International Journal of
ISSN 0960-0035
Physical Distribution & Logistics Management
Volume 32 Number 8 2002
Strategic alliances and partnerships in logistics Guest Editor Clifford F. Lynch Paper format The International Journal of Physical Distribution & Logistics Management includes ten issues in traditional paper format. The contents of this issue are detailed below.
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Access to International Journal of Physical Distribution & Logistics Management online ________ 623 Editorial advisory board ___________________________ 624 Abstracts and keywords ___________________________ 625 French abstracts___________________________________ 627 Spanish abstracts __________________________________ 629 Japanese abstracts_________________________________ 631 Acknowledgements ________________________________ 634 Guest editorial ____________________________________ 635 Understanding buyer information acquisition for the purchase of logistics services Carol C. Bienstock_______________________________________________
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Internal relationship marketing: a key to enhanced supply chain relationships Scott B. Keller __________________________________________________
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Shipper-carrier partnership issues, rankings and satisfaction Brian J. Gibson, Stephen M. Rutner and Scott B. Keller ________________
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CONTENTS
CONTENTS continued
Effective logistics outsourcing in New Zealand: an inductive empirical investigation Jay Sankaran, David Mun and Zane Charman________________________
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The electronic supply chain: its impact on the current and future structure of strategic alliances, partnerships and logistics leadership Lisa R. Williams, Terry L. Esper and John Ozment ____________________
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International Journal of Physical Distribution & Logistics Management online
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EDITORIAL ADVISORY BOARD Dr Prabir Bagchi Professor of Logistics & Management, George Washington University, USA Dr Ronald H. Ballou Professor of Operations, Case Western Reserve University, USA Rick D. Blasgen Vice President Supply Chain, Nabisco Inc., USA Dr Joseph L. Cavinato Senior Vice President, National Association of Purchasing Management, USA Dr Garland Chow Associate Professor of Logistics, University of British Columbia, Canada Dr Martin Christopher Professor of Marketing and Logistics, Cranfield School of Management, UK Dr David J. Closs Professor of Marketing and Logistics, Michigan State University, USA Dr Jacques Colin Institut Universitaire Technologie, France Dr Rajiv P. Dant Associate Professor of Marketing, Boston University, USA Dr Patricia Daugherty Siegfried Professor of Marketing, Division of Marketing, University of Oklahoma, USA David A. Durtsche TranzAct Technologies, Inc., USA Dr Margaret A. Emmelhainz Associate Professor of Marketing, University of Georgia, USA Graham A. Ewer Chief Executive, Institute of Logistics, UK Patrick Forsyth Oklahoma State University-Tulsa, USA Frances Fowler Miami University, Ohio, USA Thomas L. Freese Principal, Freese & Associates, Inc., USA Dr Jerry Goolsby Associate Professor of Marketing, University of South Florida, USA Dr Bernard J. Hale Logistics Consultant, USA Dr Anthony F. Han Professor of Transportation Management, National Chiao Tung University, Taiwan, Republic of China Dr Alan Harrison Professor of Operations and Logistics, Cranfield School of Management, UK Dr James L. Heskett UPS Foundation Professor of Business Logistics, Harvard University, USA Herbert Hodus Consultant, IFM Logistics, USA Dr Daniel E. Innis Associate Dean, Ohio University, USA Dr Zahir Irani Senior Lecturer of Information Systems, Brunel University, UK Olof Johansson University of Umea, Sweden Dr Andrew Kerr Managing Director, Griffin Corporate Services, NSW, Australia Dr Bernard J. La Londe Professor Emeritus, Ohio State University, USA Dr Douglas M. Lambert Raymond E. Mason Professor of Transportation & Logistics, Ohio State University, USA
Dr Richard A. Lancioni Professor of Marketing & Logistics, Temple University, USA Dr C. John Langley Jr Professor of Supply Chain Management, Georgia Institute of Technology, USA Dr Michael Levy Charles Clarke Reynolds Professor of Marketing, Babson College, USA Dr Arvinder P.S. Loomba Associate Professor of Organization and Management, San Jose State University, USA Clifford F. Lynch President, C.F. Lynch & Associates, USA John McCormick University of New South Wales, Australia Professor Alan McKinnon Logistics Research Centre, Heriot-Watt University, Edinburgh, UK Norman E. Marr Division of Marketing, University of Huddersfield, UK Dr G.C. Meeuse Rotterdam, The Netherlands Dr John Thomas Mentzer The Bruce Excellence Chair of Business Policy, University of Tennessee, USA Dr Alan Mercer Professor of Operations Research, Lancaster University, UK Dr Paul Murphy Professor of Marketing and Logistics, John Carroll University, USA Dr Bruce Murtagh Professor of Management, Graduate School of Management, Macquarie University, Australia Dr Pieter Nagel Partner, Burns Bridge Nagel Pty Ltd, Australia Dr R. Mohan Pisharodi Associate Professor of Marketing, Oakland University, USA Cees J. Ruijgrok Professor Logistics Section, INRO-TNO, The Netherlands Dr Jay Sankaran Senior Lecturer, University of Auckland, New Zealand Dr Philip B. Schary Professor Emeritus, Oregon State University, USA Dr Arun Sharma Associate Professor of Marketing, University of Miami, USA Dr Tage Skjott-Larsen Professor, Institute for Logistics and Transport, Copenhagen Business School, Denmark Alan Slater Director, Added Value Logistics Consulting Limited, Manchester, UK Amrik Sohal Director, Monash University, Australia Dr Mark Speece Nanyang Technological University, Singapore Dr Thomas W. Speh Professor of Marketing and Logistics, Miami University, USA Dr Jay U. Sterling Associate Professor of Marketing and Logistics, University of Alabama, USA Dr Diana Twede Associate Professor, Michigan State University, USA Hans van der Hoop Logistics International, Rotterdam, The Netherlands Dr Hugo T.Y. Yoshizaki Assistant Professor of Production Engineering, University of Sa˜o Paulo, Brazil Dr Paul H. Zinszer Associate Professor of Marketing, Syracuse University, USA
Understanding buyer information acquisition for the purchase of logistics services Carol C. Bienstock Keywords Logistics, Information, Supply chain management, Industry, Services During the last several decades, logistics has increasingly emerged as a source of sustainable competitive advantage. This article incorporates recent work in services ma rketing on customer i nforma tion acquisition, with research on industrial buying behavior to help logistics service providers understand and manage their customers’ information acquisition and purchase activities for logistics services. Internal relationship marketing: a key to enhanced supply chain relationships Scott B. Keller Keywords Relationship marketing, Supply chain, Organizational development Competitive market pressures within today’s contemporary business environments have encouraged the partnership of many supply chain members. Of particular interest is the development of successful relationships between firms in an effort to gain product and service quality and efficiency that would otherwise go left unclaimed. This research specifically identifies the need for supply chain members to foster healthier relationships within the firm in order to realize more fully success and obtain the benefits associated with external partnerships. The concept of internal relationship marketing is employed and a model is proposed to aid companies in identifying the variables associated with marketing to the internal customer. The motor carrier industry provides an appropriate service setting for the analysis, and implications for retaining the very best customer-conscious frontline employees are outlined. Shipper-carrier partnership issues, rankings and satisfaction Brian J. Gibson, Stephen M. Rutner and Scott B. Keller Keywords Shipping, Transport partnering, Alliances, Success Over the past decade, there have been a number of studies that examined either
shipper or carrier selection and evaluation factors. However, there has been little comparison between how these two groups perceive these factors with regard to their partners. This study examines the similarities and differences with the rankings of factors between shipper and carrier groups. Furthermore, the results highlight the various levels of satisfaction between the two groups.
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Effective logistics outsourcing in New Zealand: an inductive empirical investigation Jay Sankaran, David Mun and Zane Charman Keywords Contracts, Logistics, Outsourcing, Effectiveness, Quality, New Zealand Reports an inductive, qualitative investigation into third party logistics contracts in New Zealand. The objective of the study was to uncover managerial insights into effective logistics outsourcing that are appropriate to the New Zealand context. A salient feature of the research is the methodology that involved going back-and-forth between data gathering (the principal source of data was flexible interviews) and analysis, which was conducted through formal coding techniques. Analysis reveals that the third party provider’s refraining from premature monetary commitments is an instrumental variable in the effectiveness of third party logistics contracts in New Zealand. Also uncovers how the uniqueness of the NZ context shapes third party logistics in NZ.
The electronic supply chain: its impact on the current and future structure of strategic alliances, partnerships and logistics leadership Lisa R. Williams, Terry L. Esper and John Ozment Keywords Logistics, Internet, Alliances, Supply chain management, Partnering, Leadership The advent of the Internet and electronic communications has enabled companies to be
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more responsive to their customers. However, the same technological advancements are changing the marketplace and providing an impetus for changes in strategic alliance and partnership structures. Successful leaders of the future will have to understand how to operate in the new marketplace and within the evolving organizational structures where alliances and partnerships are changing. The purpose of this article is to shed light on the
current and future organizational structures in the logistics industry. Toward that end, traditional supply chain management (SCM), electronic supply chain management (eSCM), and the resulting impact on strategic alliances a n d part ne rs hi ps wil l be ex pl or ed . Additionally, considering the inherent ability of the eSC to be dynamic and adaptable, the new type of leader that is likely to be most successful in this new structure is discussed.
French abstracts Comprendre l’acquisition d’informations des acheteurs pour l’achat de services de logistique Carol C. Bienstock Mots-cle´s Logistique, Informations, Gestion de la chaıˆne d’approvisionnement, Industrie, Services Au cours des quelques dernie`res de´cennies, la logistique s’est de plus en plus manifeste´e en tant que source permettant d’obtenir un avantage compe´titif durable. L’article que voici incorpore les travaux entrepris re´cemment, dans le domaine de la mercatique des services, sur l’acquisition d’informations des acheteurs, et les recherches faites sur le comportement d’achat industriel, afin de permettre aux prestataires de services logistiques de mieux comprendre et ge´rer les activite´s d’acquisition d’informations et les activite´s d’achat de leurs clients pour les services logistiques.
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Mercatique des relations internationales: une solution permettant d’ame´liorer les relations dans la chaıˆne d’approvisionnement Scott B. Keller Mots-cle´s Mercatique des rapports, Chaıˆne d’approvisionnement, De´veloppement organisationnel Les contraintes que pre´sente la compe´titivite´ sur le marche´, qui sont ressenties dans les environnements commerciaux d’aujourd’hui, ont encourage´ le partenariat entre de nombreux membres au sein de la chaıˆne d’approvisionnement. Ce qui est particulie`rement inte´ressant, c’est le de´veloppement de rapports fructueux entre les entreprises afin d’obtenir la qualite´ des produits et services et l’efficacite´ qui resteraient autrement non revendique´es. La recherche que voici identifie plus particulie`rement le besoin que ressentent les membres de la chaıˆne d’approvisionnement d’encourager des relations plus saines dans l’entreprise, afin d’obtenir un succe`s plus complet et les avantages associe´s aux partenariats externes. L’auteur se sert de la notion de mercatique des relations internationales et propose un mode`le permettant aux socie´te´s d’identifier les variables associe´es a` la mercatique pour le client interne. L’industrie des transporteurs automobiles sert d’exemple dans le secteur des services et il est approprie´ pour l’analyse; l’auteur de´crit aussi les implications pour le maintien des meilleurs employe´s de front possibles, qui sont conscients des besoins des clients. Questions de partenariat entre expe´diteurs et transporteurs, classements et satisfaction Brian J. Gibson, Stephen M. Rutner et Scott B. Keller Mots-cle´s Expe´dition, Partenariat de transport, Alliances, Succe`s La dernie`re de´cennie a produit toute une se´rie d’e´tudes sur les facteurs de se´lection et d’e´valuation des expe´diteurs ou des transporteurs. Elles ont cependant offert peu de comparaisons entre les diffe´rentes manie`res dont ces deux groupes perc¸oivent ces facteurs, en ce qui concerne leurs partenaires. L’e´tude que voici examine les ressemblances et diffe´rences que l’on rencontre, dans le classement des facteurs, entre le groupe des expe´diteurs et celui des transporteurs. De plus, les re´sultats mettent en e´vidence les divers niveaux de satisfaction entre les deux groupes. Externalisation efficace de la logistique en Nouvelle-Ze´lande: une analyse empirique inductive Jay Sankaran, David Mun et Zane Charman Mots-cle´s Contrats, Logistique, Externalisation, Efficacite´, Qualite´, Nouvelle-Ze´lande L’article rend compte d’une analyse qualitative inductive sur des contrats logistiques avec des tiers en Nouvelle-Ze´lande. L’objectif de l’e´tude consistait a` mettre a` jour les aperc¸us de la
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direction concernant l’externalisation efficace des services de logistique, qui sont approprie´s au contexte ne´o-ze´landais. Une caracte´ristique frappante de la recherche est sa me´thodologie; celleci impliquait la transition continue entre la collecte des donne´es (la source principale des donne´es e´tait repre´sente´e par des interviews flexibles) et l’analyse des donne´es, qui se fit au moyen de techniques de codage formelles. L’analyse re´ve`le que l’abstention, de la part des prestataires tiers, d’engager leurs fonds de manie`re pre´mature´e repre´sente une variable instrumentale dans l’efficacite´ des contrats logistiques avec des tiers en Nouvelle-Ze´lande. L’analyse indique e´galement comment le caracte`re unique du contexte ne´o-ze´landais fac¸onne la logistique avec des tiers en Nouvelle-Ze´lande. La chaıˆne d’approvisionnement e´lectronique: son impact sur la structure actuelle et future des alliances et associations strate´giques et de la fonction de direction en logistique Lisa R. Williams, Terry L. Esper et John Ozment Mots-cle´s Logistique, Internet, Alliances, Gestion de la chaıˆne d’approvisionnement, Partenariat, Fonction de direction L’ave`nement de l’Internet et des communications e´lectroniques a permis aux entreprises de mieux re´pondre a` leurs clients. Cependant, ces meˆmes e´volutions techniques apportent des changements sur le marche´ et entraıˆnent des modifications a` la structure des alliances et associations strate´giques. Pour pouvoir re´ussir, les directeurs de demain devront eˆtre capables d’exploiter leur entreprise sur le nouveau marche´ et dans le cadre des structures organisationnelles en e´volution, dans lesquelles les alliances et associations changent constamment. Le but de l’article que voici est d’e´claircir les structures organisationnelles d’aujourd’hui et de demain dans l’industrie de la logistique. A cette fin, nous explorons la gestion traditionnelle de la chaıˆne d’approvisionnement (SCM - supply chain management), la gestion e´lectronique de la chaıˆne d’approvisionnement (eSC - electronic supply chain management), et l’impact sur les alliances et associations strate´giques qui en re´sulte. De plus, vu les caracte´ristiques inhe´rentes a` la chaıˆne d’approvisionnement e´lectronique, a` savoir son dynamisme et son adaptabilite´, nous discutons le nouveau type de directeur susceptible de re´ussir au mieux dans cette nouvelle structure.
