1. WHAT DO CUSTOMERS VALUE ABOUT 3PL SERVICES? COMPARING LOGISTICS BUSINESS MODELS Moosa Sharafali & Damien Power Department of Management, Faculty of Economics and Commerce, University of Melbourne, Australia Vikram Bhakoo Department of Management, Faculty of Business and Economics, Monash University, Australia

2. Customer Value in 3PL Service Provision  Relevant Literature: –Bowesox, D. J. (1990), "The Strategic Benefits of Logistics Alliances," Harvard Business Review, Vol. 68, No. 4, pp. 36-45 –Sheffi, Y. (1990), "Third Party Logistics: Present and Future Prospects." Journal of Business Logistics, Vol. 11, No. 2, pp. 27-39 –Berglund, M., van Laarhoven, P., Sharman, G. and Wandel, S. (1999), "Third Party Logistics: Is there a future?," International Journal of Logistics Management, Vol. 10, No. 1, pp. 59-69 –Halldorsson, A. and Skjott-Larsen, T. (2004), "Developing logistics competencies through third party logistics relationships." International Journal of Operations and Production Management, Vol. 24, No. 2, pp. 192-206 –Hertz, S. and Alfredsson, M. (2003), "Strategic Development of third party logistics providers," Industrial Marketing Management, Vol. 32, No. 2, pp. 139-149 –Knemeyer, A. M., Corsi, T. M. and Murphy, P. R. (2003), "Logistics Outsourcing Relationships: Customer Perspectives," Journal of Business Logistics, Vol. 24, No. 1, pp. 77-109 –Langley, C. J., Allen, G. R., Colombo, M. J. and Dale, T. A.. (2005), “Third-Party Logistics Study: Results and Findings of the 2004 Ninth Annual Study,” Research Report, Georgia Institute of Technology

3. Customer Value in 3PL Service Provision  Previous Australian Studies: –Dapiran, P., Lieb, R., Millern, R. and Sohal, A. (1996), Third party logistics services usage by large Australian firms, International Journal of Physical Distribution and Logistics Management, Vol 26, No. 10, 36-45 –Millen, R., Sohal, A., Dapiran, P., Lieb, R. and Van Wassenhove, L. N. (1997), "Benchmarking Australian firms' usage of contract logistics services: A comparison with American and Western European practice," Benchmarking for Quality, Management & Technology, Vol 4, No. 1, pp.34-46 –Sohal, A., Millen, R., and Moss, S. (2002), A comparison of the use of third-party logistics services by Australian firms between 1995 and 1999, International Journal of Physical Distribution and Logistics Management, Vol 32, No. 1, 59-68. –Gattorna, J., Selen, W. and Ogulin, R. (2004). Characteristics, Strategies and Trends for 3PL/4PL in Australia. Alpha Research Consortium Report, Sydney Business School, University of Wollongong, Australia

4. Customer Value in 3PL Service Provision  Survey –Two separate survey instruments were designed – one for providers of 3PL services; the second for users of services provided by 3PL’s. –Administered within membership of Logistics Association of Australia –This survey yielded 178 responses – 106 being from 3PL service providers and 72 from customers of 3PL service providers –Response rates difficult to quantify – LAA have no classification “ 3PL ”.

5. Customer Value in 3PL Service Provision  Typology: –Based on previous work of Africk, J. M., and Calkins, C. S. (1994), Does asset ownership mean better service?, Transportation and Distribution, Vol. 35, No. 5, 49-61 LOW HIGH PHYSICAL SERVICES MANAGEMENT SERVICES BASIC SERVICES MANAGEMENT CONTRACT 3PL PHYSICAL CONTRACT SERVICES INTEGRATED CONTRACT 3PL

6. Customer Value in 3PL Service Provision LOW HIGH ASSET OWNERSHIP MANAGEMENT / COORDINATION SERVICES Broker (20) Non-Asset Based 3PL (22) Traditional Logistics Company (10) Asset Based 3PL (51)  Typology: –Service Providers (self assessment)

7. Customer Value in 3PL Service Provision LOW HIGH ASSET OWNERSHIP MANAGEMENT / COORDINATION SERVICES Broker (11) Non-Asset Based 3PL (13) Traditional Logistics Company (16) Asset Based 3PL (30)  Typology: –Customers (assessment of their primary service provider)

8. Customer Value in 3PL Service Provision

10.  Contribution of Asset Ownership vs. Co-ordination

11. Customer Value in 3PL Service Provision

17.  Conclusions –Customers of 3PL service providers indicate that genuine 3PL’s are contributing more to their performance than traditional service providers –Management and coordination of logistics services, rather than ownership of physical assets, explains the majority of this variance –Despite this, there are substantial perceived gaps between service providers and customers regarding current and expected future objectives –In general, customers have a higher expectation for innovation combined with cost reduction