The Flexibility of Logistics Service Providers and its Impact on Customer Loyalty – An Empirical Study

Abstract

The use of logistics outsourcing and the degree of competition in the logistics service industry have significantly increased over the past decade. In order to reach and maintain an important role in such a business environment, logistics service providers (LSPs) have to find ways to achieve competitive advantage. In this regard, the role of flexibility as a potential source of competitive advantage for an LSP is unclear, as empirical research on flexibility in an industrial services context and specifically in logistics outsourcing relationships is lacking. Therefore, using the resource-based view theory as the theoretical foundation, this study develops a conceptual model of flexibility as a capability of an LSP and its impact on customer loyalty, a central outcome for LSPs in a competitive business environment. Further, taking a relational as well as a knowledge perspective with respect to the antecedents of flexibility, the relational capability collaboration and the knowledge resources supply chain partner insight and communication are integrated into the model. Finally, the relationships of collaboration as a capability with knowledge resources as well as with customer loyalty are considered. This study analyzes 155 logistics outsourcing relationships using a survey method and partial least squares structural equation modeling to empirically assess the proposed relationships. The results reveal that LSP flexibility is a strong driver of all core dimensions of customer loyalty (i.e., retention, extension and referrals) and thus a source of competitive advantage for LSPs. Further, collaboration positively influences LSP flexibility and also the loyalty dimensions, supporting its significant role in a supply chain relationship. Finally, knowledge resources have a positive effect on LSP flexibility as well as on collaboration, indicating the importance of such resources in facilitating crucial capabilities.

Adaptation of Foreign Logistics Service Providers' Resources and Capabilities to a New Institutional Environment

“…The participating companies represent the Russian subsidiaries of four major LSPs with Western Service reliability e.g., accuracy of documentation, accurate price calculation, reliability of booking space, cargo safety, reliability of schedules, and ability trace (Yang et al, 2009) Flexibility e.g., handling of unforeseen problems, handling of changes and adjustments, and response to customer requests (Hartmann & De Grahl, 2011) Basic services e.g., transport and freight forwarding (Lai, 2004) VAL services* e.g., assembling/reassembling, repacking/relabeling, purchasing/procurement, cross-docking, order processing, customer-specific label printing, fleet management, L/C compliance and negotiations, and warehousing (Lai, 2004) Information integration e.g., global information systems, quality of data transmission, and linkage with related industries' information systems (Yang et al, 2009) Relationship building e.g., operational collaboration with other LSP and other actors and knowledgeability of sales personnel (Yang et al, 2009) European origins. All of them have been operating in Russia for more than ten years, offering almost complete geographical coverage with branch offices in remote regions.…”

“…Lu (2007) refers to many functional areas of business management, such as purchasing, operational, human resource, and financial management, as LSP capabilities. Other higher order forms of operational capability include value-added services, service reliability, customer responsiveness, relationship building, information integration, innovation, and flexibility (Hartmann & De Grahl, 2011;Lai, 2004;Lu & Yang, 2010;Shang, 2009;Yang et al, 2009). Liu, Grant, McKinnon and Feng (2010) identify three types of LSP capabilities, namely strategic, operational, and networking.…”

The Roles of Procedural and Distributive Justice in Logistics Outsourcing Relationships

“…This growth is also accompanied by a broadening of research scope and methodologies, and the recent literature increasingly relies on theory as the basis for hypotheses development and testing (Marasco 2008). One such research stream focuses on attitudinal and behavioral attributes that foster collaborative and successful third-party logistics provider (3PL)customer relationships (Tian et al 2008;Hofer et al 2009;Wallenburg 2009;Chen et al 2010;Hartmann and De Grahl 2011).…”

How Do Delivery Variety Decisions Contribute to Sales? An Empirical Study on Demand and Supply Integration

“…For example, delivery guarantees provided by a supplier can affect operational and marketing performance (Chatterjee, Slotnick, & Sobel, 2002). Hartmann and de Grahl (2011) suggest that deliveries contribute to buyer loyalty and, hence, improved sales. Moreover, delivery variety contributes to logistics flexibility, which has been found to reduce lost sales in a two-level supply chain (Aprile et al, 2005).…”