Driving Forces and Barriers for Value-Added Services

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Logistics and Logistics Service Providers

In this section we take a closer look on logistics as a sphere in which TPL providers operate. Coyle et al. (2003) claim that the term logistics gained general public recognition in the 1980s. Logistics has four subdivisions: business, military, event and service logistics. The main focus in this paper is on business logistics, which is defined by Coyle et al. (2003, p. 39) as :”the part of the supply chain that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of use or consumption in order to meet customer demands.” Coyle at al. (2003) state that there are four principal types of economic utilities which add value to the product or service: form, place, time and possession utilities. Place and time utilities are generally associated with logistics, while form utility is associated with manufacturing and possession utility is associated with marketing. Form utility involves, for example, transforming raw materials into finished products. Place utility can mean moving products from the place of production to the point of products’ demand. Time utility involves ensuring that products reach the point of the product demand at the right time. Possession utility means creating the demand for the products through different direct or indirect promotion activities. All four utilities are closely related to each other and thus logistics through place and time utility can have an important value-adding role (Coyle at al., 2003).
Delfmann, Albers and Gehring (2002) define logistics service providers (LSP) as companies which perform logistics activities on behalf of others. The authors claim that in the literature, LSPs are described very generally and that the functional scope of logistics service providers is left unanswered. The term LSP is broad and used also to describe third-party logistics providers which is the target firm type in this thesis. For this reason a short theoretical review about classification of LSP is provided before defining and classifying TPL providers in the next section of this thesis. LSP are classified in different ways in the literature. Lai (2004) classifies LSP in terms of their service capabilities and performance result. According to Lai’s (2004) research study there are four different types of LSPs, classified according to their variation in service capability. Traditional freight forwarders offer freight forwarding service such as combining small shipments into single larger shipment. Transformers have an expanded service capability including freight forwarding service in addition with value added service and technology enabled logistics service. By sharing resources between several customers they add value to their customers. A third category of LSPs are nichers that target a special niche market and offer specialized service in value added and technology enabled sphere. The last categories of LSPs are full service providers which offer a wide range of service and are seen as creating superior service performance. Lai (2004) furthermore state that full logistic service providers have the highest possibility to perform different logistic services comparing to the other three types of LSP.
Delfmann et al. (2002) describe clustering of LSP made by Niebuer (1996) where LSP are classified in regard to the services they provide and degree of their service customization, as depicted in Figure 2.3. Providers of standardized and isolated services like transportation and warehousing can be found in the first group, standardizing LSP. These companies are highly specialized and have optimized their whole logistics system in regard to the objects of their specialization. Standardized LSP plan and coordinate their logistics systems according to their own considerations and are not interested in taking over coordination or administrative functions of their customers’ business. Examples for standardizing LSP are traditional carriers and express parcel service providers. The second group involves LSP who combine different standardized logistic services in bundles according to their customer wishes. Such companies can consequently be called bundling LSP. Often such service bundles consist of one core logistics activity, like transportation which is combined with some value-added services like simple assembly and quality control. Standardized financial services and insurance or payment services can be provided as well. Such bundled services are performed, for example, by freight forwarders in automotive industry. Bundled services are provided in similar way to all customers, which is the reason why bundling LSP do not provide management support services as such services need to be customized considering the needs of each particular customer (Delfmann et al., 2002).

Definition and Classification of TPL Providers

The term “third party logistics” actively began to appear in academic literature year 1989 (Maloni & Carter, 2006). The expression is associated with the practice of contracting-out (outsourcing) some of the company’s logistics activities to a third-party and there are numerous other terms referring to the same phenomenon, such as logistics alliances, operation alliances in logistics, contract logistics, contract distribution and logistics outsourcing (Berglund et al., 1999, Selviaridis & Spring, 2007). One of the earlier TPL definitions of functional character is provided by Andersson and Sjöholm (1992, cited in Skjott-Larsen, Halldorsson, Andersson, Dreyer, Virum & Ojala, 2003, p.8). The authors state that TPL is a situation “where a third party takes responsibility for primary transport and warehousing activities, but also related services such as consolidation, order administration and simple assembly.” Researchers however generally tend to agree that there is a lack of one single widely accepted definition of the phenomena of third-party logistics (Marasco, 2008, Skjott-Larsen et al., 2003, van Laarhoven, Berglund & Peters, 2000). Based on their conducted literature review, Maloni and Carter (2006) argue that some consider that the TPL concept involves external logistics service provider supplying any logistics services, typically those that have previously been performed in-house. Maloni and Carter (2006) continue by saying that according to such simple definitions any transaction-based carrier or warehouse provider could be viewed as a TPL firm. Leahy, Murphy and Poist (1995) however claim that the TPL is generally perceived as a logistic service provider offering several bundled services instead of just isolated services of warehousing or transportation.

1 Introduction 
1.1 Background
1.2 Problem Formulation
1.3 Purpose .
1.4 Research Questions
1.5 Delimitations
1.6 Outline of the Thesis
2 Frame of Reference 
2.1 Service Management .
2.2 Third-Party Logistics Providers
2.3 Service Development
2.4 Summary of the Frame of Reference
3 Methodology 
3.1 Research Process
3.2 Research Approach
3.3 Exploratory, Descriptive and Explanatory Studies
3.4 Qualitative or Quantitative Research
3.5 Research Strategy
3.6 Collection of Data – the Interview.
3.7 Secondary Data.
3.8 Literature Study
3.9 Sampling
3.10 Data Analysis
3.11 Reliability and Validity
4 Empirical Study.
4.1 Overview of Empirical Material
4.2 Bring Logistics Solutions .
4.3 Schenker Logistics
4.4 Aditro Logistics
5 Analysis 
5.1 Positioning of TPL Providers
5.2 Value-Added Services in TPL .
5.3 Development of Value-Added Services
5.4 Driving Forces and Barriers for Value-Added Services .
6 Conclusions

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Value-Added Services in Third-Party Logistics A study from the TPL providers’ perspective about value-added service development, driving forces and barriers