Spanish abstracts Entendimiento de la adquisicio´n de informacio´n de compradores para la compra de servicios de logı´stica Carol C. Bienstock Palabras clave Logı´stica, Informacio´n, Gestio´n de la cadena de suministro, Industria, Servicios Durante las u´ltimas de´cadas, la logı´stica ha surgido progresivamente como una fuente de ventaja competitiva sostenible. Este artı´culo incorpora trabajo reciente en el marketing de servicios sobre la adquisicio´n de informacio´n de clientes con investigacio´n acerca del comportamiento de compra industrial, para ayudar a los proveedores de servicios de logı´stica a comprender y gestionar su adquisicio´n de informacio´n sobre clientes y las actividades de compra relacionadas con los servicios de logı´stica.
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Marketing de relaciones internas: una clave para mejores relaciones en la cadena de suministro Scott B. Keller Palabras clave Marketing de relaciones, Cadena de suministro, Desarrollo organizacional Las presiones competitivas del mercado dentro de los entornos comerciales contempora´neos de hoy en dı´a han estimulado la asociacio´n de muchos miembros de la cadena de suministro. Resulta de particular intere´s el desarrollo de relaciones satisfactorias entre empresas en un esfuerzo por obtener eficiencia y calidad de productos y servicios, que de otro modo se quedarı´an sin reclamar. Esta investigacio´n identifica especı´ficamente la necesidad de que los miembros de la cadena de suministro sostengan unas relaciones ma´s saludables dentro de la empresa con el fin de materializar el e´xito ma´s plenamente, y obtener beneficios relacionados con las asociaciones externas. Se emplea el concepto del marketing de relaciones internas y se propone un modelo para ayudar a las empresas a identificar las variables asociadas con el marketing dirigido al cliente interno. La industria del transporte automovilı´stico ofrece una configuracio´n de servicio apropiada para el ana´lisis, y se perfilan implicaciones para conservar a los mejores empleados de primera fila por su concienciacio´n sobre el cliente. Cuestiones sobre la asociacio´n entre expedidor-transportista, clasificaciones y satisfaccio´n Brian J. Gibson, Stephen M. Rutner y Scott B. Keller Palabras clave Despacho, Ssociacio´n de transporte, Alianzas, E´xito Durante la u´ltima de´cada, se han realizado una serie de estudios que han examinado los factores de seleccio´n y evaluacio´n, bien del expedidor o del transportista. No obstante, se ha producido poca comparacio´n entre co´mo estos dos grupos perciben dichos factores con respecto a sus socios. Este estudio examina las semejanzas y diferencias en las clasificaciones de factores entre grupos de expedidores y transportistas. Asimismo, los resultados destacan los diversos niveles de satisfaccio´n entre los dos grupos. Obtencio´n externa eficaz de logı´stica en Nueva Zelanda: una investigacio´n empı´rica inductiva Jay Sankaran, David Mun y Zane Charman Palabras clave Contratos, Logı´stica, Obtencio´n externa, Eficacia, Calidad, Nueva Zelanda Informa sobre una investigacio´n inductiva cualitativa de contratos logı´sticos de terceros en Nueva Zelanda. El objetivo del estudio fue descubrir las visiones directivas internas sobre la obtencio´n externa eficaz de logı´stica, que resultan apropiadas dentro del entorno de Nueva
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Zelanda. Una caracterı´stica destacada de la investigacio´n es la metodologı´a que requirio´ la ida y vuelta entre la recopilacio´n de datos (la fuente principal de datos fueron entrevistas flexibles) y el ana´lisis, el cual se realizo´ a trave´s de te´cnicas formales de codificacio´n. El ana´lisis revela que la abstencio´n por parte de los proveedores terceros de compromisos monetarios prematuros es una variable decisiva para la eficacia de los contratos logı´sticos de terceros en Nueva Zelanda. Tambie´n descubre co´mo la singularidad del contexto neocelande´s da forma a la logı´stica de terceros en Nueva Zelanda. La cadena de suministro electro´nico: su impacto sobre la estructura actual y futura de las alianzas estrate´gicas, asociaciones y liderazgo logı´stico Lisa R. Williams, Terry L. Esper y John Ozment Palabras clave Logı´stica, Internet, Alianzas, Gestio´n de la cadena de suministro, Asociacio´n, Liderazgo La llegada de Internet y de las comunicaciones electro´nicas ha permitido a las empresas responder ma´s ra´pidamente a sus clientes. No obstante, los mismos avances tecnolo´gicos esta´n cambiando el mercado y proporcionando un ´ımpetu para que se produzcan cambios en la alianza estrate´gica y las estructuras de asociacio´n. Los lı´deres con e´xito del futuro tendra´n que comprender co´mo funcionar en el nuevo mercado y dentro de las estructuras organizacionales evolutivas, donde las alianzas y asociaciones esta´n cambiando. El propo´sito de este artı´culo es iluminar las estructuras organizacionales actuales y futuras en la industria logı´stica. Con ese fin, se explorara´n la gestio´n tradicional de la cadena de suministro (SCM), la gestio´n de la cadena de suministro electro´nico (eSC) y el impacto resultante sobre las alianzas y asociaciones estrate´gicas. Adicionalmente, considerando la habilidad inherente de la eSC para ser dina´mica y adaptable, se discute el nuevo tipo de lı´der que probablemente tenga ma´s e´xito dentro de esta nueva estructura.
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Acknowledgements This special issue of the International Journal of Physical Distribution & Logistics Management would not have been possible without the dedication and patience of those who reviewed the submissions. Their intelligent and thorough critiques were of tremendous help to the Editor and, I am sure, to the authors of both accepted and unaccepted manuscripts. The Editor extends his deepest appreciation to: . Kenneth B. Ackerman, President, The Ackerman Company, Columbus, Ohio, USA. . George A. Gecowets, Executive Vice President (ret.), Council of Logistics Management, Downers Grove, Illinois, USA. . Robert R. Milner, Partner, Colliers, Wilkinson & Snowden, Memphis, Tennessee, USA. . Ernest L. Nichols, PhD, Director – FedEx Center for Cycle Time Research, The University of Memphis, Fogelman College of Business, Memphis, Tennessee, USA. . Michael D. Seef, Principal, MDS Logistics, Evanston, Illinois, USA. Clifford F. Lynch Guest Editor
Guest editorial Guest Editor Clifford F. Lynch of C.F. Lynch & Associates has provided management advisory services in logistics since 1993. During the previous 35 years, he was Vice-President – Logistics for the Quaker Oats Company and President of Trammell Crow Distribution Corporation. He attended public schools in Memphis, received his undergraduate degree from the University of Tennessee, and an MBA from the University of Chicago. He is a certified member of the American Society of Transportation and Logistics and is a member and past president of the Council of Logistics Management. He has received numerous awards in the field of logistics including the CLM Distinguished Service Award, Traffic Management Magazine Professional Achievement Award and University of Tennessee Department of Marketing and Transportation Distinguished Alumnus. He is the author of numerous articles on the subject of logistics and the recently published book, Logistics Outsourcing – A Management Guide. He is chairman of The Memphis Food Bank, and is licensed as an affiliate real estate broker in the State of Tennessee.
While outsourcing has been a factor in the logistics industry for centuries, in recent years there has been a dramatic growth in the contract or ‘‘third party’’ logistics industry. As provider firms have gained efficiencies and sophistication and increased their service offerings, an increasing number of firms have entered into strategic alliances or partnerships with one or more logistics service companies. In addition, a number of new providers have entered the field, and the range of services provided or desired has broadened considerably, particularly in the technology area. These developments not only have had a major impact on growth in the provider/client segment of the industry, but many contract logistics firms are turning to strategic alliances and partnerships with other providers as a means of offering full service logistics packages. According to R.V. Delaney of Cass Information Services, the logistics service market increased from $10 billion to $25 billion between 1992 and 1996. By 2000, the market size had increased to over $50 billion. Much of this more recent growth has been a result of expanded provider offerings, both from new and existing firms. Today’s typical logistics service provider is much different from those of ten or even five years ago. It is more sophisticated, offering the latest in facilities, materials handling techniques, and transportation equipment. Some of these firms, such as Schneider Logistics, have moved far beyond their logistics origins and are offering leading-edge technology and visibility of activities throughout the supply chain. While the next year or so are expected to see little if any growth, interest in outsourcing should not diminish significantly. What we will see, however, is more client emphasis on such important issues as provider strategy, global capability, financial stability, security, relationships, and information technology. This special issue provides some of the current thinking on strategic alliances and outsourcing both in the USA and abroad. Authors address technology, relationships, and satisfaction levels in the current environment, plus others which their research indicates are important. Clifford F. Lynch
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The research register for this journal is available at http://www.emeraldinsight.com/researchregisters
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The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/0960-0035.htm
Understanding buyer information acquisition for the purchase of logistics services Carol C. Bienstock Department of Marketing and Supply Chain Management, Fogelman College of Business and Economics, The University of Memphis, Memphis, Tennessee, USA Keywords Logistics, Information, Supply chain management, Industry, Services Abstract During the last several decades, logistics has increasingly emerged as a source of sustainable competitive advantage. This article incorporates recent work in services marketing on customer information acquisition, with research on industrial buying behavior to help logistics service providers understand and manage their customers’ information acquisition and purchase activities for logistics services.
