Barriers to third-party logistics integration: empirical evidence from China
| Date | 11 September 2017 |
| Published date | 11 September 2017 |
| Pages | 1738-1760 |
| DOI | https://doi.org/10.1108/IMDS-08-2016-0344 |
| Author | Baofeng Huo,Qianwen Wang,Xiande Zhao,Zhongsheng Hua |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Barriers to third-party logistics
integration: empirical evidence
from China
Baofeng Huo and Qianwen Wang
School of Management, Zhejiang University, Hangzhou, China
Xiande Zhao
China Europe International Business School,
South China University of Technology, Shanghai, China and
China Europe International Business School, Business Center,
Shenzhen, China, and
Zhongsheng Hua
School of Management, Zhejiang University, Hangzhou, China
Abstract
Purpose –The purpose of this paper is to investigate effects of two integrative mechanisms of third-party
logistics (3PL) integration (i.e. information sharing and process coordination) between users and providers on
relationship satisfaction, and further explores how partnership-surrounding (e.g. legal unprotectability) and
partnership-specific barriers (e.g. measurement difficulty and cooperation difficulty) influence 3PL integration
in the context of Chinese 3PL practices.
Design/methodology/approach –Using data collected from 247 3PL users in China, this study uses
the structural equation modeling method to empirically examine the relationship among partnership-
surrounding/specific barriers, 3PL integration and relationship satisfaction.
Findings –The results show that information sharing has no significant effect on relationship satisfaction,
while process coordination has a positive effect on relationship satisfaction and partially mediates the
relationship between information sharing and relationship satisfaction. Furthermore, as partnership-specific
barrier, measurement difficulty and cooperation difficulty are negatively related to information sharing and
process coordination. Surprisingly, as partnership-surrounding barrier, legal unprotectability is not
significantly related to information sharing but is positively related to process coordination.
Originality/value –As a comprehensive study on 3PL user-provider relationship in China, this study
extends existing 3PL literature by providing evidence about the importance of 3PL integration and different
types of barriers to 3PL integration, also providing managerial implications for 3PL users, providers, law and
regulation makers about how to better implement 3PL integration in China.
Keywords China, 3PL integration, Partnership-specific barrier, Partnership-surrounding barrier,
Relationship satisfaction
Paper type Research paper
1. Introduction
With its rapid economic growth and huge market potential, China has become the world’s
second-largest economy since 2010 (Li et al., 2016). In this context, low-cost labor and
modern technology have served to stimulate the development of general logistics
outsourcing (Brown, 2005). These factors have also facilitated the development of
third-party logistics (3PL), especially since China opened up its logistics industry for the
World Trade Organization at the end of 2004. According to Africk and Calkins (1994), 3PLs
“are more complex, encompass a broader number of functions, and are characterized by
longer-term, more mutually beneficial relationship”(p. 49). The National Development and
Industrial Management & Data
Systems
Vol. 117 No. 8, 2017
pp. 1738-1760
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-08-2016-0344
Received 27 August 2016
Revised 11 January 2017
Accepted 12 January 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
This research was supported by National Natural Science Foundation of China (Nos 71525005,
71372058), Zhejiang Provincial Natural Science Foundation of China (No. LR13G020001).
1738
IMDS
117,8
the challenges of managing 3PL have attracted a great deal of attention over the last two
decades (Leuschner et al., 2014). Growing numbers of firms are outsourcing some or all of
their logistics activities to 3PL providers, as they seek to achieve reduced costs, improved
service and enhanced ability to focus on their own core activities (Maloni and Carter, 2006).
According to a survey of about 2,000 executives by Langley (2012), over 45 percent of
shipping and transportation logistics and 39 percent of warehouse logistics are outsourced
to 3PL providers. China’s 3PL industry is definitely expanding faster than that of other
developing countries (Wee Kwan Tan et al., 2014). Some cities such as Shanghai, Tianjin,
Guangzhou or Shenzhen regard the logistics industry as one of their most important
economic sectors, and therefore these cities provide preferential policies and resources to
promote the 3PL industry. Recently, this trend has extended to numerous regions across
China (Hong et al., 2007; Jing and Cai, 2010).
In a supply chain context, integration is defined as “the degree to which a manufacturer
strategically collaborates with its supply chain partners and collaboratively manages intra-
and inter-organization processes”(Flynn et al., 2010, p. 59). In recent years, 3PL integration
has received increasing attention from researchers (e.g. Mortensen and Lemoine, 2008;
Jayaram and Tan, 2010; Sheikh and Rana, 2012). However, previous studies have failed to
provide a detailed definition of 3PL integration. Building on insights from Bowersox et al.
(2002), Flynn et al. (2010), Frohlich and Westbrook (2001) and Romano (2003), we define 3PL
integration as the degree to which a 3PL user collaboratively manages inter-firm logistics by
using providers to facilitate accurate and timely flows of information and materials, for
maximum customer value, at a high speed and low cost. This kind of integration is directly
related to the wider effort to overcome intra- and inter-firm boundaries.
Our investigation builds on several studies of operations management which identify
information sharing and process coordination as two primary mechanisms of logistics
integration (Sahin and Robinson, 2002; Cai et al., 2010; Wu et al., 2014; Liu et al., 2015). These
mechanisms are central because 3PL systems are expected to be seamless, with fully
integrative information and material flows between the parties involved (Towill, 1997;
Liu et al., 2015; Wisner et al., 2014).
According to Leuschner et al. (2014), the 3PL literature covers three main areas.
The first area includes descriptive studies that capture the existing circumstances of
logistics outsourcing, such as the motivations for and the functions of 3PL. The second
area concerns the refinement of key concepts, the examination of hypotheses and the
formation of normative explanations or prescriptions. The third area concerns the major
trends toward the internationalization of 3PL outsourcing and the spread of 3PL practices.
In regard to logistics implementation, some studies emphasize the integration of logistics
with upstream suppliers and/or downstream customers (e.g. Stank et al., 1999; Paulraj and
Chen, 2007; Prajogo and Olhager, 2012; Wei et al., 2012; Mellat-Parast and Spillan, 2014). In
these studies, however, the 3PL user-provider relationship has been largely ignored,
especially among the majority of 3PL studies that have been conducted in the US or
European countries.
The high cost of logistics is a serious problem in China. According to the
National Development and Reform Commission, the proportion of total logistics costs to
the gross domestic product was 17.8 percent in 2010, and 16 percent in 2015.
This proportion fell to 14.6 percent in the first half year of 2016, but is still higher than the
global average. These costs necessitate more studies on how to reduce the transaction
costs of 3PL processes in China.
Empirical evidence demonstrates that the integration of data systems between firms
brings several benefits, such as reduced transaction costs, improved performance and
enhanced competence (Frohlich and Westbrook, 2001; Frohlich,2002; Rosenzweig et al., 2003;
Flynn et al., 2010; Wong et al., 2011; Huo et al., 2013). However, various chal lenges to
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Barriers to
third-party
logistics
integration
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