Logistics outsourcing relationships: Customer perspectives

Journal of Business Logistics, 2003 by Knemeyer, A Michael, Corsi, Thomas M, Murphy, Paul R

In recent years, logistics outsourcing has received a great deal of attention from logistics scholars (Razzaque and Sheng 1998). Researchers have reported on the outsourcing of logistics functions from several perspectives including overviews of the industry, keys to successful logistics outsourcing relationships, selection of logistics outsourcing providers, and international perspectives on logistics outsourcing (e.g., Boyson et al. 1999; Lieb, Millen, and Wassenhove 1993; Lieb and Randall 1996; Murphy and Poist 2000). The focus by researchers on logistics outsourcing should continue given that much of the current literature suggests that the adoption of third-party logistics (3PL) does not appear to be a passing fad (Leahy, Murphy, and Poist 1995; Murphy and Poist 1998, 2000).

While logistics outsourcing has been defined in several ways, this study defines the concept as "a relationship between a shipper and third party which, compared with basic services, has more customized offerings, encompasses a broader number of service functions, and is characterized by a longer term, more mutually beneficial relationship" (Murphy and Poist 2000; Sink, Langley, and Gibson 1996). It is this view of logistics outsourcing relationships as a "longer term" exchange that suggests possible benefits of infusing relationship marketing theory (marketing activities directed at establishing, developing, and maintaining successful relational exchanges) into the study of these important supply chain relationships (Morgan and Hunt 1994).

Relationship marketing has recently attracted considerable attention in the marketing literature (Dibb and Meadows 2001). In particular, relationship marketing focuses on the interaction between buyers and sellers and is concerned with winning and keeping customers by maintaining links between marketing, quality, and customer service (Christopher, Payne, and Ballantyne 1991). The dynamics of change and organizational issues associated with supply chain relationships are particularly important subjects for study because they directly influence the "make-or-buy" decision (Hoyt and Huq 2000). Therefore, an integration of relationship marketing theory into the study of logistics outsourcing relationships would seem to be justified.

To date, little of the existing logistics research has integrated relationship marketing theory. The majority of literature dealing with logistics outsourcing is descriptive and lacks a theoretical perspective. Of notable exception is the recent work by Lambert, Emmelhainz, and Gardner (1999); Mentzer, Min, and Zacharia (2000); Moore (1998); and Moore and Cunningham (1999), all of which integrate some aspects of relationship marketing theory into their discussions of supply chain relationships.

In an effort to add to the empirical literature examining logistics outsourcing, the present paper reports findings from a recent study of firms involved in partnerships with third-party logistics providers. In particular, this study has the following primary objectives:

* First, to confirm the existence of distinct levels of partnership development previously suggested in the logistics literature;

* Secondly, if the existence of distinct levels is supported, investigate possible differences in key relationship marketing elements and outcomes across these distinct levels.

This study should be beneficial to several logistics constituencies, such as third-party logistics providers, customers of logistics outsourcing services, and researchers interested in the study of these as well as other types of supply chain relationships.

The next section will discuss the distinct levels of partnership development previously established in the logistics literature. Then, relationship marketing elements and outcomes of particular relevance for logistics outsourcing partnerships will be detailed. Specific logistics outsourcing examples will illustrate the relevance of each of these identified variables. Following this, a section that discusses the methodologies used to collect the company data will be presented. Then, a section will discuss the various findings of the study. The final section will summarize the study, discuss possible managerial implications of the findings, and offer suggestions for future research.

LEVELS OF PARTNERSHIP DEVELOPMENT

While researchers have developed well-supported models that define many of the relevant variables that influence success or failure in a relationship (Wilson 1995), substantially less empirical research addresses possible differences in these variables across levels of relationship development. To this end, a primary goal of this study is to examine the potential existence of distinct levels of partnership development established by Lambert, Emmelhainz, and Gardner (1996). Based on detailed case studies of 18 individual relationships, their research indicates the existence of three distinct types of partnerships, identified as Type I, Type II, and Type III. It should be noted that while a continuum of possible relationships exists (see Figure 1), the current study required the respondents to focus on relationships they would classify as "partnerships."