Introduction What sources of information do buyers of logistics services use in making their purchase decisions? What are the challenges inherent in making a purchase decision for a product that, prior to actually experiencing it, cannot easily be evaluated? Do all purchasers of logistics services use the same information sources? Can purchasers of logistics services be segmented according to their information acquisition activities? Understanding these issues will enhance logistics service providers’ efforts to manage customer information acquisition and purchase decisions for their services. During the last several decades, logistics has increasingly emerged as a source of sustainable competitive advantage (Kyj and Kyj, 1994; Novack et al., 1995; Bowersox et al., 1995; Bienstock et al., 1997; Mentzer and Williams, 2001). A number of researchers have responded to the growing competitive significance of logistics and supply chain management by integrating research from services marketing with the traditionally more operationally based logistics studies to explore customer service and logistics service quality issues (Bienstock et al., 1997; Mentzer et al., 1999; Mentzer et al., 2001). The purpose of this article is to continue this integration by incorporating recent work in services marketing on customer information acquisition with research on industrial buying behavior. The discussion synthesizes the existing research to generate suggestions that help logistics service providers understand and manage their customers’ information acquisition and purchase decisions for logistics services. Suggestions are also proposed for future research to empirically verify and validate these initial efforts. International Journal of Physical Distribution & Logistics Management, Vol. 32 No. 8, 2002, pp. 636-648. # MCB UP Limited, 0960-0035 DOI 10.1108/09600030210444890
Services and customer information search Achieving success in service businesses is particularly challenging because of what Bharadwaj et al. (1993, p. 83) term the ‘‘moderating effects of the
characteristics of services’’. More than two decades ago, one of the primary motivators for the origination of the field of services marketing research was the challenge of understanding the process customers use to purchase and evaluate services (Zeithaml, 1981). Understanding information acquisition is vital for service businesses because it is one of the early stages in the purchase decision process for both consumer and industrial products (Moriarty and Spekman, 1984; Engle et al., 1986; Dholakia et al., 1993). Customers use information to increase certainty and lower the risk they associate with a purchase. Research in the area of services marketing has demonstrated empirically that the perception of uncertainty, and, therefore, risk, is higher for products that are less tangible, such as services (Deshpande and Zaltman, 1987; Murray and Schlacter, 1990). And, although research in industrial/organizational buying behavior has not specifically addressed industrial purchasing processes for services (e.g. transportation), it has shown that industrial buyers engage in increased information search when the buying situation is risky (i.e. as a result of performance or economic uncertainty) (Moriarty and Spekman, 1984). Thus, it is important for service businesses, such as logistics providers, to understand, absent information in the form of actual experience from purchase and use of a service, what alternative sources of information customers seek, and how this information impacts their purchase decisions. Buyer information sources can be classified into two categories: internal and external. Sources of internal information include evaluations of past experiences with a service, past experiences with related services, and previous experience with the service environment or industry, all of which create customer knowledge (Leigh and Rethans, 1984; Lynch and Srull, 1982). Heretofore, the integration of services marketing and logistics service literatures has focused primarily on how internal information sources are created for logistics service customers. For example, Bienstock et al. (1997) and Mentzer et al. (1999, 2001) have investigated logistics service customers’ perceptions of service quality based on their experiences with logistics services. These experiences create knowledge, which forms internal sources of information for subsequent logistics service purchase decisions. In contrast, this article focuses primarily on examining and proposing guidelines that enhance logistics service providers’ ability to manage effectively external sources of information for logistics customers’ purchase decisions. External information sources include what is referred to as commercial (i.e. ‘‘marketer dominated’’) and non-commercial (i.e. ‘‘non-marketer dominated’’) information, both impersonal and personal (Engle et al., 1986; Moriarty and Spekman, 1984). An example of impersonal commercial information is a print advertisement for freight forwarding services. Personal commercial information, in contrast, is that provided by the freight forwarder’s sales or customer service representatives. Impersonal non-commercial information might originate from a Council of Logistics Management study or from carrier performance ratings by the American Trucking Association. Finally, examples
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of personal non-commercial information sources are recommendations (or warnings!) from customers of a logistics provider offering fleet management services; direct observation (examining office furniture prior to purchase); or product trial (test driving an automobile). Related to the acquisition of external information for services is the importance of what is known as the integrated marketing communications (IMC) perspective. The IMC maintains that all external sources of product/ service information play a vital role in creating and maintaining product/ service positioning, and as such, must be managed strategically for their ability to influence customer perceptions and initiate and maintain customer relationships (Duncan and Moriarty, 1998). Services marketing literature has long recognized the fact that services are distinguished by intangibility, relative lack of standardization, and simultaneous production and consumption (Berry, 1980), thus presenting particular information acquisition challenges. Because of these unique characteristics, service customers, since they cannot actually examine the service prior to purchase, confront a purchasing situation with relatively less information than do purchasers of more tangible products. The intangibility and simultaneous production and consumption of services mean that customers have no first hand information on the service they will receive until they experience the service after purchase and use. For, although they may be able to obtain information from service providers’ sales literature or recommendations from other customers, this is, at best, only a proxy for what their actual experience with the service will be. Moreover, service customers may, in some cases, lack the time, financial resources, or expertise to adequately evaluate a service, even after they have experienced it. Mindful of the unique information acquisition challenges presented by services, Smith (2000) introduced the incomplete information framework, a reconceptualization of Stigler’s (1961) cost/benefit analysis of information acquisition and Nelson’s (1970, 1974) and Darby and Karni’s (1973) economics of information taxonomy. The next section explains the basis and development of Smith’s incomplete information framework. Then, the third section integrates research in services marketing and industrial purchasing behavior to help suppliers of logistics services better understand and manage their customers’ information acquisition and purchase activities. Basis and development of the incomplete information framework Stigler first proposed his economics of information (EOI) theory in 1961 to elucidate the process of information search prior to purchase. The theory maintains that potential buyers will search for information only as long as the costs of the search do not exceed the benefits (Urbany, 1986). Nelson (1970, 1974) and Darby and Karni (1973) extended Stigler’s EOI theory in an effort to explain the relationship between suppliers’ communication efforts and purchasers’ information acquisition activities; and Zeithaml (1981) borrowed
the extended EOI framework from economics and introduced it into services marketing. The extension of EOI presents a taxonomy that classifies purchasers’ product information search and evaluation processes into three categories. If a buyer can easily obtain and evaluate information about a product before and after purchase, the information acquisition and evaluation process is dominated by search attributes. For example, it is relatively easy for purchasers of office furniture to obtain information and evaluate style and construction prior to purchase. And, they are obviously able to obtain information and easily evaluate it after purchase/use. On the other hand, an information search and evaluation process for which information, in the form of experience with the product, is unavailable prior to purchase, but is available and easy to evaluate after purchase, possesses a high degree of experience attributes. For example, prior to purchase, an apparel manufacturer has no information on their particular experience with freight forwarding services. In contrast, after purchase/use of the services, the apparel manufacturer does have the necessary information and can relatively easily evaluate their experience with the services. A third category, credence, was introduced by Darby and Karni (1973). A purchasing process high in credence attributes is one for which information/ experience is unavailable before purchase, and, although available, is difficult to evaluate, even after purchase and use. Difficulties for evaluation processes characterized by credence attributes arise because purchasers lack the resources (e.g. financial or temporal) or the expertise to evaluate products adequately. Essentially, in this situation, a buyer concludes that the costs of evaluating information after purchase are higher than the benefits. For example, if a retailer is considering the purchase of freight payment and auditing services, they are unable to obtain information on their particular experience with the service prior to purchase/use. And, after purchase/use, unless they want to constantly audit the auditor, the retailer must, to some degree, trust that the payment and auditing services are being performed satisfactorily. According to Smith (2000), prior to her reconceptualization of the EOI taxonomy, services marketing research failed to consider adequately both dimensions of purchasers’ search processes: when a buyer has information available to guide the purchase decision, as well as the difficulty of understanding, interpreting, and evaluating information when it is available. Smith’s incomplete information framework addresses these heretofore overlooked complexities in the EOI taxonomy by explicitly representing both when information is available, as well as how difficult the information is to incorporate into a purchase decision process (see Figure 1). This reconceptualization makes the framework useful for analyzing a variety of purchase situations. Another advantage of Smith’s reconceptualization is that it puts the emphasis on the purchase process or situation, rather than on the product or
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Figure 1. Characterizing purchase processes: incomplete information framework
the purchaser (Smith and Bush, 2002). This is important because all purchasers of logistics services, for example, are not the same in their level of sophistication and expertise. Evaluating logistics IT services, even after purchase/use may be difficult for a relatively unsophisticated purchaser, but relatively easy for one with more expertise. Furthermore, sophistication and expertise may change over time. For example, purchasers who have relatively little experience purchasing freight forwarding services have different information requirements and differ in their ability to evaluate information and experience after purchase/use. However, as they gain experience, these customers become more expert. Another aspect that must be considered, in relation to customer expertise, is the role that online, interactive information contributes to the development of buyer sophistication. Consumer research has demonstrated that the ease of acquisition and customization of information from interactive sources, such as service providers’ and industry and government Web sites, has the ability to significantly influence purchasers’ sophistication (Alba et al., 1997). Using the incomplete information framework’s classification of purchase processes enables a logistics service provider to understand and consider relevant information acquisition issues for all purchasers, even if these issues
change over time as purchasers become more proficient in their ability to evaluate logistics services. Since the focus of this article is on customer information acquisition for the purchase of logistics services, this discussion concentrates on the aspects of the incomplete information framework that are most relevant to services. The boxes labeled 2 and 4 in Figure 1 depict the characterization of these purchase situations as either experience (see box 2: information/experience is not available before purchase, but is available and easy to evaluate after purchase/use) or credence (see box 4: information/ experience is not available before purchase, and is available but difficult/ impossible to evaluate after purchase/use.
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Implications of the incomplete information framework for logistics services Based on research in services marketing and industrial purchasing behavior, this section discusses a variety of external information sources to help logistics service firms understand and, therefore, effectively manage their customers’ information acquisition and purchase activities. The discussion is organized around the four types of external information discussed above (impersonal and personal commercial; impersonal and personal non-commercial). The discussion in this section is summarized in Table I. Impersonal commercial information Sales literature and advertisements (including those delivered online) are typical impersonal commercial sources of information for purchasers of logistics services. Research in services marketing indicates that these sources of information have value primarily in purchasing situations where Description of purchase situation
Effective sources of information
‘‘Experience’’ purchase situations: information/experience available after purchase/use and easy to evaluate
Service information provided by sales/customer service representatives Recommendations from other customers Recommendations from colleagues in and out of the purchasing organization Sales literature and advertisements Service branding and price as market signals Government and/or industry service ratings
‘‘Credence’’ purchase situations: information/experience available after purchase/use, but difficult to evaluate
Activities by logistics providers’ sales/customer service representatives that foster/maintain trust and commitment Activities by logistics providers’ sales/customer service representatives that signify the professionalism, reputation, competence of the logistics service provider Price as a market signal Government and/or industry service ratings
Table I. Purchase situations and effective information sources
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information/experience is difficult to evaluate prior to purchase, but is available and easily evaluated after purchase and use (Zeithaml, 2000). For example, Exel’s Web site (http://www.exel.com), conveys impersonal commercial information about value added logistics services, integrated logistics IT solutions, and global freight management that firms can incorporate into their purchase decisions for these services. Another type of impersonal commercial information that logistics service providers can use to manage buyer information acquisition is what is known as market ‘‘signals’’, an example of which is product/service branding. Unfortunately, very little research has been done on industrial product branding, and none on industrial services branding. However, perhaps some preliminary conclusions can be drawn from services marketing research on branding, which has found it to be most effective in purchase situations for which information/experience is unavailable prior to purchase, but is available and easily evaluated after purchase/use (Brucks et al., 2000; Kirmani and Rao, 2000). For example, purchasers of Exel’s freight management services could be expected to base their purchase decisions to some extent on the Exel ‘‘brand’’ associated with the company’s original warehouse management services. Another type of market signal is pricing. According to a recent article by Dutta et al. (2002) in MIT Sloan Management Review, pricing strategies, if employed correctly, can represent a significant strategic weapon. For example, Dutta et al. (2002) suggest that, in industrial markets, an effective pricing strategy involves pricing industrial goods and their attendant services separately. But what are the pricing implications for industrial products that consist purely of value added services, such as logistics? Although the results have been mixed, services marketing and consumer research has found that, for some products, there is a positive correlation between price and quality, i.e. high price signals high quality (Chen et al., 1994; Faulds et al., 1995). There has been relatively little research in pricing for industrial products, and practically none for industrial services. However, research examining the effect of pricequality correlations for consumer services, such as legal services, indicates that price is an important market signal for suggesting quality in credence purchase situations, i.e. when information, although available, is difficult to evaluate even after purchase/use (Tellis and Gaeth, 1990). This effect needs to be further investigated within the context of logistics services. Personal commercial information Both services marketing research and research into industrial buying behavior stress the importance of personal sources of information, particularly for decisions that have economic or performance uncertainty. Moreover, personal commercial information, from sources such as sales or customer service representatives or discussions with representatives at trade shows, has historically been a significant factor in industrial purchasing decisions (Moriarty and Spekman, 1984).
