Role of Logistics Service Providers in Horizontal Collaboration Partnerships - Coursework Example

Topic: Role of Logistics Service Providers in Horizontal Collaboration Partnerships Affiliation: Title: Date: Introduction Business enterprises undertake differentiated operations with a view to satisfy market demand and reap profits in the process. Organizational operations are influenced by market and industry changes, and the success of a business enterprise depends on how well that enterprise responds to the underlying changes. The rise of new and improved technologies has also redesigned the business environment. Essentially, dynamics of enterprise operations continue to influence and inform collaborations within and across markets. This has given rise to business partnerships that exhibit horizontal collaboration characteristics. The role played by Logistics Service Providers (LSPs) has enhanced the operationalization, functionality, effectiveness, and efficiency of horizontal collaboration partnerships. The Partnership Context The setting of horizontal collaboration partnerships is driven by the presence of mutual interests. Logistics partnerships can take the simplest form possible, but they can also be substantially complex. The common denominator, however, is that the market conditions that surround the operations of horizontal collaboration partnerships are the same. In other words, horizontal collaboration partnerships primarily comprise of business enterprises that operate at the level(s) in the market (Naesens, Gelders, & Pintelon, 2009, p.257). Being subjected to the same market trends will relatively dictate that companies interested in partnering will exhibit mutual interests for horizontal collaboration. However, the operationalization of this process depends on the contracted LSP. Setting of the partnership requires accurate planning and control of events. Whilst the partnership comprises of numerous firms, these firms still run independently in one way or another. Most collaboration partnerships do not fully implement group operations. Rather, they partner in some aspects that critical and beneficial to each partner. This implies that there are those operational aspects that partnership will automatically not provide for. The integration of strategic alignment is critical when it comes to the setting of collaboration partnerships. In other words, the intent to partner must be guided by operational goals and objectives (Cruijssen, Dullaert, & Joro, 2009, p.168). The partnering process is further subject to the evaluation and assessment of the contribution of each partner. Here, the strengths and weak points of each partner considered. Partner analysis influences partner choice, and consequently informs the collaboration. The success of LSPs cannot be realized in the absence of strategic alignment. Once strategic alignment is complete, collaboration partnering is formed and implemented. The formation sees the partners involved make agreements on the underlying business operations within the collaboration context. On the other hand, the implementation aspect encompasses the operationalization of the partnership and installation of collaboration systems, processes, and management procedures (Barratt, 2004, p.33). This process determines the services and processes that the LSP will run subject to the interests of the horizontal collaboration partnership. Control and management seals the partnership deal. The execution of collaborative logistics is implemented, and the stakeholders involved can now mutually benefit from the partnership. However, this does not imply that the partnership is free from operational hardships. Entities bound to the partnership have to trust one another, and fair practices have to be the order of the day (Augustine, Dant, & Tekleab, 2008, p.416). Whilst this might not always be the case, the partners can employ a number of strategies to ensure that the underlying benefits are fairly spread across all entities. Two factors are critical when it comes to the functionality of collaboration partnerships; these are trust and resources (Koppers, Zelewski, & Klumpp, 2008, p.365). They can both enhance the success of logistics companies, but they can as well exacerbate operational conflicts and eventually result in the collapse of the partnership. To ensure that the entities bound to the partnership receive a fair share of the deal, information sharing is necessary. The LSP cannot selectively deal with the collaboration partnership. Secondly, the collaborative efforts between the entities should be dynamic in response to organizational changes for one or more partners. Thirdly, accounting, finance, and LSP technology employed in the partnership operations should remain open. Taking an example from the clothing sector, all partners should have adequate knowledge about the shipping methods, technologies, and location of LSP stations (Checkland, 2007). Finally, when meeting are scheduled to take place between all stakeholders involved, all entities should be informed. Moreover, any critical decisions, processes, or operations should receive the consent of all members. Type of Relationship LSPs relate with partnership entities in diverse and dynamic ways under the