Middle ground gets bigger

Middle ground gets bigger

Copyright 2003, Traffic World, Inc.

The Internet was supposed to cut out the middleman by putting buyers in direct contact with sellers. But the opposite is true, according to a case study, and a new breed of intermediary has emerged called the hypermediary.

Susan L. Golicic, assistant professor of marketing at the University of Oregon, and Donna F. Davis, assistant professor of marketing at Texas Tech University, carried out the study. They write about the findings in an article published in the May-June issue of Business Horizons.

Traditional supply-chain intermediaries perform and manage logistical functions such as distribution, warehousing and transportation, said the authors. The Internet spawned cybermediaries that manage information flows mainly in electronic markets. Hypermediaries straddle the two areas. "Hypermediaries are those middlemen that operate across traditional and virtual structures to facilitate all types of flow in the supply chain, from physical to informational," they said.

To find out how these players influence supply-chain relationships, the authors interviewed customers and employees of Plano, Texas-based 3PL Transplace. Also interviewed was a subset of carriers that provide transportation services to customers via Transplace.

The study found that the value of introducing a hypermediary falls into three primary areas for shippers: access to higher levels of expertise, increased supply-chain visibility and reduced costs. For carriers, the presence of Transplace brings new business opportunities through the technology and freight network that the 3PL brings to the table.

On the downside, there were concerns that going through a hypermediary means less control over operations and relationships. Another issue voiced by respondents was that their own activities may not be given a high priority and that, given Transplace''s expansive network of carriers and customers, a customer or carrier may not show up on the 3PL''s immediate radar screen.

Overall, the study suggests that the hypermediary model is here to stay. "Shippers concurred that they do not foresee turning back to their old ways of engaging carriers and many were currently exploring the possibility of increasing the volume of business conducted through hypermediaries," the authors said.