Information Technology Safeguards, Logistics Asset Specificity and 4th Party Logistics Network Creation in the Food Chain.

Purpose – To investigate the evolutionary process of the retail logistics network formation, and to propose a relationship framework between the

logistics asset buyer (the retailer) and the logistics asset supplier (the third-party logistics firm).

Design/methodology/approach – The evolutionary process is based on the way the asset specificity element of transaction costs theory can be

perceived by the logistics asset buyer and the logistics asset supplier. The asset specificity element is linked to both network and buyer-supplier

relationship theories with the aim of conceptualising a buyer-supplier relationship framework. Secondary data for the UK food retail chain are also

employed.

Findings – A new relationship framework is developed based on the buyers’-suppliers’ perceptions in relation to logistics asset specificity, and the

conditions required for the formation of the retail logistics network are illustrated. If transaction costs are perceived as high by both the buyer and the

supplier of a logistics asset, the retailer will engage into a fourth-party logistics network formation where the use of information technology systems is

of critical importance. At this stage, these systems will become the primary co-ordination device for the reduction and absorption of complexity in the

retail chain.

Originality/value – The paper offers a unique buyer-supplier partnership framework by proposing that the formation of a fourth-party logistics

network will decrease the complexity of modern retail logistics operations. The paper will assist retail managers responsible for the development of

logistics strategies and will be beneficial to researchers examining logistics and supply chain management operations.