Academic journal article ASBM Journal of Management

Need Assessment Analysis of CRM Practices in Logistics Industry

Academic journal article ASBM Journal of Management

Need Assessment Analysis of CRM Practices in Logistics Industry

Article excerpt

Introduction

In today's competitive world, outsourcing, core competency and on time delivery have become very common. Realising that effective management of logistics operations can be costly, manufacturers tend to focus their resources on assembling products, and turn to outside specialists for all or part of their logistics needs (Stock and Lambert, 1992). Most of the successful corporate are now concentrating on the job in which they are good (core competency) and outsourcing the allied jobs to others who are good at it. Hum (2000) obtained similar findings of companies moving towards outsourcing their logistics activities so that they can concentrate their efforts on their core businesses. Sheffi (1990) revealed that while some firms prefer to focus on their core business, the development of expertise and dedicated systems to support logistics activities is still beyond the scope of others. The basic question which arises is, if logistics is of so much significance to a firm, why would it turn the activities over to outsiders? Lim (2000) has stated that firms that used to adopt the 'do it all' approach are beginning to realise that having a 3PL provider take charge of the company's overall supply chain presents a more effective and efficient way of running the logistics of the business. This is particularly the case for companies which are increasingly involved in international trades (Murphy et al, 1991; Sohal et al, 2002). Lieb et al (1993) surveyed US and European manufacturers on their use of 3PL and reported that some firms have achieved a 30% -40% reduction in logistics costs and have been able to streamline their global logistics processes as a consequence of outsourcing. Their survey of Fortune 500 manufacturers in 2000 revealed that the use of 3PL reached an all-time high and that over 70% of the responding users indicated that the practice has had a positive or very positive impact on their logistics costs and service levels. In addition, nearly two-third reported that using 3PL has had a positive or very positive impact on customer satisfaction (Lieb and Miller, 2002). So; third-party logistics (3PL) seems to be a sound solution as a step towards supply chain optimization. These need and competition among 3PL players lead to all sorts of deliberation to capture the market share. In this context the Customer Relationship Management emerged as a tool which can be leverage upon. The paper reviews various dimension of 3PL and CRM. CRM can be helpful to 3PL players.

Literature Review

Knemeyer and Murphy (2004) suggested that a commonly accepted definition of '3PL' is lacking. The dichotomy lies in whether the notion is being viewed as solely transactional or as a long-term mutually beneficial relationship. The following lines include some of the definitions emerging from the literature survey. Logistics is 'a time-based activity concerned with the profitable movement of information and materials into/through the organization and out to the customer. It includes everything from the moment a product or service needs to be made, through to incoming raw materials management, production, finished goods storage, delivery to customer and after-sales service (Day, 1998). Stank and Maltz (1996) regarded a 3PL provider as 'any firm providing goods or services that is not owned by the purchaser of the good or service. Lieb and Randall (1996) defined 3PL as Outsourcing activities that have traditionally been performed within an organization. The functions performed by the third party can encompass the entire logistics process, or more commonly, selected activities within that process'. Africk and Calkins (1994) referred to 3PL as a relationship between a shipper and a third party which, compared with basic services, has more customized offerings, encompasses a broader number of service functions and is characterized by a longer-term, more mutually beneficial relationship'. In the recent past outsourcing the logistic solutions to the third part called Third Party Logistic (3PL) has emerged giving cost and strategic advantage to the companies adopting for it. …

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