horizontal collaboration context. The ultimate goal of the underlying relationships is to foster successful logistics operations, thereby enhancing the realization of the set organizational goals and objectives. Such relationships are purely based on the point of interaction between the LSP and the partnership entities. They can vary or even change as the partnership advances, subject to the agreements that bind entities within the partnership. The observation of an alliance factor is highly probable. Networking between the LSP and the partnership tends to create an alliance-driven relationship (Chaffey, 2002, p.61). The relationship is driven by the harmonized business processes and systems that account for the welfare of all stakeholders. Alliances in the market context ensure that the interests of every entity are factored in the overall logistics that the LSP implements for the partnership. In the event that the operations of the partnership are set in the short run, LSPs’ relationship with the entities involved in the partnership could be based on short term plans and short term alignment of business activities. In such a relationship, the processes or systems involved could often be limited to just a few, and the partnership might have a defined period of dissolution. Basically, this could be termed as a seasonal relationship, where the partnerships and the LSPs only interact at certain periods of their scheduled operations. Another type of relationship could be low degree of integration as a complement of aligned business activities (Cruijssen, Dullaert, & Fleuren, 2007, p.132-135). Unlike seasonal relationship, this type of relationship is set within a relatively longer business period. Here, the partnerships could operate independently and dependently in an on and off basis, prompting that the LSP be responsive to such trends. This means that the LSP should be in a position to identify and understand the underlying needs for all the entities involved in such an operation plan. The activities and processes in play within this relationship could be numerous and relatively complex. Fully integrated of operational activities could be a characteristic relationship between LSPs and partnership entities. This relationship is long term in nature, and could be one of the most complex relationships with logistics companies. Here, activity alignment is fully integrated into the LSP systems, allowing planning to effectively and efficiently be undertaken between the partnership and the LSP (Cruijssen, Dullaert, & Fleuren, 2007, p.139). Essentially, this is the type of relationship that allows LSPs to fully exploit their potential. The supply chain, for example, could be streamlined between the partnership and the LSP to the extent that the two will seem to operate like a single entity. In the context of the clothing sector earlier mentioned, LSPs enhance partnership operations by ensuring that the logistics path taken is the best available in terms of efficiency and effectiveness. For example, shipping of clothing has to be timely as per the customer’s request, needs, tastes, and preferences. In other words, customer satisfaction comes first. In this respect, Heide and John (2002, p.31-33) contends that it would be vital to enhance functional relations between the partnership, LSP, and the customer. Basically, this is a relationship that improves the overall supply chain adopted by players in the clothing sector. Type of Services The types of services that LSPs could provide in the collaboration partnership context are driven the market needs the partnership seeks to satisfy. In this respect, the collaboration is influenced by a number of factors, namely: cost, growth, innovation, differentiation, social profits, synergy, and agility (Cruijssen, et al. 2010; Tapscott & Williams, 2006). The types of services to be provided have to account for the aforementioned drivers of partnership collaboration. In the process, considering issues that result in partnership failure would be vital. Doing so would ultimately enhance service delivery and operational relations between the partnership and the LSP. Using the clothing line example, the following types of services could be provided: lead logistics, fourth-party logistics, basic carrier services, and third party logistics (Simatupang & Sridharan, 2002, p.42-47). All services do not necessarily need to be integrated into the partnership’s operations. One or more of the appropriate services could be chosen. For instance, if the clothing line is need of being provided with full-service logistics, then the most appropriate service in that line would be the third-party logistics. Where administrative and consultation services are required, then the logistics company could offer fourth-party logistics. Finally, where the logistics system is relatively complex, lead providers could be contracted to coordinate the underlying logistics. Basic carrier services constitute an unavoidable factor when the central focus is the supply chain management. Markets are driven by needs, tastes, and preferences. Failure to satisfy these factors could prove fatal to the operations of any given business. In this respect, choosing the types of services that the logistics companies should