delivery quality risk and delivery time risk. Therefore, it is important for the 4PL to design delivery contract based on principal-agent theory, and to induce the 3PL to work hard and achieve the management and control of delivery risk.Based on the review of 4PL, logistics risk management as well as principal-agent theory, aiming to two main delivery risks, i.e., delivery quality risk and delivery time risk, this dissertation studies the optimal incentive contract design for 4PL under considering single 3PL delivery quality risk management, single 3 PL delivery time risk management, two 3PL delivery quality risk management and single 3PL delivery quality and time risk management respectively.The contract design under considering single 3PL delivery quality risk management is studied firstly. Based on the effort level and investment level exerted by the 3 PL in delivery process, combining the 3 PL’s unobservable action (effort level, investment level) and private information (effort cost information, investment output information), the optimal delivery quality contracts are designed. Then, a cooperation mechanism between the 3 PL and 4PL is proposed to weaken the effect of 3 PL’s private output information on logistics delivery quality. The results show that:1) the 3PL’s private cost or output information reduces the logistics delivery quality, and increases the delivery quality risk loss; 2) in the optimal contract of effort level, the effect of 3PL’s risk-averse on delivery quality is always larger than the private cost information effect on delivery quality; 3) in the optimal contract of investment level, if the output information is symmetric, the 3PL’s risk-averse does not reduce the delivery quality; 4) in cooperation mechanism, if the 3 PL is risk-averse, the achievement of cooperation between 3PL and 4PL depends on the 3PL’s risk-averse measure.The contract design under considering single 3PL delivery time risk management is studied secondly. Based on the different requirements of client on delivery time, the optimal delivery time contracts are designed in three different cases respectively, named emergency delivery, tardiness penalty delivery, earliness and tardiness penalty delivery. The relationship between different delivery time requirements is analyzed. The optimal contract results in different delivery time requirements are compared. The results show that:1) in the optimal contract of emergency delivery, the 3PL’s private cost information extends the delivery time and increases the delivery time risk loss; 2) in the optimal contract of emergency delivery, the 3PL’s risk-averse prevents it to exert more effort to shorten delivery time; 3) in the optimal contract of tardiness penalty delivery, earliness and tardiness penalty delivery, the different requirements on delivery time weakens the effect of system parameters on the 3PL’s optimal delivery time effort.The contract design under considering two 3PL delivery time risk management is studied thirdly. Based on the different relationships between the two 3PL, the optimal delivery time contracts are designed in serial structure and parallel structure respectively. In parallel structure, considering the delivery time is normal distribution or uniform distribution, two methods of contract design is given. The effect of different structures on optimal contract result is investigated. The results show that:1) in the optimal contract of serial structure, the delivery time effort of the two 3PL is independent; 2) in the optimal contract of parallel structure, the two 3PL share the 4PL’s delivery time risk penalty; 3) in the optimal contract of parallel structure, the two 3PL’s delivery time efforts are interrelated and depend on the task properties and capability features of two aspects.The contract design under considering single 3PL delivery quality and time risk management is studied fourthly. Based on the different relationships between the 3PL’s delivery quality effort and delivery time effort, the optimal delivery quality and time contracts are obtained in three different cases respectively, named independent effort, single effort and associated effort. The results show that:1) in the optimal contract of independent effort, the delivery quality and delivery time incentive given by the 4PL to the 3PL are independent; 2) in the optimal contract of single effort, the delivery quality incentive is increasing in the randomness of delivery time; 3) in the optimal contract of associated effort, both the delivery quality effort and delivery time effort depend on two aspects of the task properties and capability features.