4th dimension in Supply chain management outsourcing means, outsourcing all the components, together or separately, composing and/or incorporated into the Supply Chain Management, and involving the supplier of external resources in the process of directly shouldering the work load in order to share the potential risks, and thus adding a new dimension to the concept of logistics services.

It differs from previous dimensions where the 3rd party service providers used to take risks, proportional to the quality of services undertaken, and on the basis of an award-punishment system structured according to the quality of their performances in comparison with key performance indicators. However, the risk in the 4th dimension affects the service providers and service receivers equally. Therefore, it's a risk rather directly connected with the outcome of the services rendered, or jobs done than to the performance quality of the service provider.

In other words, in the 4th dimension, if we outsource the planning stage of the Supply Chain and if the provider fails in the services it provides for this purpose, this will affect all the components of the process both before and after the planning stage. Consequently, let's have a pessimistic point of view and anticipate what and how it would affect adversely? Above all, there will be a huge financial loss due to orders given sooner than necessary. Likewise, as a result of orders given sooner than necessary, there'll be an in-excess piling up of inventories both in stock and in transition which will inevitably cause a significant financial loss. As a result of planning mistakes, yet again due to early ordering, there will be complications in production periods because of a raw material pressure -if purchased goods are raw material- created in production. In an opposite scenario where orders are set later than necessary due to a possible mistake in planning, things will lead to a shortage of raw materials in production line which will consequently interrupt routine production processes. These risk factors may naturally be vital for some sectors but not for others. For instance, if we are talking about a middle-sized textile/clothing company, the cost of one-day interruption of the production line may not be significant. If this is not a middle-sized textile/clothing company but an automobile manufacturer, or a corporation in any sub-sectors of automotive industry, however, even production interruption for an hour, let alone a day, may result in huge financial losses. Plus, even if we think that service receiver does not have any losses, again bad planning, service provider filling up his/her depots with unnecessary inventories, if a real sale rather than undirect sale connection is made as a business model in an agreement, again this will mean that service provider will carry all the burden of physical inventories as well as financial load of this inventory. Consequently, the risk involved in the 4th dimension differs significantly from the risk in providing services as a 3rd party; it directly depends how well the job is done and how organized the chain is coordinated.

In order to emphasize once again,; while the risk in acting as a third party is compensated with an award/punishment according to the direct performance of the service provider, for the risk in the 4th dimension, success or failure will directly and vitally affect both the receiving and providing ends of the service in a positive or negative way since the service provider becomes a strategic business partner and places his/her assets at odds.

There is one other thing we need to be clear about here; what are the differences between being a 3rd party service provider and a 4th party entity providing complete logistics services in the 4th dimension? When we say 'third party', we mean some certain and traditional rings of the Supply Chain. What are these? They are physical transportation of goods from one place to another, providing storing services in between, post-transportation storage of the physical inventory in a warehouse, and delivery of goods to the ultimate destination according to the demands of the owner of the goods.

Providing customs handling services may also be included in the traditional boundaries of the 3rd dimension, if the job is an international one. When we come to understanding the difference between a 4th party logistics service provider and the 4th dimension, we'd better take a look at the structure of a 4th party logistics service provider. Being a 4th party logistics services provider means undertaking an advisory role in outsourcing some certain links, not all, within the supply chain, and determining the third party suppliers through bidding. In other words, it's the institutions themselves who determine which part of the supply chain should be outsourced, and usually it's the classic, traditional and ordinary services we already mentioned above when we talked about 3rd party logistics services; and they outsource them to a single 4th party logistics services provider assigning all responsibility to the 4th party. The 4th party service provider, as seen in general practice however, doesn't take any direct risks, immediately finds some 3rd party service providers to transfer some of the liabilities they're primarily responsible for and to share the risk load, with binding contracts similar to those they've concluded with their own customers, and acts as a mediator only.

In fact, when we take a look at how we described the contents of 3rd and 4th party logistics services, it becomes quite apparent how they differ from the services incorporated into the scope of the 4th dimension, and of this new business model mentioned above.