Service capability and performance of logistics
rvice providers
Kee-hung Lai *
Department of Logistics,The Hong Kong Polytechnic University,Hung Hom,Kowloon,Hong Kong
Received 23May 2003;received in revid form 1D ecember 2003;accepted 7January 2004
Abstract
Drawing on the resource-bad view of the firm,this study empirically examines if there exist different types of logistics rvice providers (LSPs),and whether the types differ in rvice performance.The study results suggest that there are four discernable types of LSP,according to the rvice capability displayed by each type,and that differences in rvice performance exist between the types.The implications of the results are discusd and suggestions for further rearch in LSPs are offered.
Ó2004Elvier Ltd.All rights rerved.
Keywords:Logistics rvices;Capability;Resource-bad view;Performance
1.Introduction
The globalization of business and the increa in competitive pressures have prompted many firms to develop logistics as a part of their corporate strategy for cost and rvice advantages (McGinnis and Kohn,2002).Nowadays,many manufacturers and retailers are eking to out-source their logistics activities to logistics rvice providers (LSPs)to introduce products and rvice innovations quickly to their markets.Their actions em to reflect the trend of business firms using LSPs to satisfy their increasing need for logistics rvices (Lieb and Miller,2002).In general,an LSP can be broadly defined as a provider of logistics rvices that performs all or part of a client company’s logistics function (Coyle et al.,1996;Delfmann et al.,2003).This consists of at least the managing and operating of the transportation and warehousing functions.An LSP can also provide other rvices such as materials management rvices (e.g.inventory *Tel.:+852-2766-7920;fax:+852-2330-2704.
E-mail address:lgtmlai@polyu.edu.hk (K.-h.Lai).
1366-5545/$-e front matter Ó2004Elvier Ltd.All rights rerved.
doi:10.2004.01.002
Transportation Rearch Part E 40(2004)
385–399
386K.-h.Lai/Transportation Rearch Part E40(2004)385–399
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management),information-related acking and tracing),and value-added rvices (dary asmbly)(Berglund et al.,1999).To fully satisfy the increasing requirements of customers for one-stop rvices,many LSPs have taken initiatives to broaden the scope of their rvices(Murphy and Daley,2001).One of their major decisions concerns the extent to which they should expand their rvice capability and improve their rvice performance(Lai and Cheng,2003).
Originating from the strategic management literature,the resource-bad view(RBV)suggests thatfirms compete on the basis of their resources and capabilities(Wernerfelt,1984;Barney,1991; Conner,1991).The differences in thefirm’s resources in turn affect their competitive advantages and disadvantages.1Drawing from the resource-bad view(RBV)of thefirm,we make some predictions of the rvice capability and performance of LSPs.The RBV advocates that unique capabilities are crucial to achieving a sustained competitive advantage.It has been argued in the logistics literature that capabilities in logistics rvices such as EDI linkage,freight consolidation, warehousing,consulting,and freight bill payment are drivers for superior performance(Murphy and Po
ist,2000).However,little has been done to examine the rvice capability of LSPs from the perspective of the RBV.This studyfills this gap in the logistics literature by examining whether there are different types of LSP in terms of rvice capability,and the relationship of type with rvice performance,within the theoretical framework of the RBV.In particular,this study aims to:
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3.determine if there are differences in rvice performance in different types of LSP and,if so,how
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快乐环岛歌词and why they differ;and
4.suggest directions for further rearch in LSPs.
2.Resource-bad view
Since its introduction by Wernerfelt(1984),the RBV has received considerable attention and enjoyed widespread support in the literature on strategy.However,logistics rearchers have only recently started to examine the implications of the RBV for Bolumole,2001).It is noted that LSPs ar
e interested in specific resources and organizational capabilities.For instance,there are discussions of the strategic development of LSPs(Hertz and Alfredsson,2003)and of supply chain performance in LSPs(Lai et al.,2002).Indeed,the RBV can provide a theoretical foun-dation to support the emerging streams of rearch in LSPs.
The RBV suggests that competitive advantages originate at thefirm;specifically,that they are derived from the resources and capabilities of thefirm(Teece et al.,1997).According to Amit and Schoemaker(1993),resources are asts that are either owned or controlled by afirm,whereas capabilities refer to afirm’s ability to deploy resources to achieve a desired outcome.How is the RBV manifested withinfirms?Barney(1991)pointed out thatfirms compete on the basis of 1We u the terms‘‘resources’’and‘‘capabilities’’inclusively and interchangeably in this paper,following the usage in Barney(1991).
K.-h.Lai/Transportation Rearch Part E40(2004)385–399387‘unique’corporate resources––that is,resources that are valuable,rare,difficult to imitate,and non-substitutable.This view of thefirm is bad on the assumption that resources are both heterogeneous acrossfirms and imperfectly mobile(Hunt and Morgan,1995).In the context of LSPs,the resources can be quipment,plants,fleets,hardware),or organizational process,skills,kno
w-how,reputation),and will enable them to attain superior performance(Daugherty et al.,1996;Murphy and Poist,2000)and to foster strategic partnerships with customerfirms(Skjoett-Larn,1999).
Makadok(2001)emphasized that,while resources by themlves can rve as the basic unit of analysis,firms achieve market advantage by asmbling the resources to create organizational capabilities.Makadok(2001)advanced the notion that thefirm-specific capabilities provide economic returns becau thefirm is more effective than its competitors in deploying resources. While LSPs can easily duplicate investments in physical warehou and EDI linkage),the resources per do not by themlves lead to improved performance.The capability notion of the RBV suggests that superior performance is dependent on the manner in which LSPs leverage their resources.Following this logic,rvice capability is defined in this study as the ability of LSPs to create and deploy resources to satisfy the logistics needs of their customers in pursuit of better rvice performance.