Research in services marketing has demonstrated that, because service customers are motivated to reduce the costs of information search and uncertainty, they respond positively to what is termed ‘‘relationship marketing’’, (i.e. activities designed to develop and maintain a relationship with customers), in purchase situations where information/experience is not readily available prior to purchase (Zeithaml, 1981; Nayyar, 1990; Bharadwaj et al., 1993). Personal commercial sources of information typified by the relationships that develop between sales and customer service representatives of logistics providers and their customers are examples of relationship marketing activities. These activities play a vital role in a logistics provider’s integrated marketing communications (IMC) strategy, both for purchase situations where services can be easily evaluated after purchase/use, as well as for purchase situations where information/experience with services is available, but difficult to evaluate even after purchase/use. For purchasing situations where information/experience is unavailable before purchase, but is available and easily evaluated after purchase, skillful use of personal commercial information succeeds in shifting the emphasis from the purely transactional to a longer-term, more collaborative focus (Garbarino and Johnson, 1999). For example, suppose Retro Logistics manages outbound LTL transportation for Metro manufacturing. Metro knows Retro’s sales and/ or customer service representatives to be helpful, straightforward, and responsive. However, suppose one week, Retro’s customer service representatives notify Metro that, because of an unavoidable weather delay, Monday afternoon’s outbound freight cannot go out until Tuesday morning. Metro is less likely to turn to another logistics provider, because the actions of Retro’s customer service representatives mitigate, to some extent, their customer’s dissatisfaction with the service failure. In purchase situations where information/experience is available, but difficult to evaluate even after purchase/use, personal commercial information tends to ‘‘tangiblize’’ the service. Essentially, these sources of information build trust and commitment, thus helping to establish a logistics provider’s reputation with customers, and providing them with a basis for continuing to purchase from the organization. For example, suppose Global Transport performs freight auditing and payment for Metro manufacturing. Absent Metro’s constant monitoring of Global’s services, information from the sales and/or customer representatives of Global, and the consequent reputation that Global builds with Metro, is a significant factor in Metro’s decision to continue purchasing these services from Global. Impersonal non-commercial information Research in industrial buyer behavior has demonstrated that impersonal noncommercial sources of information (e.g. government or industry ratings services) tend to assume greater importance when the purchase process is perceived to be more risky, presumably because these sources are viewed as being relatively objective (Moriarty and Spekman, 1984). Since industrial
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services, such as logistics, would necessarily carry more performance risk (e.g. will the carrier deliver on time?), services marketing research suggests that impersonal non-commercial information plays an important role in purchasers’ decision processes (Zeithaml, 1981). Because of the relative dearth of research into the purchasing process for industrial services, there exists no empirical evidence to suggest whether impersonal non-commercial information is relatively more effective for purchase processes characterized as experience (where information/experience is not available before purchase, but is available and easy to evaluate after purchase/use) or credence (information/experience is not available before purchase, and is available but difficult/impossible to evaluate after purchase/use). However, because industrial buyers regard impersonal non-commercial information as objective, it seems intuitive that this source of information would facilitate both types of purchase decisions. For example, suppose Woodline, a furniture manufacturer, is contemplating securing the services of REACT!, a third party logistics provider, for freight management. Assuming a reasonable level of expertise on Woodline’s part, their purchase process for these services can probably be characterized as an experience situation, i.e. although they do not have the necessary information to evaluate their experience with REACT!’s freight management services prior to purchase and use, information/experience will be available and relatively easy for them to evaluate after purchase/use. As part of the purchasing process, Woodline could obtain REACT!’s International Motor Carrier Audit Commission (IMCAC) rating and/or ratings from the Bureau of Transportation Statistics (BTS) to provide them with objective assessments of REACT!’s safety, financial, and operating record. Personal non-commercial information Research in both services marketing and industrial purchasing behavior has found a significant role for ‘‘word of mouth’’ information, i.e. personal noncommercial sources of information for both consumer and industrial purchasing decisions, particularly when there is uncertainty surrounding the decision (Webster, 1968; Zeithaml, 1981; Moriarity and Spekman, 1984). For example, if PCWinner, a computer manufacturer, is contemplating engaging Access Logistics to handle their product returns, PCWinner, prior to using the services of Access, has no information/experience about the quality of the product return service they will receive. However, positive recommendations from the Access Logistics’ current customers would diminish uncertainty about the product return service, thereby reducing the perceived risk and facilitating the purchase decision for PCWinner. Unfortunately, because of the relative scarcity of research in services marketing and industrial buying behavior related to industrial services, such as logistics, it is not clear whether the effectiveness of personal non-commercial information varies depending on whether or not information/experience with a service can be easily evaluated after purchase and use. Moreover, even in the context of consumer services, services marketing research has not explored the
differential efficacy of personal non-commercial sources for experience versus credence purchasing situations. This is an area that should be explored more thoroughly. Conclusions and suggestions for future research This article has integrated recent work on customer information acquisition in services marketing with research on industrial buying behavior for the purpose of helping logistics service providers understand their customers’ information acquisition activities for purchases of logistics services. Based on the existing research, the discussion presented sources of information which were expected to be effective in purchasing situations characterized as either experience (information/experience is not available before purchase, but is available and easy to evaluate after purchase/use) or credence (information/experience is not available before purchase, and is available but difficult/impossible to evaluate after purchase/use). The information provided in our discussion is best viewed from an integrated marketing communications (IMC) perspective. That is, logistics service providers must think strategically in terms of the role external sources of information play in creating and maintaining product/service positioning, as well as the ability of these information sources to influence customer perceptions and initiate and maintain customer relationships. In addition, the discussion presented here should motivate logistics service firms to consider their IMC strategy in terms of customer segments. The incomplete information framework used in this article suggests that customers can be segmented according to the sophistication and expertise of their purchase process, thus enabling logistics service firms to differentially manage their customer segments’ information acquisition activities. For example, a relatively sophisticated and knowledgeable group of customers may not require the same intensity of relationship marketing activity from a logistics firm’s sales and/or customer service representatives that a less sophisticated group of customers requires. Related to this issue of customer segmentation, recent research into customer service and logistics service quality issues has already demonstrated empirically that logistics quality perceptions differ among customer segments (Mentzer et al., 2001), thus providing at least two bases on which to segment industrial service customers meaningfully: information acquisition related to purchase process; and logistics quality perceptions. Based on the discussion presented here, it is clear that further research is required to investigate purchase and evaluation processes for industrial services. For example, although the incomplete information framework has been tested empirically for consumer services, it should be examined more thoroughly within the context of industrial services, such as logistics. Doing so would provide more information about how logistics service providers could segment customers based on their information acquisition requirements and purchase situation. Related to this is the examination of the issue of the effect
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interactive media (e.g. the Internet) has on logistics customers’ information search and purchase processes. As has been demonstrated for consumer purchase processes, do interactive media transform the purchase process for buyers of industrial services by enabling them to increase their expertise more rapidly? Do the roles and/or effectiveness of personal and impersonal noncommercial information differ depending on whether or not information/ experience with a service can be easily evaluated after purchase and use? Since so little research has been done on the role of industrial product branding (and none on industrial services branding), the issue of how this market signal affects logistics customers’ information acquisition and purchase processes needs to be examined empirically. Similarly, exactly what role does price as a market signal play in the purchase process for logistics services? Does its role differ depending on whether the buyer has the expertise and/or resources to evaluate the service after purchase/use? In summary, these initial efforts to integrate services marketing and industrial purchasing research for the purpose of exploring logistics purchasers’ information acquisition activities provide a solid beginning, as well as preliminary guidelines for logistics service providers to consider as they formulate IMC strategies to manage their customers’ information acquisition and purchase activities. They also highlight several productive areas for future research that will serve to enhance the rapidly developing field of study on logistics service quality and supply chain management. References Alba, J., Lynch, J., Weitz, B., Janiszewski, C., Lutz, R., Sawyer, A. and Wood, S. (1997), ‘‘Interactive home shopping: consumer, retailer, and manufacturer incentives to participate in electronic marketplaces’’, Journal of Marketing, Vol. 61, July, pp. 38-53. Berry, L.L. (1980), ‘‘Services marketing is different’’, Business, Vol. 30, May-June, pp. 24-9. Bharadwaj, S.G., Varadarajan, P.R. and Fahy, J. (1993), ‘‘Sustainable competitive advantage in service industries: a conceptual model and research propositions’’, Journal of Marketing, Vol. 57, October, pp. 83-99. Bienstock, C.C., Mentzer J.T. and Bird, M.M. (1997), ‘‘Measuring physical distribution service quality’’, Journal of the Academy of Marketing Science, Vol. 25 Winter, pp. 31-44. Bowersox, D.J., Mentzer, J.T. and Speh, T.W. (1995), ‘‘Logistics leverage’’, Journal of Business Strategies, Vol. 12, Spring, pp. 36-49. Brucks, M., Zeithaml, V.A. and Naylor, G. (2000), ‘‘Price and brand name as indicators of quality dimensions for consumer durables’’, Journal of the Academy of Marketing Science, Vol. 28 No 3, pp. 375-87. Chen, I.J., Gupta, A. and Rom, W. (1994), ‘‘A study of price and quality in service operations’’, International Journal of Service Industry Management, Vol. 5 No. 2, pp. 23-33. Darby, M. and Karni, E. (1973), ‘‘Free competition and the optimal amount of fraud’’, Journal of Law and Economics, Vol. 16, April, pp. 67-86. Deshpande, R. and Zaltman, G. (1987), ‘‘A comparison of factors affecting use of marketing information in consumer and industrial firms’’, Journal of Marketing Research, Vol. 24, February, pp. 114-18.
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Stigler, G. (1961), ‘‘The economics of information’’, Journal of Political Economy, Vol. 69, June, pp. 213-25. Tellis, G. and Gaeth, G. (1990), ‘‘Best value, price-seeking, and price aversion: the impact of information and learning on consumer choice’’, Journal of Marketing, Vol. 54, April, pp. 3445. Urbany, J. (1986), ‘‘An experimental examination of the economics of information’’, Journal of Consumer Research, Vol. 13, September, pp. 257-71. Webster, F.E. (1968), ‘‘On the applicability of communication theory to industrial markets’’, Journal of Marketing Research, Vol. 5, November, pp. 426-8. Zeithaml, V. (1981), ‘‘How consumer evaluation processes differ between goods and services’’, in Donnelly, J. and George, W. (Eds), Marketing of Services, American Marketing Association, Chicago, IL, pp. 186-90. Zeithaml, V. (2000), ‘‘Service quality, profitability, and the economic worth of customers: what we know and what we need to know’’, Journal of the Academy of Marketing Science, Vol. 28, Winter, pp. 67-85.
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Internal relationship marketing: a key to enhanced supply chain relationships Scott B. Keller Department of Marketing and Supply Chain Management, The Eli Broad College of Business, Michigan State University, East Lansing, Michigan, USA
Internal relationship marketing 649 Received December 1999 Revised October 2001
Keywords Relationship marketing, Supply chain, Organizational development Abstract Competitive market pressures within today’s contemporary business environments have encouraged the partnership of many supply chain members. Of particular interest is the development of successful relationships between firms in an effort to gain product and service quality and efficiency that would otherwise go left unclaimed. This research specifically identifies the need for supply chain members to foster healthier relationships within the firm in order to realize more fully success and obtain the benefits associated with external partnerships. The concept of internal relationship marketing is employed and a model is proposed to aid companies in identifying the variables associated with marketing to the internal customer. The motor carrier industry provides an appropriate service setting for the analysis, and implications for retaining the very best customer-conscious frontline employees are outlined.
Introduction Research indicates that supply chains may be strengthened through the manifestation of longer-term, mutually beneficial relationships between its members (e.g. Bowersox et al., 1992, 1999; Ellram, 1995; Ellram and Cooper, 1990; Gentry, 1996). Managers realize that product and service costs may be inflated while quality diminishes as members retain traditional myopic views of their roles in the chain. The concept seems intuitive: let us get together, share information, resources, rewards, and risks, and in the end we shall all be better off. It is that simple, right?– not in all cases. Several researchers have documented critical reasons for failures of relationships between suppliers and buyers (Ackerman, 1996; Bowersox et al., 1992; Ellram, 1995; Lambert et al., 1999). Increasing the chance of successful relationships with select partners is therefore very important. Successful partnerships and relationship integration throughout the supply chain have the potential to render efficiencies, profits, and service unattainable by firms operating more individually (Bowersox et al., 1999; Ellram, 1995; Lambert et al., 1999; Tate, 1996). In an effort to develop successful relationships with select partners, researchers have prescribed decision-making models for identifying potential partners, developmental processes for designing relationships, and implementation principles for fostering partnerships (Lambert et al., 1999). Moreover, studies have rendered industry data indicating key motivations, success factors, and reasons for failures (Ellram and Cooper, 1990; Ellram, 1995).
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Business relationships have been analyzed from an external perspective. That is, experts have studied and documented the most important factors in fostering successful inter-firm relationships. An area in need of more attention, however, is relationship building within firms who are in pursuit of external partnerships. In brief, advocates of internal relationship marketing (IRM) believe that managers must first work to develop solid relationships within the firm (i.e. between co-workers, functional areas, horizontal and vertical) before external relationship marketing (ERM) may fully be achieved (Berry, 1981; Gro¨nroos, 1981). IRM is therefore identified as the ‘‘first’’ market while ERM the second. Purpose Is it not logical to expect employees who are better skilled at managing work relationships within the firm will also be better equipped to maintain healthier relationships with external customers? For example, one primary reason for buyers to enter partnerships is to secure a source that exercises dependability in upholding product and service commitments (Ellram, 1995). Supposing the buyer is aware of a supplier’s program, whereby the supplier continually works to improve relationships within the firm in an effort to assure such dependability. This internal effort would add to the buyer’s confidence that the supplier may be a quality-focused partner. A lack of such focus on total quality commitment may have adverse consequences on the longevity of the relationship and contribute to possible partnership failure (e.g. Ellram, 1995; Gentry, 1996). Toward this end, the purpose of this study is to propose and evaluate one comprehensive internal practice that may contribute to the success of such external relationships. This is the practice of internal relationship marketing (Berry, 1981). The concept of internal relationship marketing Marketing concepts can be called upon to provide an analysis of the internal marketing mix elements needed to satisfy internal customer wants and needs (Berry, 1981). Marketers establish the product, price, promotion, and place for creating marketing plans by which to ensure the satisfaction and patronage of consumers; so too can employers who pursue the satisfaction and allegiance of the very best employees. Employees outside of the traditional marketing functions may have an impact on the quality of service provided to the ultimate customer. It follows, therefore, that employees are in essence the first market, and external customers the second (Gro¨nroos, 1981). Certainly, both ‘‘markets’’ are important to the overall success of service firms; however, it is suggested that firms concentrate on motivating customer-conscious employees through internal marketing and thus enhance their relationship performance in the external supply chain. While other factors such as products and technology also play important roles in the success of external marketing, the effects of internal marketing can,
none-the-less, be overlooked. This point is stressed as Gro¨nroos (1990) makes the case for service firms to pursue effective internal marketing strategies to achieve external marketing potential more fully. Traditional marketing functions have been departmentalized, yet personnel functioning in service firms in the capacities of, for example, service delivery, directly affect the outcome of the service provided and, consequently, the consumer’s perception of the firm. Therefore, such personnel should be considered marketing resources and managed accordingly. While identifying internal marketing as a fundamental philosophical stance available to management, according to Gro¨nroos (1990, p. 8), ‘‘Management should create, continuously encourage, and enhance an understanding of and an appreciation for the roles of the employees in the organization.’’ Only then, will firms be able to retain customer-conscious employees. George (1990, p. 64) concurs, ‘‘The premise of this philosophy is that if management wants its employees to do a great job with customers, then it must be prepared to do a great job with its employees.’’ To implement the concept, firms must identify the needs of employee segments and develop a service concept to meet those needs. Outcome expectations include, for example, increased employee retention, reduced training costs, improved external performance and customer relationships. Following the work of Schneider (1986), George (1990) identifies the need for firms to recruit employees with personality characteristics capable of being molded through formal procedures designed to enhance interpersonal competency. Specifically, he suggests that firms hire people who are ‘‘interpersonally sensitive and responsive’’ to the needs of other persons (George, 1990, p. 66). Understanding these employee behavioral skills and capabilities will aid in the facilitation of an internal marketing strategy within the firm. Management’s support should include providing training, influencing effective communication patterns, and providing and collecting regular employee feedback. By recognizing these communication issues as one of management’s top priorities, service organizations can become more effective in the external marketplace by managing and fostering positive behavioral characteristics of employees who serve the internal as well as external customer. An attempt has been made to illustrate the concept, utility, and potential impact of internal marketing and considering employees, especially those closest to the external customer, as internal customers. Throughout this paper an effort will be made to employ the concept of internal marketing within the context of the motor carrier industry in an attempt to help firms retain truck drivers, improve performance in the field, and, in the process, enhance external relationships with supply chain members. Research setting Service firms provide settings very appropriate for this analysis, whereas difficulty arises in separating the service provided from the service provider
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(Gro¨nroos, 1990). It is proposed that relationships between co-workers may highly impact customers’ perceptions of the service delivered. Where better can this concept be explored than within the motor carrier industry? It could hardly be disputed that the motor carrier industry is a major link in most supply chains built around raw materials transport, product flow to, through, and from manufacturing, and finished goods distribution (Gentry, 1996). Failures in the partnership with carriers who provide critical transport, for example by excluding carriers in initial delivery system design stages, may be accompanied by recurring operating problems. Internally speaking, a lack of carrier communication between terminals has caused problems between suppliers, carriers, and customers (Gentry, 1996). From this perspective, motor carriers provide the valuable time and place utility for product marketing. Because of this central impact, and the costs involved to perform such a role, supply chain members have begun to develop long-term relationships with carriers as they have with product suppliers and buyers. Similarly, motor carriers have looked to strengthen relationships with shippers and receivers in an effort to better plan and execute their operational supply chain duties (Ellram and Cooper, 1990; Gentry, 1996; Gibson et al., 1996; La Londe and Cooper, 1989). Motor carriers must continue to adopt a proactive approach to relationship building within the supply chain. One step should be to look within the carrier and strengthen the first market relationships (IRM). A critical place to begin is with the driver; the primary contact between trucking firms and their shippers and receivers. Drivers are in the unique position of affecting services as promised; one of the leading pitfall areas of logistics partnerships (Ackerman, 1996). Due to the unique impact of a driver on services rendered, motor carriers interested in strengthening the quality commitments of zero defects, continuous improvement, and sustained performance (i.e. the necessary basic quality commitments, Bowersox et al., 1992) must focus attention to this critical area. From this perspective, truck drivers are considered the internal customer; an area further explored in the next section. One key internal customer affecting entire supply chains Berry (1981) set out to establish the employee as customer. Perhaps this practice may be even more important to firms in a homogeneously competitive environment. In relating this to the trucking industry, it is commonly known that carriers offer similar pay and working conditions and are, in essence, quite parallel in their employment offerings. This is evidenced by Richard et al. (1995, p. 281): ‘‘Problems with pay and time home do not account for the fact that most drivers leave one over-the-road trucking job for another, usually one that offers the same level of pay and the same amount of time home.’’ Therefore, it has been suggested that companies, operating under such conditions, implement internal marketing as a tool of distinction for attracting and retaining good employees. Berry (1981, p. 34) explains:
Thinking like a marketer doesn’t have to stop at the boundary of the external marketplace. The people who buy goods and services in the role of the consumer, and the people who buy jobs in the role of employee, are the same people. And the exchange that takes place between employees and employers is no less real than the exchange that takes place between consumers and companies. Whereas consumers exchange economic resources for goods and services, employees exchange human resources for jobs that provide, among other things, economic resources.
