Benefits of 3rd Party Logistics Services for South African FMCG Manufacturers

Date
2012-01-19
Authors
McCallum, David Travis
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Abstract
South African organisations are continually faced with challenge of improving their competitiveness in the local and international market; the potential for logistics to enhance their levels of competitiveness was confirmed by the research of Mentzer et al. (2000), who stated that “Logistics excellence has become a powerful source of competitive differentiation” Despite the rapid growth and development of the logistics industry in South Africa, the use of third party logistics service providers in South Africa is a topic in which very little research has been undertaken. This piece of research aims to explore the perceptions of the users of third party logistics service providers, in the manufacturing sector of the South African fast moving consumer goods industry. By applying a structured questionnaire to a random sample of 150 organisations, the research examined the user’s perceptions pertaining to the influence that their contracted 3PL has had, in assisting them to achieve their strategic logistic objectives, and determine what influence the contractual agreement in place has on the relationship between user and 3PLs. Data collected from the 64 usable questionnaires established that the leading reason for contracting the services of a third party logistics service provider, was to enable the user to focus on its core competencies. The data confirmed that users are of the opinion that a third party logistics service provider has the potential to create a competitive advantage for the user. A final key finding was that a formal agreement that contains Key Performance Indicators improves the quality of the relationship between the user and the third party logistics service provider. It also positively influences the longevity and success of the relationship. iii To generate and capture their full potential value, third party logistics service providers need to gain a deeper understanding of why their users have contracted their services. By enhancing their understanding, they would be able to develop and provide services that target the areas in which the user feels they are best suited to create a competitive advantage, thus differentiating the user from its competitors. Third party service providers need to acknowledge the importance of a formal agreement, they must invest the necessary resources required to formulate and implement an agreement that contains relevant, measurable Key Performance Indicators that they are able to directly influence. The existence of such an agreement would enhance the relationship and increase the longevity of the relationship. The research also presents findings related to the demographics of respondents, the decision making process of respondents and the extent to which respondents make use of the various services offered by their third party logistics service providers. These findings are discussed and compared with published studies that were undertaken in various other regions of the world. The research report includes various discussions on the managerial implications of the data collected
Description
MBA thesis - WBS
Keywords
Logistics, Third party logistics
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