It is suggested in the literature that having a core competence enables afirm to successfully diversify into new markets by exploiting the competence in new product market ttings(Prahalad and Hamel,1990).According to the RBV,it is logical for LSPs to allocate resources and develop their rvice capabilities as the investments will provide them with access to different market gments
宿舍的宿and,hence,yield economic returns.This logic suggests that,given the differences in their ability to create and deploy resources,LSPs should differ in rvice capability.The differences in their rvice capabilities lead them to compete in different market gments,in which their re-sources are best deployed to satisfy the needs of specific customer groups.The above discussion leads us to postulate that:
Proposition1.There are different types of LSPs in terms of rvice capability.
In the logistics literature,it has been shown that customer-focud capabilities,comprising gmental focus,relevancy,responsiveness,andflexibility,2are positively linked tofirm perfor-mance(Zhao et al.,2001).To qualify for the customer-focud capabilities,it is necessary for an LSP to improve its rvices,in both breath and depth,to fully satisfy the rvice requirements of customers.From the RBV,the enhancement of rvice capability can be considered as a potential source of competitive advantages.It should enable LSPs to differentiate themlves on the basis of their ability to offer a wide variety of logistics rvices.LSPs with a better rvice capability should be in a better position to satisfy the needs of customers for various logistics rvices and,there-fore,achieve better rvice performance.Accordingly,it is reasonable to postulate that:
2Segmental focus refers to the belief thatfirms should identify core customers best suited to be their business clients and then meet or exceed their expectations by providing unique value-added rvices;relevancy requiresfirms to satisfy not only existing needs but also tho that may emerge;responsiveness is about accommodating unique and/or unplanned customer requirements;andflexibility is concerned with adaptation to unexpected operational circumstances.
388K.-h.Lai/Transportation Rearch Part E40(2004)385–399
Proposition2.LSP types with a better rvice capability attain better rvice performance.
3.Methodology
To examine if there are different types of LSPs in terms of rvice capability and if individual LSP types differ in rvice performance,we developed a survey questionnaire to collect infor-mation from LSPs in Hong Kong on their rvice capability and performance as afirst step to providing answers for the rearch inquiries.The rearch process for this study is shown in Fig.1.时尚发型女
We identified a total of1176LSPs from the membership list of the Hong Kong Association of Freight Forwarding and Logistics Limited(HAFFA),and from a list of LSPs published in the Shipping Gazette,
a biweekly magazine published by the shipping industry of Hong Kong.We cross-checked the survey samples to avoid double mailings.The questionnaire was mailed to the general managers of the sampled LSPs,as the target respondents were assumed to have a good
K.-h.Lai/Transportation Rearch Part E40(2004)385–399389 knowledge of the rvice capability and performance of their companies.We solicited only one respon from each sampled LSP.3Each target respondent received an initial mailing,which consisted of a cover letter explaining the purpos of the study,a copy of the questionnaire,and a postage-paid return envelope.Approximately one month later,a cond mailing identical in content to the initial one was nt to the non-respondents,followed by a reminder letter two weeks after the cond mailing.4A total of232respons were received after the two mailings and a follow-up reminder.5As the survey respon was less than100%,a non-respon bias could contaminate the reliability of the study’sfindings.Therefore,a test of non-respon bias was conducted to asss the extent of the potential bias in the results.6The test results suggest that a non-respon bias should not be a problem in this study.
Table1summarizes the organizational characteristics of the respondent LSPs with respect to their size(number of employees),business volume(annual revenues),and age(number of years in business).Most of the221respondent LSPs are small in size,with approximately67%employing fewer than50employees.Around60%have annual revenues of less than HK$200million.7 Nearly50%have been in business for less than10years.
4.Results
To measure the rvice capability of the sampled LSPs,we developed a list of24items8 covering the different logistics rvices that are generally expected of a comprehensive LSP.The targets of the survey were requested to indicate,using afive-point Likert scale,where1.0¼very low capability and5.0¼very high capability,the extent to which they perceived their companies capable of performing each of the24logistics rvice items.Table2summarizes the results,俚语大全
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3We acknowledge that bias in data collection may stem from the u of a single respondent in this study.However, we adopted this strategy of using a‘‘key informant’’becau only such a person has the necessary knowledge to respond,and this person is likely to be a more reliable source of information than other sources.
4After the two mailings,89surveys were returned as undelivered mail becau the sampled LSPs were either no longer in business or their address had changed.The large number of undelivered returns might be due to the volatility of the LSP industry,which reduced the effective sample size of this study to1087.
5Of the232returned questionnaires,two expresd a refusal to participate,four were returned blank,th
ree had significant data missing,and two were received too late to be included in the data analysis.In sum,there were221 usable respons––114in thefirst mailing and107in the cond mailing––reprenting an effective respon rate of 20.3%(221/1087).This respon rate is comparable to tho obtained in previous studies of a similar , Murphy and Daley,2001).
6The non-respon bias was assd by dividing the221respons into two groups,namely early(n¼114,51.6%) and late(n¼107,the remaining48.7%)respondents.The answers of the two groups to the24questionnaire items, which were ud to measure their rvice capability(e Table2),were then compared by using a ries of t-tests.The test results indicate that,at a5%significance level in all24items,no statistical differences existed between the mean scores of the early and late respondents.
7Approximately US$1¼HK$7.8.
8The items were developed by referring to previous logistics rearch on rvice and performance evaluation(Larson and Gammelgaard,2001;Lieb and Miller,2002;Murphy and Poist,2000)and from discussions with academics and practitioners in logistics.
