Jouni Juntunen

Service quality and its relation to satisfaction and loyalty in logistics outsourcing relationships

Purpose – The purpose of this paper is to investigate how perceived service quality influences both a shippers satisfaction and subsequent loyalty in third‐party logistics outsourcing relationships.Design/methodology/approach – Critical service dimensions are identified and their impact on satisfaction and loyalty are developed into a theoretical model, which in turn is examined empirically using structural equation modelling from a survey of 235 industrial companies in Finland.Findings – The results support the satisfaction‐loyalty model in a logistics outsourcing context confirming that service perceptions influence loyalty through a shippers overall satisfaction with the service provider.Research limitation/implications – The empirical study is limited to Finland and data were collected before the financial crisis of 2008‐2009 which affected the economy and this industrial sector. The theoretical constructs and model also need to be validated and tested further across a wider empirical context.Practi...

Impact of service quality, image and relational aspects on satisfaction and loyalty in logistics outsourcing relationships

This paper examines the links between service quality, customer satisfaction and loyalty in logistics outsourcing relationships. Besides service quality, also the moderating role of inter-firm relationships and service provider’s image are examined. A theoretical model is developed and tested with structural equation modelling using survey data from industrial companies in Finland. It is shown that perceived service quality influences the customer’s satisfaction which again affects loyalty. Inter-firm relationships and service provider’s image affect loyalty directly and indirectly through satisfaction.

Short‐run vs long‐run trade‐offs in outsourcing relationships

Purpose – The purpose of this paper is to report on a study of a shippers dilemma as a customer. Shippers desire both lower costs and good service levels, and this dilemma may lead in the long run to a trade‐off consideration between staying loyal to existing service providers and seeking cost reductions from competing providers.Design/methodology/approach – A model was devised from the literature exploring how a shippers propensity to switch logistics service providers may be affected by perceptions of service elements and logistics cost reductions. The model was tested with survey data from 235 Finnish industrial firms and analysed using structural equation modelling.Findings – Findings indicate that in the short‐run trade‐offs do not exist, but there may be a propensity to trade‐off in the long run. Further, quality of service is a more important factor for customers than participating in tight price competition.Research limitations/implications – The data were collected from one country and further ...

Outsourcing strategies of the security sector through acquisition procedures

Purpose – The aim of this research is to reveal the security‐related outsourcing strategies of the public sector and the military and the relevant logistics outcomes by examining buying tactics.Design/methodology/approach – A tentative model was devised from theoretical literature of how buyers use their negotiating power and relationships to achieve improved service quality and/or unit‐cost reductions. The model was tested using survey data from 149 respondents from the Finnish Defence Forces, and the public sector and industrial firms in Finland via structural equation modelling analysis.Findings – Contrary to the approach of classic economics, where negotiating power correlates with direct costs, the findings indicate that negotiating power and relationships do not affect direct costs in the public sector and military contexts, but rather that negotiating power and relationships correlate with an improved service level, which consequently decreases the indirect logistics costs.Research limitations/impl...

Protecting Finnish Defence Security: A Logistics Challenge

This study examines how Finland can secure efficient logistics for the use of their military forces. In doing so, it examines how logistics service providers (LSPs) in countries with higher cost structures can maintain their profitability when competing against transport companies in countries with lower cost structures. The empirical data was gathered from Finnish LSPs in 2008. The survey resulted in 460 acceptable responses. The research models were tested with structural equation modelling (SEM). The results suggest that LSPs can not increase their profits with their negotiation power. However, a positive image of the industry seems to facilitate profitability. In addition, contracts seem to facilitate the profitability of the LSPs, but only if those are accurate and updated. As a conclusion, in addition to negotiation power and contracts, the image of the industry is found to be important as well when LSPs want to increase their profits.

External economies and confidence: a way to reduce logistics costs

The purpose of this paper is to study how external economies and confidence affect logistics costs. To do so, first the influence of relationship-specific investments on external economies is examined, followed by the effect of relationships and brand identity on confidence. A conceptual model is developed and tested with structural equation modelling using empirical data from Finnish industrial companies in 2008. The results show that relationship-specific investments are a key component of external economies, and external economies and confidence explain decreasing logistics costs. A model is developed to illustrate the way in which external economies and confidence explain decreasing logistics costs. From a managerial point of view, the study suggests that logistics service providers should consider relationship-specific investments to develop external economies and also confidence so that they can provide decreasing logistics costs to their customers.

Controlling the bullwhip with transport capacity constraints

The bullwhip effect can be costly to companies in terms of capacity-on costs and stock-out costs. This paper examines the possibilities for controlling the bullwhip effect with transport capacity management in the supply chain. The goal is to examine how inventories and service levels react to transport capacity constraints in a simulated supply chain that is prone to the bullwhip effect. By controlling the transport capacities, the companies may be able to reduce the impacts of demand amplification and inventory variations. Thus, there may be significant practical implications of the findings for logistics managers in todays volatile business environments.

Investigating brand equity of third-party service providers

Purpose – The purpose of this paper is to apply theory and techniques from the services and marketing literature to a supply-chain context consisting of a shipper or seller, a customer or buyer and a third-party logistics service provider (3PL) to investigate corporate brand equity resulting from service quality, customer satisfaction and customer loyalty towards the 3PL. Design/methodology/approach – A conceptual model was developed from the literature and tested with Finnish industrial firms using an online survey. Data were analysed using structural equation modelling to examine relationships among the four constructs. Findings – Hypothesised relationships among the four constructs in the conceptual model were supported; however, the relationship between loyalty and corporate brand equity was weak. Research limitations/implications – This investigatory research is based on a one-country sample making transferability and generalisability to other countries difficult. Practical implications – The finding...

Trust, control and confidence in logistics outsourcing decisions

A number of theoretical constructs and models exist for framing logistics outsourcing decisions. In transaction cost economics, it is argued that the dimensions of transactions, notably asset specificity, are the main criteria to consider in outsourcing situations. Resource-based approaches focus on the company’s assets and capabilities that should be protected and developed while non-core activities should be outsourced. Behaviourally oriented theories explore the human and social factors facilitating outsourcing decisions. In this paper, the model of Das and Teng (1998) is used to examine the role of trust and control as facilitators creating confidence in outsourcing when relationship specific investments are present in the outsourcing relationship. A conceptual model is developed and tested with structural equation modelling using survey data from Finnish industrial companies. The results show that confidence is positively associated with the propensity to outsource logistics when the outsourcing relationship is disposed to specific investments.

Functional spin-offs in logistics service markets

The aim of this paper is to increase the understanding of logistics outsourcing decisions in a network context. The concepts influencing the decision to outsource logistics activities are first identified, using theories in organisational economics, marketing and strategic management. A tentative model showing the key concepts and their assumed relationships is developed and tested with empirical survey data from industrial companies in northern Finland. The estimations are made using structural equation modelling. Based on empirical analysis, a modified model is suggested which identifies two separate dimensions, or modes, of the outsourcing concept. These outsourcing modes offer a useful tool for defining the classic concept of functional spin-offs in logistics service markets. Moreover, the development paths of outsourcing relationships between the shipper and service provider can be examined on the basis of the horizontal and vertical outsourcing modes proposed in the paper.