For more than a decade, researchers have studied the problem of driver turnover and even longer, managers have lived with it. Wholesale and retail prices escalate with deteriorating service as equipment sits idle due to the industry-wide condition. It is doubtful that motor carriers, and perhaps more importantly shippers and receivers, are capturing the full extent of the costs involved with the loss of a single driver. Total supply chains are affected as greater uncertainties enter into logistics systems. While supply chain relationship concepts are based on complete and shared information, in an effort to reduce the guesswork within the system, it hardly seems possible for the chain to function optimally without a complete and reliable driving force. Since the 1980s, countless trade and research articles about driver turnover have been published. A key point of disseminating such ideas and information is to offer industry further insights and suggestions for helping understand and reduce the problem. Yet, firms continue to report enormous annual turnover figures. What then is missing? Are firms taking heed of research findings and able and willing to forge ahead to employ suggested corrective actions? Can motor carriers alone rectify the situation? Research shows the need for partners to understand the dynamics of each other’s business and join together in problem solving activities in an effort to achieve lowest system costs and highest continued improvements (Gentry, 1996; Stuart, 1993). Many carriers have employed various programs that have had positive effects on managing driver retention, however it is obvious that more must be done. As one effort to provide industry with a means to employ the many suggestions of researchers, a comprehensive integrated model is offered. Figure 1 illustrates a model based on the marketing concept, whereby carriers focusing on the internal customer are shown to improve their external performance in the field. By pinpointing the marketing mix elements of product, price, promotion, and place to satisfy the wants and needs of drivers, carriers are better positioned to perform higher service levels with respect to suppliers, manufacturers, and customers. More specifically, the driver is identified as the internal customer. From this perspective, it becomes apparent that in order to satisfy the needs of this internal customer, industry must identify the marketing elements similar to the manner by which companies seek to understand and satisfy their external customers. Without this critical understanding of the marketing elements, it is unlikely that efforts to build long-term relationships will have much chance to succeed. It then makes sense that if a firm has established a solid marketing plan based on identified marketing mix elements for their external customers, the same marketing-type plan should be employed within the firm.
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Figure 1. Internal relationship marketing
The concept of internal relationships parallels that of external relationships and partnerships. In fact, it is expected that by focusing on the internal, firms will enhance their external relationships. Research findings in the study of truck drivers are many, and, therefore, by categorizing the findings/ suggestions, it is hoped that motor carriers will have an organized marketing mix by which to establish legitimate internal marketing plans for servicing and retaining drivers. A complete internal marketing plan should help firms foster and better manage longer-term relationships with drivers. Ongoing research has linked internal relationships with drivers to external customer relations and performance in the field (Keller, 1999). It is clear that this internal effort will aid carriers and shippers in creating stronger relationships. To fully explore ‘‘marketing’’ to truck drivers, the concept of internal relationship marketing is called upon (George, 1990; Gro¨nroos, 1981). Industry practices offer anecdotal evidence of the importance of treating drivers as customers (Johns, 1995), and since 1996 several researchers have specifically suggested for firms to treat drivers as internal customers (e.g. Keller and Lynch, 1996; Keller and Ozment, 1999a, b; Taylor and Cosenza, 1998). This
study builds on the knowledge gained from previous research by more precisely employing the total internal marketing concept, as set forth by George (1990) and Gro¨nroos (1981). Previous research efforts have identified multiple factors that influence driver decisions to remain with the firm. These factors pertain to the driver, dispatchers, managers, recruiters, the job itself, and other areas. Through this writing, a framework is offered to categorize these factors as product, price, promotion, or place elements of internal marketing to drivers. It is this categorization that is most unique and the primary outcome of this effort; whereas previous studies have stopped short of completely operationalizing the entire concept. The following sections offer this conceptual breakdown. Motor carrier driver products Research suggests that dispatchers may play a greater role in helping retain drivers than was once expected. However, studies have been few that focus directly on the driver and dispatcher relationship, yet the dispatcher is in a unique position to help retain drivers as dispatch is in more frequent contact with drivers compared to other positions within the firm. For this study, the dispatcher is identified as the internal supplier. The question is then proposed, ‘‘What products are supplied by dispatchers (internal suppliers) to fulfill the wants and needs of drivers (internal customer)?’’ Table I contains a breakdown of ‘‘driver products’’ identified through a thorough review of the literature. Of the products outlined, those influenced by the dispatcher will be further explored. Products important to drivers and partially influenced by dispatchers include driver pay (associated with miles), time-home (associated with promised driver-due-home dates), helpfulness in resolving concerns (responsiveness), relationships with supervision, recognition, appreciation, balanced load assignments, non-threatening corporate environment, adherence to realistic job previews, and the promotion of better treatment by customers (Table I contains references to these products). Today, the trucking industry has experienced a reduction in the driving labor pool while the demand for drivers continues to escalate (Delaney, 1999). Under such market conditions drivers are in the position to demand more from firms. Similar to external customers, drivers are expecting a higher level of compliance in the more traditional areas. Increased driver wages may seem out of reach in an industry faced with high competition and the pressure to reduce transport rates. Moreover, the general characteristics of driving irregulartruckload routes require extended time away from home. However, adequate miles for ample pay (e.g. Keller and Ozment, 1999a; Rakowski et al., 1989; Southern et al., 1989; Stephenson and Fox, 1996; Taylor, 1991) is expected by all drivers while promised due-home dates are to consistently be met (e.g. Dobie et al., 1998a; Fuller and Walter, 1993; LeMay et al., 1993; Southern et al., 1989; Stephenson and Fox, 1996). On the occasion that such ‘‘basic’’ needs and wants are unmet, drivers are aware that other positions are immediately available
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Dispatcher related Pay Corsi and Martin (1982) Beilock and Cappelle (1990) LeMay et al. (1993)
656
Taylor (1994)
Time-home
Responsiveness
LeMay et al. (1993) Stephenson and Fox (1996) Keller and Ozment (1999a) Taylor (1991)
Keller and Ozment (1999b) McElroy et al. (1993)
Richard et al. (1994a)
Richard et al. (1994b)
Taylor and Cosenza (1998) Rodriguez and Griffin (1990) McElroy et al. (1993) Taylor (1994)
Keller and Ozment (1999a) Taylor (1991)
Recognition Appreciation/ treatment Balanced load assignment Non-threatening Corporate environment
Realistic job previews (RJP) Treatment by customers
Taylor (1991) McElroy et al. (1993) Dobie et al. (1998a)
Richard et al. (1994a) Ozment and Keller (1999) Keller and Ozment Keller and Ozment (1999a) (1999b) Rodriguez and Griffin Fuller and Walter (1990) (1993) Richard et al. (1994b) Richard et al. (1994a) Richard et al. (1994b) Taylor (1991)
Richard et al. (1994b) Ozment and Keller (1999) Taylor and Cosenza (1998) Taylor and LeMay (1991) Guthrie and Fox (1994)
Fuller and Walter (1993) Taylor (1994) Dobie et al. (1998b)
Guthrie and Fox (1994) Ozment and Keller (1999) Keller and Ozment (1999b) Fuller and Walter (1993) Richard et al. (1994b) Taylor and Cosenza (1998) Richard et al. (1994a) Stephenson and Fox (1996)
LeMay et al. (1993)
Rakowski et al. (1989) Southern et al. (1989) McElroy et al. (1993)
Rakowski et al. (1989)
Rodriguez and Griffin Fuller and Walter (1990) (1993) McElroy et al. (1993) Guthrie and Fox (1994) Stephenson and Fox Keller and Ozment (1996) (1999a)
Keller and Ozment (1999b) Southern et al. (1989)
Relationships with supervision
Table I. Motor carrier driver products
Southern et al. (1989)
Guthrie and Fox (1994) Richard et al. (1995) Keller and Ozment (1999a) Taylor (1994)
Rodriguez and Griffin (1990) Richard et al. (1994a) Dobie et al. (1998a) Keller and Ozment (1999b) Taylor and Cosenza (1998) (Continued)
Company related Retention/ satisfaction programs Benefits Wellness programs Working conditions
Corsi and Fanara (1988)
Internal relationship marketing
McElroy et al. (1993)
Rakowski et al. (1989) Rodriguez and Griffin Fuller and Walter (1990) (1993) McElroy et al. (1993) Holmes et al. (1996)
Rakowski et al. (1989) Rodriguez and Griffin (1990) Guthrie and Fox Stephenson and Fox (1994) (1996) Equipment/tools LeMay et al. (1993) McElroy et al. (1993) Stephenson and Fox (1996) Work itself Rodriguez and Griffin Fuller and Walter (1990) (1993) Advancement Rodriguez and Griffin Fuller and Walter programs (1990) (1993) Taylor and Cosenza (1998) Ongoing training Fuller and Walter McElroy et al. (1993) (1993) Firm as whole Rakowski et al. (1989) LeMay et al. (1993)
657
Fuller and Walter (1993) Taylor (1994) Guthrie and Fox (1994) McElroy et al. (1993)
Taylor and Cosenza (1998) Taylor (1994)
elsewhere in the industry. What Andraski and Novack (1996, p. 25) point out about external customers also holds true for internal customers: Today, these logistics services can be called ‘‘reliability’’ services. Customers expect 100 percent conformance at all times. Doing them well will not gain a firm business but performing them poorly will cost a firm market share.
Fulfilling these basic driver services are simply qualifiers for recruiting but performing them poorly will reduce a firm’s ability to retain drivers and maintain a mobilized fleet. Perhaps the movement of a driver from one job to a similar driving job may be fostered by the failure of dispatchers to recognize the necessity to provide consistently for these basic driver needs. Some carriers are working to provide these internal driver services. For example, one firm conspicuously posts freight bookings by dispatcher name in an effort to create a healthy competitive atmosphere among dispatchers. Dispatchers react to the publicized information by working more diligently to obtain more profitable loads. Drivers benefit from this strategy by having the opportunity to haul more loads associated with better pay. A more radically direct approach has been taken by some truckload motor carriers with their increasing driver pay above the industry average. Beyond these basics, today’s drivers are influenced by their attitudes toward dispatchers (e.g. Richard et al., 1994a, b, 1995; Stephenson and Fox, 1996). Driver attitudes are affected by their perception of the dispatcher’s personable
Table I.