provide is critical (Floridi, 2007, p.62). The choice must be informed by the business goals and objectives that drive the operations of an enterprise. Choices on logistics vary within and across sectors. Therefore, it is important for the partnership to identify the actual position that logistics hold in the line of its business. Doing so guides decision making, thereby enhancing the desired outcome as far as logistics are concerned. On the same note, LSPs should consider their effectiveness and efficiency in discharging their service offering duties and responsibilities (Sawhney & Parikh, 2001, p.84). The objective is to ensure that the partnership-LSP processes are working to the best interest of both parties. Business Model LSPs operate just like any other business, meaning that they persistently pursue profit motives. For this reason, the business model(s) that they chose to implement has to reflect their interests as well as those of their clients. Failure to implement a functional business model would not only affect service provision by LSPs, but also the success line of horizontal collaboration partnerships that they serve. As far as business models are concerned, contract logistics dictate which way LSPs should go. LSPs could implement open-book, semi-open, or close-book contract (Perret & Jaffeux, 2007; Worthington & Britton, 2005). The choice depends on the actual sector that demands their services. Before the contract logistics are implemented, it is vital to consider factors that make partnership vulnerable to failure. The first in line is competition. The competition aspect affects both LSPs and partnerships. Logistics companies compete for clients, while partnerships compete on the nature of their respective businesses. Either way, targeting the same markets and/or customers is a critical undertaking. Organizational instability, imbalanced power distribution, unfair business practices, and mismatching information puts an organization at the verge of failure (Porter, 2001, p.69). In implementing the chosen business model, the LSP should offer consultative services to the partnership to enable decide about handling resource issues. As earlier mentioned, resource management is critical to account for in the partnership context. Whilst some partnerships decide to share resources or assets, others handle them independently. For the sake of fairness and balanced business benefits, the partners could adopt a uniform pricing mechanism. Whichever the preferred case, the LSP could implement a business model that is characteristic of the open-book contract. The flexibility provided by contract logistics business model allows the involved players to adopt operational changes and dynamics when need be (Lambert, Emmelhainz, & Gardner, 2009, p.175). Reference List Augustine, A., Dant, R. & Tekleab, A. (2008). Trust-opportunism paradox, relationalism and performance in interfirm relationships: evidence from the retail industry, Strategic Management Journal, 29: 401-423. Barratt, M. (2004). Understanding the meaning of collaboration in the supply chain, Supply Chain Management: An International Journal, 9(1): 30-42. Chaffey, D. (2002). E-Business and E-Commerce Management, Harlow, Essex: Pearson Education. Checkland, P. (2007). Systems Thinking, Systems Practice, Chichester: John Wiley. Cruijssen, F., Dullaert, W. & Fleuren, H. (2007). Horizontal Cooperation in Transport and Logistics: A Literature Review, Logistics and Transportation Review, 43(2): 129-142. Cruijssen, F., Dullaert, W. & Joro, T. (2009). Freight transportation efficiency through horizontal cooperation in Flanders, International Journal of Logistics: Research and Applications, 13(3): 161-178. Cruijssen, F., et al. (2010). CO3: Collaboration Concepts for Co-modality, Transport Research Arena Europe 2010, Brussels. Floridi, L. (2007). ‘A look into the future impact of ICT on our lives’, Information Society 23(1): 59–64. Koppers, L., Zelewski, S. & Klumpp, M. (2008). Social production factors in supply chain cooperations, In Proceedings of the 15th International Working Seminar on Production Economics, Igls, Innsbruck, pp. 363–374. Naesens, K., Gelders, L. & Pintelon, L. (2009). A swift response framework for measuring the strategic fit for a horizontal collaborative initiative, Int. J. Production Economics, 121: 550-561. Perret, F. & Jaffeux, C. (2007). Essentials of Logistics and Management, London: EPFL Press. Porter, M. E. (2001). ‘Strategy and the Internet’, Harvard Business Review 79(3): 63–78. Sawhney, M. & Parikh, D. (2001). ‘Where value lies in a networked world’, Harvard Business Review 79(1): 79–86. Simatupang, T. M. & Sridharan, R. (2002). The collaborative supply chain, International Journal of Logistics Management, Vol. 13, No. 1, pp. 40-48. Tapscott, D. & Williams, A. D. (2006). Wikinomics: How mass collaboration changes everything, London: Atlantic Books. Worthington, I. & Britton, C. (2005). The Business Environment, Englewood Cliffs, N.J.: Prentice Hall. Lambert, D., Emmelhainz, M. & Gardner, J. (2009). Building successful logistics partnerships, Journal of Business Logistics, 20(1), 165-181. Heide, J. B. & John, G. (2002). ‘Do norms matter in marketing relationship?’ Journal of Marketing, 56(2) 32-44. Read More