Do the Service Priorities of Companies Outsourcing to 3PL Providers Vary by Industry?

Do the Service Priorities of Companies Outsourcing to 3PL Providers Vary by Industry?

Ioannis Manikas (University of Greenwich Business School, University of Greenwich, London, UK) and Petros Ieromonachou (Department of Systems Management and Strategy,University of Greenwich, London, UK)
Copyright: © 2016 |Pages: 33
DOI: 10.4018/IJAL.2016010105
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Abstract

This research looks into how well the priorities of third party logistics providers in the UK are aligned to that of their customers and how these priorities change dependent upon industry segment and size. Additionally, it looks into how the levels of information communication technology (ICT) employed by a supplier and their green profile could be affecting their ability to remain competitive. The research confirms previous work that a service gap exists between what clients want against what they are actually receiving. The results of this research present several key findings on logistics service quality priorities in the UK. The study demonstrates that 3PL providers in some cases are focusing on service quality areas which are not aligned to that of their customers. This could mean that currently precious capital is being invested in areas that will either do nothing to improve the service quality perception of their suppliers or worse, be invested in an area that is not significant to the client's competitive advantage.
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Introduction

The UK logistics market forecasted to reach a value of $51.9 Billion by 2013 (datamonitor, 2009). As well as representing a valuable market, there has been an increasing acceptance among organisations and scholars that an effective and efficient logistics operation can create a competitive advantage for businesses. Evidence is provided through case studies on organisations such as Zara, who were able to create over 20,000 new product lines per year (compared to an industry average of under five thousand) (Ghemawat & Nueno, 2006) through a better logistics operation and supply chain, all helping them to improve market share and post a net profit of over €1 Billion in 2006 (Cuc and Tripa, 2007). Other anecdotal evidence from organisations such as Dell and Federal Express, corroborate the fact that logistics can create value through efficiency, effectiveness and differentiation and have a significantly positive effect on the gaining of market share and increased profits (Mentzer et al. 2001, Fugate & Mentzer, 2010). Despite the clear evidence detailing the value of the UK logistics market and research completed on clients who have been able to improve market share and profitability through better logistics operations, there has been no research completed attempting to identify which areas of logistics service quality are most important to UK industries by segment and size.

Focusing on third party logistics (3PL) organisations, this research aims to understand whether the service priorities of 3PL clients vary, dependent on industry segment and size, and if they do, whether these nuances are recognised by the 3PL suppliers. The research will gather foundation data to assist further research into whether the level and sophistication of ICT employed by suppliers and their ‘green profile’ could be affecting their ability to remain competitive within this market. The results of this research aim to improve the profitability, reputation and ultimately market share of 3PL suppliers through the identification of the most profitable industries to target, as well as a deeper understanding of the service specific priorities of these sectors for both service delivery and marketing.

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