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and helpful nature, positive attitude, and trustworthiness. In addition, driver retention has been shown to increase as dispatchers exercise greater responsiveness (Keller and Ozment, 1999a, b; Ozment and Keller, 1999; Richard et al., 1995; Taylor, 1991). Responsiveness to driver concerns includes dispatcher pursuit of a resolution even if results seem out of the direct control of the dispatcher. Responsiveness is driven by a dispatcher’s sensitivity to the voice of the driver (Keller and Ozment, 1999a, b) thus creating a nonthreatening working environment. Lastly, dispatchers are in the unique position of being in communication with customers and drivers. The opportunity must not be taken for granted, whereas in the development of internal and external relationship integration, dispatchers must be adequately skilled and equipped to negotiate for either side. Carriers must work to establish open communications with shipping and receiving departments, so as to establish a trust that facilitates fair treatment of drivers in the field. Together, these dispatcher attributes contribute to the manageability of their relationships with drivers. Repeated pursuit of these driver services may be the best offense for recruiting drivers and defense against driver turnover, therefore contributing to the satisfaction and allegiance of the very best drivers. Driver and dispatcher price The literature concerning truck drivers indicates very little research with respect to sacrifices associated with providing and obtaining driver products. Table II outlines the price components associated with the previously identified driver products (see Table for references to these price components). For the purpose of this study, price refers to the sacrifices which drivers endure to receive products and to the costs incurred by dispatchers and firms when providing products. For example, more miles are associated with greater levels of pay, therefore, drivers must be more willing to accept such loads that contribute to greater pay. In turn, dispatchers must increase their pursuit of more profitable loads that are more attractive to drivers; possibly reducing some bookings that are inadequate for enhancing the quality of internal relationships with drivers and, consequently, productivity in the field. In addition, dispatchers must be trained in more equally distributing loads to drivers. Assuming this is a driver product, dispatchers and firms must work to develop meaningful measures to monitor and report feedback concerning the service provided to drivers with respect to this product. This may require additional investment in training and monitoring tools. Driver time-home is another product associated with a price. Driver comments clarify that the problem is not so much the frequency or amount of time-home, rather the primary concern is in getting drivers home when first promised or scheduled (Keller and Ozment, 1999a). Failure to meet driver expectations causes drivers to miss personal appointments and family events. While adherence may mean a reduction in bookings or adding driving positions, firms must treat these dates with the same respect given to order
Internal relationship marketing
Dispatcher related Develop customer relationships that Guthrie and Fox (1994) improve driver field treatment Participate in RJPs given to driver candidates
Taylor and LeMay (1991), Taylor (1991)
Keller and Ozment (1999a, b) Obtain more profitable and appealing loads Training and monitoring in balanced load allocation Treat driver-due-home dates with greater importance Provide efficient and effective driver feedback tools Training and monitoring utility and effectiveness of feedback tools Provide training to dispatchers before they assume a position in dispatch Develop tools to monitor performance in sensitivity and responsiveness to drivers Reduce number of drivers assigned per dispatcher Add assistants/trouble shooters Company related Modern equipment
659
McElroy et al. (1993)
Attitude of company to drivers Driver career tracks Invest in measures tying dispatcher Richard et al. (1994a) performance to driver satisfaction Driver related Training in constructive use of feedback tools
Keller and Ozment (1999a, b)
Willingness to negotiate time-on-road to accommodate due-home dates
Keller and Ozment (1999a, b)
Career stage
McElroy et al. (1993)
McElroy et al. (1993)
delivery dates. Drivers may also be asked to pay a price for this adherence. Perhaps it may become necessary to increase a driver’s average time in the field. By extending this road time, more miles may be achieved while dispatchers have more time resources by which to plan driver routes home. It is apparent that internal relationships require great efforts of supplier and customer flexibility.
Table II. Dispatcher and driver price
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Managers often refer to the many lines of communication available for driver feedback. Some include, open-door policies, suggestion boxes, and tollfree driver help-lines. Quite often, while in place, these communication modes are underutilized. Firms may insist they provide drivers the tools, by which to voice their opinions; however, often drivers comment about the lack of effectiveness of the very same tools (Keller and Ozment, 1999a). For this reason, firms must invest in the most efficient and effective methods for collecting driver feedback. Designing and testing each tool for its utility is important and must be diligently pursued. Simply having tools in place is no longer enough for establishing effective internal relationship environments (feedback methods will be discussed in the following section pertaining to the distribution of products). In addition, drivers must invest a genuine interest in participating in the programs. This cannot simply be mandated. Firms must take the time to demonstrate fully the usefulness of each tool while drivers must consistently employ the tools. Training and perseverance on the part of drivers, managers, and executives is vital for creating a less threatening, more cooperative corporate environment. Dispatcher responsiveness also is associated with a price. Properly trained, monitored, and provided with adequate job environments, dispatchers will be better prepared to reduce driver turnover. Monitoring is necessary for capturing the effects of sensitive and responsive dispatchers. Through such measurements, firms will better understand the impact of dispatcher attitudes and behaviors. Measurements may then be used in coaching dispatchers. Ample job conditions may mean a reduction in number of drivers assigned to each dispatcher. Dispatchers quite often cite the assignment of too many drivers as a reason for their lack of responsiveness. For example, a dispatcher assigned 50 drivers would have less than ten minutes a day to communicate with each driver. Relationships are fostered by quality communication and it is hardly expected that under these conditions dispatchers can effectively develop productive internal relationships. Dispatch assistants may provide the necessary flexibility to pursue and resolve driver issues completely. Drivers must also pay a price for more responsive dispatchers. Drivers must make concerted efforts to improve their feedback content. That is, drivers must prioritize and pursue the most important issues first, while affording dispatchers ample time to resolve each issue. Recruiters must include dispatchers in the development of realistic job previews (Taylor, 1991) for new driver candidates. It is doubtful that along with their many duties dispatchers currently play a central role in advising candidates. Along with drivers (Taylor and LeMay, 1991), dispatchers should be called upon to present their realistic views of the driving position, working environment, and customers. Motor carriers must assist dispatchers in developing relationships with external customers in an effort to ensure the fair treatment of drivers (Guthrie and Fox, 1994). Often cited as a problem area for drivers is the attitude of
indifferent customers. Carriers and customers alike must realize that driver retention is not solely a trucking industry problem, rather it affects the performance and costs of the supply chain in total. Driver product distribution (place) As a preface, the author conducted several brainstorming group sessions with drivers in the field to obtain candid driver assessments of feedback tools used by carriers. Some firms provide suggestion boxes, 1-800 driver phone lines, open-door policies, group meetings, and annual review periods for disseminating information among drivers and dispatchers. However, most often, drivers reported minimal effectiveness of these communication modes. Therefore, it seems necessary to consider the product when evaluating the tools used to facilitate fulfillment of internal customer needs and wants. Table III contains the methods by which dispatchers may best administer products to their drivers (see Table for references to these place components). More miles, associated with higher pay, relates to the driver assignment of loads. Discussions with drivers in the field have revealed some perceptions that favoritism often occurs when dispatchers assign loads. The insinuation is that Dispatcher related Face-to-face interaction Quality of telephone communication in the field
Taylor and Cosenza (1998)
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Keller and Ozment (1999a, b)
Keller and Ozment (1999a, b)
Internal driver report card: Automated driver feedback collection in the field Administer realistic job previews
Taylor and LeMay (1991)
Taylor (1994)
Taylor and Cosenza (1998) Develop driver retention policies
Corsi and Fanara (1988)
Conduct exit interviews and publish feedback
Corsi and Fanara (1988)
Periodic meetings with drivers, dispatchers, and managers to discuss load assignment effectiveness
Keller (1999)
Taylor and Cosenza (1998)
Automate and publish driver-due-home date schedules Publish by dispatcher the performance in meeting driver-due-home dates
Table III. Product distribution (place)
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some drivers believe they routinely receive less profitable unappealing loads. Perhaps this perception is fostered as drivers are assigned loads via computer transmission, and consequently they have little immediate input and influence in the decision. While such scheduling is for maintaining operational integrity, dispatchers may find it useful to discuss with drivers, face-to-face, exactly how assignment plans are derived. Moreover, firms are encouraged to solicit ongoing driver perceptions of the fairness of the loads assigned. Formal collective personal interaction between drivers, dispatchers, and terminal managers should be employed for managing the dissemination of such information. This method may afford a check-and-balance on fairness as terminal managers may hear feedback from drivers and dispatchers during the same meeting. With respect to ‘‘due-home dates’’, it may prove beneficial and value adding in satisfying driver needs for firms to adopt procedures similar to advanced shipment notices. One example may be for dispatch and driver computers to be programmed to automatically notify each party, for example, seven days in advance of the driver’s date expected home. Dispatchers should utilize this notice to begin looking for return loads. Moreover, drivers will be assured that the dispatcher is very aware that the due-home date is forthcoming and will not be ignored. Rankings of dispatchers by the ratio of missed due-home dates to those dates scheduled should be regularly published and circulated among dispatchers. Similar to the objective of one firm publishing dispatcher rankings on number of loads booked, the intention would be to inspire healthy competition among dispatchers to more effectively manage their promises to route drivers home. From a general communication perspective, it seems that the interaction between drivers and dispatchers may be heading to ‘‘all-electronic’’ with the further adoption of satellite transmissions, e-mail, etc. Perhaps this is not the most effective manner for all communication with drivers. However, it seems that with the increased number of drivers assigned to a single dispatcher, traditional telephone communication is becoming too cumbersome. To the contrary, and considering the driver need for personable relationships with dispatchers (Taylor, 1991), managers are encouraged to strengthen the quality of each telephone and face-to-face interaction with their drivers. In an operation where less opportunity is available for this type of communication, each occasion missed to reinforce the sensitive and responsive nature of dispatch is a failure toward improving the retention of the driver (Keller and Ozment, 1999a, b; Taylor and Cosenza, 1998). This may seem counterproductive to traditional productivity measures, however, firms should consider this when relying on driver turnover as a measure of productivity. Many driver issues are not unique. For these occurrences dispatchers are encouraged to utilize the computer for sending progress reports to drivers in the field. Simple computer programs may be created that contain categories of issues and fields for indicating progress status reports. Updates would signal
to the driver that his or her issue was, in fact, being pursued, consequently, driver perceptions of dispatcher responsiveness would be more positive. Similar to the suggestion of ranking due-home date ratios, managers are encouraged to capture and tally the information from each progress report. Data may be collected in the form of a driver ‘‘report card’’ (e.g. ongoing driver surveys for collecting driver feedback in the field) (Keller and Ozment, 1999a, b; Taylor and Cosenza, 1998). From this data, comparisons of dispatchers may be made with respect to the ratio of the number of progress reports and resolutions to the actual number of issues raised by the drivers assigned to each dispatcher. Again, this is another method of providing drivers with a tool for voicing, dispatchers a tool for information collection, and management a tool for training and evaluation. The same report card can be utilized to capture information about the driver’s satisfaction with his or her equipment, other areas of the firm, with the external customer’s receiving facilities, and general overall satisfaction (Richard et al., 1994a). Lastly, in distributing the product of ‘‘realistic job previews’’ (Taylor and LeMay, 1991; Taylor, 1994; Taylor and Cosenza, 1998) developing driver retention policies (Corsi and Fanara, 1988), and conducting exit interviews (Corsi and Fanara, 1988; Taylor and Cosenza, 1998), dispatchers should be involved. By employing these procedures, drivers could be assured that the driving job being promoted is, in fact, an accurate representation of the actual position. Driver product promotion Traditional promotional elements New recruit advertising and strategy has been the focus of several studies pertaining to the motor carrier industry (LeMay and Taylor, 1988; Southern et al., 1989; Rakowski et al., 1989). Table IV contains a breakdown of such promotional suggestions (see Table for references to these promotional components). Firms are directed to increase advertising on highway billboards, within truck stops, and in trade publications read by drivers (Southern et al., 1989). Recruiters are encouraged to utilize actual drivers when creating visual advertisements, and look to non-driving personnel within the firm as possible driver candidates (LeMay and Taylor, 1988; Rakowski et al., 1989). Other studies have supported the need for extreme honesty when providing driver candidates with job previews (LeMay and Taylor, 1988; Southern et al., 1989; Rakowski et al., 1989; Taylor and LeMay, 1991; Taylor, 1994). Helping candidates develop realistic expectations about the driving job within the firm has proven beneficial in retaining drivers. In general, those drivers receiving realistic job previews know exactly what to expect and are far less disappointed when encountering known negative aspects on the job. To the contrary, those new hires that have expectations higher than what the job or company will bear become dissatisfied and quit. Perhaps it could be said that previous research in this ‘‘promotional’’ area has centered on recruiting drivers. What about after drivers have been
Internal relationship marketing 663
LeMay and Taylor (1988) LeMay and Taylor (1988)
Focus on non-traditional driver candidates
Use actual drivers in advertisement
Current propositions
Provide industry comparisons in the areas of pay and driver miles
Solicit and publish in a periodic company newsletter driver comments on the progress made by dispatchers and the firm in satisfying drivers
Publicize feedback tool performance in concern resolution
Publicize feedback tool utilization by driver
Design promotional campaigns to encourage drivers to provide constructive feedback
Track and publicize dispatcher performance on meeting driver-due-home dates
Taylor and Cosenza (1998)
Internal promotional elements Set goals to improve driver job aspects
Utilize recruiting videos using current drivers to explain the realistic aspects of the job
Provide realistic job previews
Show how current drivers handle poor aspects of job LeMay and Taylor (1988) Rakowski et al. (1989) Taylor (1994) Taylor (1994)
Taylor and LeMay (1991)
Present positive aspects of job first
Do not present only the bad aspects of the job
Rakowski et al. (1989)
Promote equipment, pay, benefits, and firm reputation
Use minority models for advertisements
Focus advertisement content on realistic picture of truck driving
Southern et al. (1989) Taylor and LeMay (1991)
Rakowski et al. (1989)
664
Advertise in minority publications, radio, and television
Southern et al. (1989)
Table IV. Product promotion
Traditional promotional and recruiting elements Billboard, trade publication, driver word-of-mouth, and truckstop advertising
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recruited? In more traditional marketing environments businesses do not quit advertising to customers just because they have made an initial purchase. Perhaps promotional activities actually need to be increased to current customers in an effort to develop more allegiance and patronage to the firm. Motor carriers are encouraged to do the same, that is, to increase or at the very least maintain a promotional campaign geared to drivers, internal customers, within the firm (Keller and Ozment, 1999a, b; Taylor and Cosenza, 1998). Specific to the internal driver products previously outlined, the remainder of this section will address possible corresponding promotional elements. Internal promotional elements Considering the products of more driver miles and pay, firms may look to providing drivers with ongoing industry comparisons. Comparisons, such as this, should help drivers and companies assess how they measure up to the competition. Firms may not have to be the highest paying recruiter especially if they are promoting the many other factors of driving for their company. Drivers may see that, compared to the industry average, their compensation is quite commensurate. Many drivers may envision higher salaries and more miles elsewhere in the industry, however, by publishing these comparisons firms may dispel the significance of these perceptions. Performance on meeting driver-due-home dates should also be tracked and promoted to drivers. Transport firms commonly measure on-time performance and promote their successes to their customers. Why not publish this for the internal customer? It should be restated that driver focus groups revealed drivers’ desire to have their due-home dates met more often so that they can plan family events with confidence that they may meet these obligations. This performance measure may aid firms in dispatcher evaluation, as well as promoting more positive driver attitudes toward the dispatcher and firm; two important indicators of driver retention (Taylor and LeMay, 1991). From a communication position, firms are encouraged to remind drivers of the need to utilize the feedback tools regularly. Only then can a firm understand the perceptions of their drivers, hopefully, before a problem gets out of control. A good way to promote this may be for firms to track and report the number of times drivers utilize specific communication tools offered by the firm. Moreover, firms may indicate a ‘‘success rate’’ for each mode. For example, the complaint categories discussed in the previous section, ‘‘place’’, could be crossreferenced by the number of issues raised by drivers and resolved by dispatchers. Disseminating this usage information to drivers would allow them to assess the utility and success of the feedback method. It is expected that as drivers realize the firm’s persistence in promoting the use and success of such methods, drivers will begin to regularly provide feedback. In an effort to positively enhance drivers’ attitudes toward dispatch, managers must find a way to make the driver aware of the sensitive and responsive nature of the dispatcher (Keller and Ozment, 1999a, b; Taylor and Cosenza, 1998). As a product, responsiveness relates to the helpfulness of a
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dispatcher in complaint resolution (Keller and Ozment, 1999a). The successes of dispatchers in providing these driver services should be captured and promoted. By using the driver report card method, explained earlier, firms could add a final field containing the outcome of the complaint, documented by dispatch. Again, summaries of the outcomes could be promoted to drivers on a regular basis. Lastly, as measures to improve driver treatment by customers take effect, dispatchers should actively solicit driver feedback about the progress. Brief progress reports should be published in company/driver newsletters (Taylor and Cosenza, 1998) to let fellow workers know of successes. It is expected that success will lead to future attempts to succeed rather than to regress. Conclusion An attempt has been made to illustrate the importance of treating personnel who are in frequent contact with the external customer as internal customers, themselves. Motor carrier firms provide a unique opportunity by which to evaluate the appropriateness of such internal marketing plans. In this study, an effort has been set forth to place in four internal marketing mix categories the findings of previous research about driver recruitment, retention, and turnover. In doing so, perhaps managers may be equipped to utilize more fully the many suggestions of researchers over the years. This grouping of implications simplifies the information and organizes it in such a manner that managers may make reference to the elements when assessing their firms’ driver recruitment and retention plans. For example, a manager may not have fully identified the products that are most important to drivers. Field research has rendered this information, however, managers may not have known exactly where to obtain and how to compile such suggestions meaningfully. It is expected that most motor carriers understand the implications of the driver turnover problem, yet, many fall short of developing and implementing a comprehensive plan fully to improve the relationships between drivers and the firm continuously. The primary elements present in any successful marketing plan are to understand the product offerings of the firm fully with respect to the target market, develop prices perceived to be fair and reasonable, establish efficient, reliable, and effective methods of delivering the product to the customer, and employ promotions that continually reinforce the value and quality of the products. By developing and employing an internal customer marketing program, firms will gain a better understanding of the impact and importance of relationship marketing, both internal and external. References Ackerman, K.B. (1996), ‘‘Pitfalls in logistics partnerships’’, International Journal of Physical Distribution & Logistics Management, Vol. 26 No. 3, pp. 35-7. Andraski, J.C. and Novack, R.A. (1996), ‘‘Marketing logistics value: managing the 5 Ps’’, Journal of Business Logistics, Vol. 17 No. 1, pp. 23-33. Beilock, R. and Capelle, R.B. (1990), ‘‘Occupational loyalties among truck drivers’’, Transportation Journal, Vol. 29, Spring, pp. 20-8.
