Strategic adaptation in global logistics partnerships

In modern supply chains, specialized companies called third party logistics providers1 (TPLs) realize a growing part of the logistics and supply chain functions. In parallel to this evolution, traditional manufacturers have raised their willingness and readiness to develop partnerships with those companies. For most TPLs, and in particular large and international ones which provide transnational logistics services, it has become crucial to adapt their business system to this "partnership" context. The pressure to do it effectively and efficiently is strong because of the tight margin prevalent in the sector and the central role of logistics in the globalized new economy. Understanding the mechanisms that determine TPLs performance in logistics partnership and translating it into an integrated strategy is thus a key challenge for the management of TPLs. Yet, there is insufficient literature on the topic. In this context, the thesis analyzes the strategic adaptation of third-party logistics providers in a partnership context and provides an approach that centers on the internal determinants of business performance and integrates the fundamental capabilities, the key competences, and the organizational and technological resources of TPLs. The conceptual approach builds on contributions taken from the literature on strategy, industrial marketing and purchasing, and logistics management. A logistics partnership is defined as an exchange relationship in which two legally independent partners are mutually committed to work towards a common, specific mid-term or long-term goal; they commit themselves to dedicate specific resources to its achievement, to tightly integrate a significant share of their processes, and to fairly share the benefits of the partnership. The theoretical framework hypothesizes that TPLs are engaged in dynamic and interactive relationships with their customers and that their performance is determined by their abilities to generate operating synergies with them through specialization and to maintain well-balanced power relationships. It follows that the success of a TPL depends on its ability to: i) interactively develop customized and trustworthy logistics concepts and payment systems; ii) provide logistics services which regularly match agreed specifications and occasionally surpass them; iii) communicate an intense, consistent, multi-faceted message on logistics partnership to all relevant parties; iv) seize customer-led innovation opportunities and ensure a quick, wide and methodical diffusion within the group. The results of a participative case study with a leading global third-party logistics provider – and of twenty-five "key" global relationships – on a four years period validate the initial theoretical propositions and provide indications of the impact of a set of organizational and technological components on business performance. It stresses the importance of organizing the account management unit properly and provides an operating model. The findings are synthesized into an integrated business system model which shows the relations between its different components. The thesis is thus an original contribution to our understanding of the strategic adaptation process of TPLs and highlights the challenges linked to the development of a logistics partnership strategy. Because of its practical orientation, it is also a useful management tool, a value already demonstrated in the relationship with our key business partner during the research. Further research can take the framework to conduct statistical surveys; the methodology can also be used to explore other service industries. ------------------------------ 1The term third-party alludes to their role of the middle man between the shipper, i.e. the first party, and the consignee, i.e. the second party.