Huge benefits have been reaped from collaboration between buyers, suppliers and logistics service providers. The Kraljic matrix, the Kamann Cube and the Bensaou model provide means to assess the collaboration value of a given supply chain partner. It has been argued that 3PLs suffer a significant amount of "squeezing" from their customers - a practice associated with transactional purchasing of commodities rather than strategic partnerships.
To what extent is this statement true? If it is true, what will be the effect on collaborative potential in the 3PL industry; and what will be the effect on value creation and total cost to the supply chain?
Hi Colm,
Thank you for the question.
I think your statement is true, In my research 'strategic logistics outsourcing' I've two case studies, both of them didn't deal with the LSP as a strategic partner, and you can feel the effect of commoditization of the LSP services, but at the same time they have good attitudes toward changing this situation. When I presented my new approach for strategic logistics outsourcing they show a high interest and accept to implement it.
Current situation of dealing with LSPs as non-strategic partners surely affects the SC efficiency, value creation, and long-term collaboration/well being. Absence of trust, shared vision and objectives will increase collaborative failure rate, cost of sourcing and searching for new LSPs, which in turn will affect the SC cost. On another hand, continuous changing of LSPs affects SC members relationships; firms prefer to deal with a reliable LSP in a consistence way, consistency help both LSPs and their customers to excel and create more value throughout the SC.
Thanks, Saleh.
Regarding the effect on the industry. Would it be true to say that the drivers of this commoditisation (those LSPs accepting contracts through a reverse auction process, for example) are, in the long term, forcing the more innovative LSPs and progressive thinkers out of the industry?
Dear Colm,
I think your above conclusion is right.
drivers of LSPs accepting contracts through a reverse auction process, are forcing the more innovative LSPs and progressive thinkers out of the industry.
Hello, I just thought I might add my 2 cents to this old thread... I am studying the 3PL market in Italy, and industry reports indicate that self-reported innovation-oriented approach seems to prevail among the most successful 3PL providers. They outperform the market significantly.
So at a first glance it seems that innovators and progressive thinkers are still doing well, but of course we cannot generalize for the long run or for other regions, and we don't know if self-reported emphasis on innovation correlates with actual, objectively measured ability to innovate.
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