Berry, L.L. (1981), ‘‘The employee as customer’’, Journal of Retail Banking, Vol. 3 No. 1, pp. 33-40. Bowersox, D.J., Closs, D.J. and Stank, T.P. (1999), 21st Century Logistics: Making Supply Chain Integration a Reality, Council of Logistics Management, Oak Brook, IL. Bowersox, D.J., Daugherty, P.J., Droge, C.L., Germain, R.N. and Rogers, D.S. (1992), Logistical Excellence, Digital Press, Burlington, MA. Corsi, T.M. and Fanara, P. (1988), ‘‘Driver management policies and motor carrier safety’’, Logistics and Transportation Review, Vol. 24 No. 2, pp. 153-63. Corsi, T.M. and Martin, J.C. (1982), ‘‘An explanatory model of turnover among owner-operators’’, Journal of Business Logistics, Vol. 3 No. 2, pp. 47-71. Delaney, R.V. (1999), ‘‘A look back in anger at logistics productivity’’, 10th Annual ‘‘State of Logistics Report, pp. 16-18. Dobie, K., Rakowski, J.P. and Southern, R.N. (1998a), ‘‘Managerial proactivity: attracting and retaining the essential driver force’’, Journal of Transportation Law, Logistics and Policy, Vol. 65 No. 2, pp. 149-65. Dobie, K., Rakowski, J.P. and Southern, R.N. (1998b), ‘‘Motor carrier road driver recruitment in a time of shortages: what are we doing now?’’, Transportation Journal, Vol. 37 No. 3, pp. 5-12. Ellram, L.M. (1995), ‘‘Partnering pitfalls and success factors,’’ International Journal of Purchasing and Materials Management, Vol. 31 No. 3, pp. 36-44. Ellram, L.M. and Cooper, M.C. (1990), ‘‘Supply chain management, partnerships, and the supplier-third party relationship’’, International Journal of Physical Distribution & Logistics Management, Vol. 1 No. 2, pp. 1-10. Fuller, N.P. and Walter, C.K. (1993), ‘‘Job satisfaction of Iowa truck drivers’’, Transportation Research Forum, Vol. 33 No. 2, pp. 42-55. Gentry, J.J. (1996), ‘‘Carrier involvement in buyer-supplier strategic partnerships’’, International Journal of Physical Distribution & Logistics Management, Vol. 26 No. 3, pp. 14-25. George, W.R. (1990), ‘‘Internal marketing and organizational behavior: a partnership in developing customer-conscious employees at entry level’’, Journal of Business Research, Vol. 20 No. 1, pp. 63-70. Gibson, B., Rutner, S.R. and Mundy, R.A. (1996), ‘‘Building successful alliances: are shippers doing their part?’’, Transportation Quarterly, Vol. 50 No. 2, pp. 35-46. Gro¨nroos, C. (1981), ‘‘Internal marketing – an integral part of marketing theory’’, in Donnelly, J.H. and George, W.R. (Eds), Marketing of Services, American Marketing Association, Chicago, IL, pp. 236-8. Gro¨nroos, C. (1990), ‘‘Relationship approach to marketing in service contexts: the marketing and organizational behavior interface’’, Journal of Business Research, Vol. 20 No. 1, pp. 3-11. Guthrie, D.M. and Fox, J.E. (1994), ‘‘The driver shortage in truckload carriage’’, Morgan Keegan Research, Morgan Keegan and Company, Memphis, TN, 29 June, pp. 1-7. Holmes, S.M., Power, M.L. and Walter, C.K. (1996), ‘‘A motor carrier wellness program development and testing’’, Transportation Journal, Vol. 35 No. 3, pp. 33-48. Johns, M. (1995), ‘‘Retaining quality drivers critical during driver shortage’’, Fleet Owner, Vol. 90, p. 104. Keller, S.B. (1999), ‘‘Driver relationships with customers and driver turnover: key mediating variables affecting driver performance in the field’’, Journal of Business Logistics. Keller, S.B. and Lynch, D.F. (1996), ‘‘Integrating marketing’s relational exchange theory: an explanation of performance in the motor carrier industry’’, 1996 AMA Summer Educators’ Conference, San Diego, CA, pp. 49-50. Keller, S.B. and Ozment, J. (1999a), ‘‘Managing driver retention: effects of the dispatcher’’, Journal of Business Logistics, Vol. 20 No. 2, pp. 97-119.
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Keller, S.B. and Ozment, J. (1999b), ‘‘Exploring dispatcher characteristics and the effect on driver retention’’, Transportation Journal. La Londe, B.J. and Cooper, M.C. (1989), Partnerships in Providing Customer Service: A Third Party Perspective, Council of Logistics Management, Oak Brook, IL. LeMay, S.A. and Taylor, G.S. (1988), ‘‘Truck driver recruitment: some workable strategies’’, Transportation Journal, Vol. 28 No. 1, pp. 15-22. LeMay, S.A., Taylor, G.S. and Turner, G.B. (1993), ‘‘Driver turnover and management policy: a survey of truckload irregular route motor carriers’’, Transportation Journal, Vol. 32 No. 2, pp. 15-21. Lambert, D.M., Emmelhainz, M.A. and Gardner, J.T. (1999), ‘‘Building successful logistics partnerships’’, Journal of Business Logistics, Vol. 20 No. 1, pp. 165-81. McElroy, J.C., Rodriguez, J.M., Griffin, G.C., Morrow, P.C. and Wilson, M.G. (1993), ‘‘Career stage, time spent on the road, and truckload driver attitudes’’, Transportation Journal, Vol. 33 No. 1, pp. 5-14. Ozment, J. and Keller, S.B. (1999), ‘‘Exploring dispatcher communication effectiveness: implications for retaining drivers in the trucking industry’’, Journal of Managerial Issues, Vol. 11, Spring, pp. 94-109. Rakowski, J.P., Southern, N. and Godwin, L.R. (1989), ‘‘Recruiting and the truck driver shortage: is the industry reactive or proactive?’’, Transportation Practitioners Journal, Vol. 56 No. 4, pp. 381-92. Richard, M.D., LeMay, S.A. and Taylor, G.S. (1995), ‘‘A factor-analytic logit approach to truck driver turnover’’, Journal of Business Logistics, Vol. 16 No. 1, pp. 281-98. Richard, M.D., LeMay, S.A., Taylor, G.S. and Turner, G.B. (1994a), ‘‘A canonical correlation analysis of extrinsic satisfaction in a transportation setting’’, Logistics and Transportation Review, Vol. 30, December, pp. 327-38. Richard, M.D., LeMay, S.A., Taylor, G.S. and Turner, G.B. (1994b), ‘‘An investigation of the determinants of extrinsic job satisfaction among drivers’’, International Journal of Logistics Management, Vol. 5 No. 2, pp. 95-106. Rodriguez, J.M. and Griffin, G.C. (1990), ‘‘The determinants of job satisfaction of professional drivers’’, Transportation Research Forum, Vol. 30 No. 2, pp. 453-64. Schneider, B. (1986), ‘‘Notes on climate and culture’’, in Venkatesan et al. (Eds), Creativity in Services Marketing, American Marketing Association, Chicago, IL, pp. 63-7. Southern, R.N., Rakowski, J.P. and Godwin, L.R. (1989), ‘‘Motor carrier road driver recruitment in a time of shortages’’, Transportation Journal, Vol. 28, Summer, pp. 42-8. Stephenson, F.J. and Fox, R.J. (1996), ‘‘Driver retention solutions: strategies for for-hire truckload (TL) employee drivers’’, Transportation Journal, Vol. 35 No. 4, pp. 12-25. Stuart, F.I. (1993), ‘‘Supplier partnerships: influencing factors and strategic benefits’’, International Journal of Purchasing and Materials Management, Vol. 29 No. 4, pp. 22-8. Tate, K. (1996), ‘‘The elements of a successful logistics partnership’’, International Journal of Physical Logistics Management, Vol. 26 No. 3, pp. 7-13. Taylor, G.S. (1991), ‘‘Using performance appraisals of dispatchers to reduce driver turnover’’, Transportation Journal, Vol. 30, Summer, pp. 49-55. Taylor, G.S. (1994), ‘‘Realistic job previews in the trucking industry’’, Journal of Managerial Issues, Vol. 6 No. 4, pp. 457-73. Taylor, G.S. and LeMay, S.A. (1991), ‘‘A causal relationship between recruiting techniques and driver turnover in the truckload sector’’, Transportation Practitioners Journal, Vol. 59 No. 1, pp. 56-66. Taylor, S.L. and Cosenza, R.M. (1998), ‘‘Truck driver turnover: an internal marketing perspective’’, Journal of Transportation Management, Spring, pp. 20-32.
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Shipper-carrier partnership issues, rankings and satisfaction Brian J. Gibson Auburn University, Auburn, Alabama, USA
Stephen M. Rutner
Shipper-carrier partnership issues 669 Received November 2001 Revised April 2002
University of Arkansas, Fayetteville, Arizona and Georgia Southern University, Statesboro, Georgia, USA, and
Scott B. Keller Michigan State University, East Lansing, Michigan, USA Keywords Shipping, Transport partnering, Alliances, Success Abstract Over the past decade, there have been a number of studies that examined either shipper or carrier selection and evaluation factors. However, there has been little comparison between how these two groups perceive these factors with regard to their partners. This study examines the similarities and differences with the rankings of factors between shipper and carrier groups. Furthermore, the results highlight the various levels of satisfaction between the two groups.
Introduction Although the concept of ‘‘partnershipping’’ is more than a decade old, it remains a very important strategy in today’s business environment. The current emphasis on supply chain management and collaborative transportation management propels transportation buyers and their service providers toward stronger, mutually beneficial relationships (Cooke, 2000). Without each group adopting a long range, cooperative perspective, it would certainly be difficult to take additional time, inventory, and cost out of the pipeline (Parks, 2001). This fundamental shift from price driven, arm’s length transactions to efficiency focused, collaborative relationships has received considerable media attention. Likewise, numerous academic studies have investigated logistics partnerships. Primarily, these efforts have focused on the potential benefits of partnerships (Gentry, 1993; Bowersox, 1990), critical success factors (e.g. Tate, 1996; Bowersox et al., 1989; La Londe and Cooper, 1989), partner selection criteria (Bradley, 1994), and partner evaluation criteria (Byrne and Markham, 1991). The partnership development process (Lambert et al., 1996; Ellram, 1991a, b) and adoption rates (Wood and Nelson, 1999; Cooke, 1994) have also been analyzed. For the most part, partnership studies have focused on the buyer side of the dyad, the developmental activities, and the anticipated benefits. With a few exceptions (Gibson and Rutner, 1996; Crum and Allen, 1990), information regarding the transportation service provider perspective is largely anecdotal
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and focuses on individual organizations (e.g. Auguston, 1992). Thus, there is little known about the service providers’ thoughts regarding key partnership attributes and their existing relationships. With these issues in mind, a survey of transportation buyers (i.e. shippers) and transportation service providers (i.e. carriers) was conducted to enhance the partnershipping knowledge base. In particular, this study examined the following questions: . What do shippers and carriers perceive to be the critical success attributes in their partnerships? . How satisfied are shippers and carriers with their partners’ performance on these success attributes? After a brief literature review and description of the research methodology, the results of the study are presented. The article concludes with a summary of the key findings and a discussion of the study’s implications. Literature review While the logistics partnership literature covers a wide range of important issues, the most pertinent topic for this research is the discussion of critical success factors. Since 1989, numerous studies have documented key ingredients of effective logistics partnerships. Some of these studies focused on logistics partnerships in general, while others targeted specific types of relationships (e.g. shipper-carrier alliances). A brief chronological review of research directly relevant to the current study is provided below. In 1987, Dwyer et al. provided a theoretical framework of buyer-seller relationships. They investigated the evolution of exchanges from discrete events to ongoing relationships (Dwyer et al., 1987). Their research also identified a basic list of critical success factors for strategic alliances: detailed planning for future exchange, increased measurement and quantification, sharing of benefits and burdens, reduced uncertainty, shared efficiency, and high switching costs. The Council of Logistics Management sponsored two research studies that discussed partnership issues in logistics. La Londe and Cooper (1989) analyzed shipper-third party relationships among cutting edge firms. This survey-based study discussed five major relationship building facilitators: (1) defining an effective relationship; (2) developing a non-zero sum solution; (3) establishing a technology interface; (4) possessing global capabilities; and (5) sharing of benefits and burdens. The Bowersox et al. (1989) Leading Edge Logistics study focused partly on logistics alliances. Through numerous interviews and case studies, the authors identified specific actions that are necessary to establish and maintain
successful alliances. The six categories of actions included: channel perspective, selective matching, information sharing, role specification, ground rules, and freedom to exit. Ellram conducted a number of studies that included analysis or discussion of partnership success factors. Her 1990 interview-based research of purchasing managers revealed that financial stability and performance, cultural and top management compatibility, trust, strategic fit, and organizational structure (in addition to many of the already mentioned factors) are vital to the selection of appropriate suppliers for strategic partnerships (Ellram, 1990). In 1991, Ellram identified trust between firms, transfer of necessary information, mutual dependence, and sharing of new technology as key attributes of successful relationships in her analysis of buyer-seller partnership life cycles (Ellram, 1991a, b). Later, Ellram and Hendrick (1995) identified and analyzed more than 80 buyer-seller dyads on 24 relational criteria. Studies subsequent to the 1987-1991 timeframe reiterated and built upon the primary facilitators of successful alliances. Cooper and Gardner (1993) discussed the issues of extendedness and operating controls. Stuart (1999) analyzed more than a dozen factors including joint problem solving activities and a long-term planning horizon. The logistics service user survey and factor analysis work of Dahlstrom et al. (1996) centered on five factors, most notably flexibility and formalization. Walton (1996) provided insight into asset specificity, interdependence, and other critical success factors. She used regression modeling to analyze interview information and survey data collected from managers directly involved in the development of supply chain partnerships. Tate (1996) provided an effective summary of critical success factors and their application to a long-term manufacturer – third party logistics provider alliance. Recent studies have attempted to refine the categorization of critical success factors and have added emerging supply chain issues to the existing list of key partnership attributes. In developing a partnership model, Lambert et al. (1999) separated partnership success factors into primary facilitators (corporate compatibility, similar management philosophies and techniques, mutuality, and symmetry) that must be present in every relationship and situation specific facilitators (exclusivity, share competitors, physical proximity, a prior history of partnering, and a shared end user) that may be needed and will strengthen the partnership when present. Anderson (2000) and Parks (2001) add Internetbased technology tools, collaborative planning, and synchronization of information to the inventory of critical success factors. The literature review helped to develop a composite list of critical success factors for logistics partnerships. This list served as a key resource during the development of the shipper-carrier partnership study survey instrument. Details regarding this instrument and the study methodology are provided in the following section.
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Methodology While the partnership literature contains a wealth of information regarding shipper perceptions of critical success factors, there are some limitations. In many instances, the information was derived from a few cases and/or only one perspective of the partnership was analyzed (Lambert et al., 1999; Crum and Allen, 1990). The methodology used in the current study addressed these concerns by analyzing the perspectives of both shippers and their carrier partners. Specifically, the data for this research are generated from a national mail survey of account managers from US motor carriers and the shippers with whom these carriers have partnerships. Two comparable mail questionnaires (one for carriers and one for shippers) were developed based on the partnership literature discussed above. The questionnaires directed participants to rate the importance of 60 common success ingredients gleaned from the literature review. The ratings were based on a five-point Likert scale (1 = no importance to 5 = critical importance). The participants were also asked to indicate satisfaction with their partner’s performance on these factors using a five-point scale (1 = no satisfaction to 5 = complete satisfaction). The participant lists were obtained from US motor carrier executives who provided names and addresses for customer-partners and their carrier account representatives. A total of 200 surveys were mailed to the sample (100 to the customer-partners and 100 to the account representatives). A total of 100 surveys were completed and returned (41 from the customer-partners and 59 from the account representatives) for a 50 per cent response rate. The first step toward extending previous research of partnership success factors in logistics was to refine empirically the extensive list of multiple measures that represent key attributes of partnerships. This process offers a sound basis for analyzing perceptual differences between groups of respondents. To this end, principal components analyses were conducted to identify statistically sound items representing a priori concepts (i.e. partnership attributes). Next, paired-samples t-tests were utilized to evaluate the statistical differences between the importance shippers place on 13 characteristics of partnerships and how satisfied the shippers are with key carriers in each dimension of the partnership. Carrier perceptions were also evaluated using this method of analysis. Finally, independent samples t-tests were utilized to evaluate the statistical differences between the importance shippers and the importance carriers place on 13 characteristics of partnerships. An analysis was also conducted to evaluate differences between satisfaction levels of shippers and carriers with respect to the partnership attributes. The following section offers the results of the analyses. Implications important for managers and researchers are also discussed.
Results and implications Shippers mostly represented manufacturers of component parts and finished products (68 per cent) having international scope and operations throughout the North American continent (85 per cent). Shippers most frequently reported being involved with 12 carrier partnerships of which they rated the overall success of their partnershipping efforts relatively high (mean of 2.61 on a scale of 1 = unsuccessful to 3 = very successful). Carriers primarily reported operating nationally throughout the USA and within the North American geographic region (66 per cent). They indicated most often having partnerships with 21 shippers in which they perceived their partnering efforts to be moderately successful (mean of 2.48 on a scale of 1 = unsuccessful to 3 = very successful). Multi-item measures Construct conceptualization and content validity was ensured as questionnaire items were based on previous literature in the field and discussions with managers involved in logistics partnerships. Table I contains the final multiitem scales and the results of principal components analyses conducted to verify the unidimensional nature of the items representing each partnership attribute. As a start, the analyses were performed utilizing shippers’ and carriers’ responses with respect to the importance the sample as a whole placed on each primary attribute. This step was taken to ensure that meaningful subsequent comparisons between the perceptions of shippers and carriers were based on identical multi-item scales. Moreover, it is logical to establish the make-up of items representing each measurement scale by examining the data corresponding to the importance of a partnership attribute. Table I indicates that all item principal component scores equal or exceed 0.63, with the exception of two variables (their scores equal 0.59) that were determined conceptually important to the scales and were retained. Once the scales were developed, principal component analyses were conducted on the responses pertaining to shipper and carrier satisfaction with each attribute. Resulting coefficients are in parentheses and equal or exceed 0.67, with the exception of one variable that had a principal component score of 0.58 and was retained for the purposes of this research. Table I also contains the item-to-total correlations for each measure. For the purposes of this research, all items equal or exceed 0.33, with the exception of one (at 0.29) that was deemed important to the conceptualization of the construct (Dunn et al., 1994). Cronbach alpha was calculated to further establish the comparability of the items in each scale. The reliabilities for measures of partnership attribute importance and satisfaction exceed 0.60, with the exception of shared risk and reward (0.59) and channel perspective importance (0.48). While in a few cases an individual item that failed to demonstrate high correlation with other items representing a single attribute was retained for the
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Table I. Reliabilities and principal component scores of summated scales
Scale/items
PC scores Item-to- Cronbach correlations total Alpha
Planning – importance Open discussion of demand forecasts Joint development of service schedules and goals Participating in each other’s strategic planning
0.82 (0.76) 0.53 (0.50) 0.78 (0.81) 0.46 (0.56) 0.69 (0.86) 0.38 (0.63)
Control/power – importance Equal power in the relationship Mutual authority to end the partnership The authority to require process changes by partner
0.71 (0.77) 0.40 (0.49) 0.82 (0.78) 0.52 (0.50) 0.76 (0.83) 0.44 (0.57)
Flexibility – importance Proactive management of special needs and exceptions The ability to handle changing carrier requirements
0.86 (0.89) 0.48 (0.58) 0.86 (0.89) 0.48 (0.58)
Trust – importance A culture of cooperation and trust Adversarial views are replaced by cooperation and loyalty Expectation of a long-term relationship
0.84 (0.88) 0.62 (0.73) 0.81 (0.90) 0.57 (0.77) 0.83 (0.87) 0.60 (0.70)
Information sharing – importance Timely sharing of cost and performance data The existence of an open book policy Information sharing at multiple levels across firms
0.79 (0.74) 0.49 (0.46) 0.73 (0.83) 0.44 (0.56) 0.83 (0.81) 0.55 (0.54)
Rules of engagement – importance A written, detailed contract A conflict resolution process A formal process to analyze performance Simple process to renew, amend, or end contract
0.77 0.76 0.66 0.64
(0.76) (0.70) (0.58) (0.80)
0.50 0.50 0.64 0.40
(0.52) (0.45) (0.34) (0.53)
Shared risk and reward – importance Specific rewards for outstanding performance Specific penalties for unacceptable performance An equal distribution of planned and unexpected costs The willingness to share cost savings (gain sharing)
0.77 0.65 0.63 0.63
(0.81) (0.70) (0.76) (0.79)
0.48 0.35 0.33 0.33
(0.62) (0.49) (0.55) (0.60)
Channel perspective – importance A clear vision of the supply chain and one’s role in it A focus on supply chain performance improvement
0.82 (0.87) 0.35 (0.53) 0.82 (0.87) 0.35 (0.53)
Effectiveness – importance A commitment to continuous improvement Rigorous performance measurement A corrective action program to eliminate problems Partner profitability and financial stability Improvement of your carrier service levels
0.84 0.59 0.64 0.67 0.79
Cost focus – importance The ability to take cost out of the operation The ability to control costs An emphasis on supply chain cost reduction
0.64 (0.74)
0.64 (0.70)
0.64 (0.73)
0.76 (0.76)
0.66 (0.70)
0.67 (0.67)
0.59 (0.76)
0.48 (0.69)
0.73 (0.81) (0.80) (0.73) (0.77) (0.70) (0.77)
0.65 0.39 0.43 0.48 0.58
(0.64) (0.58) (0.61) (0.53) (0.61)
0.67 (0.77) 0.83 (0.83) 0.59 (0.61) 0.71 (0.88) 0.42 (0.69) 0.82 (0.78) 0.56 (0.54) (continued)
Scale/items
PC scores Item-to- Cronbach correlations total Alpha
Performance management – importance Standardized reports and reporting methods The use of quality charts/tools to monitor performance Well-defined performance metrics Periodic performance review meetings
0.70 0.83 0.77 0.59
0.70 (0.70)
Time horizon – importance A focus on future activities A long range planning horizon The ability to weather short-term ups and downs
0.85 (0.81) 0.56 (0.55) 0.78 (0.81) 0.41 (0.56) 0.61 (0.78) 0.29 (0.51)
Strategic fit – importance Compatible strategies, goals and objectives Similar management styles Compatible corporate cultures
0.88 (0.87) 0.73 (0.71) 0.92 (0.91) 0.80 (0.79) 0.90 (0.89) 0.77 (0.75)
(0.71) (0.67) (0.80) (0.73)
0.46 0.60 0.53 0.36
(0.46) (0.45) (0.57) (0.49)
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0.61 (0.72)
0.88 (0.87)
Note: Coefficients related to satisfaction are in parentheses
Table I.
analyses, overall the summated scales demonstrate characteristics of unidimensionality and reliability. Discussion and implications of the results Tables II-IV contain the primary comparisons of average responses between manufacturers (shippers) and transportation providers (carriers). It could be argued that the priority with which customers place on factors governing supply chain relationships with key suppliers of transport services should be of highest importance. Therefore, Table II provides the ranking of shipper perceptions of the important elements of partnerships and will be discussed first.
Factor Cost Effectiveness Trust Flexibility Channel perspective Information sharing Time horizon Performance management Planning Strategic fit Rules of engagement Control/power Shared risk/reward
Importance Mean Ranking 4.64 4.59 4.58 4.50 4.19 4.10 4.04 3.99 3.97 3.95 3.94 3.67 3.52
1 2 3 4 5 6 7 8 9 10 11 12 13
Satisfaction Mean Ranking 3.67 4.06 4.32 3.96 3.75 3.70 3.61 3.72 3.67 3.85 3.85 3.70 3.51
10 2 1 3 6 8 12 7 11 5 4 9 13
Difference Sig. level ( p
