Customer Loyalty in Logistics Outsourcing Relationship

Only available on StudyMode
  • Download(s) : 33
  • Published : April 18, 2013
Open Document
Text Preview
Chapter No. 1

INTRODUCTION

Background

If a company hires an outsider to perform all of their logistic activities than that outsider will be known as logistic service provider. They are the facilitators which help the organization in an easy and economical manner. The facilities they provide is the timely delivery of the raw materials, semi finished goods and the finished goods whether internally or externally by using different modes of transportation i.e. land, air or sea.

Logistics is not only concerned with the internal movement of the goods but they are also concerned with external movement and covers a large area that includes inventory control, re-ordering of the products and make sure about the suppliers about they work performance and that the suppliers are made at the right time and are in the right area.

Logistic service providers before offered mainly two services i.e. warehousing and transportation services. But now they have innovated and enhanced their business and providing multiple services such as inventory control, re-ordering of the products, customer service, distribution etc. Competition in the logistics service industry has increased tremendously. Today, 80% of the industrial companies outsource logistics service providers (LSPs). The cheaper strategy which is cost effective is focus on the existing customers and sustains them or even expands the business with them rather than acquiring new customers.

Logistics service providers are always trying to build and maintain a strong relationship with their customers. Globalization is the most important driver of the logistics services provider. Through logistics services company can have the advantage of reducing the cost like they are more efficient and have low cost of production. Logistics outsourcing can increase their performance by utilizing expertise and better technology.

If there is going to be a tighter trading collaboration that demand for logistics will be on a higher side e.g.

• There would be more stocking locations
• Customers will order more frequent
• There will be multichannel distribution capabilities (n.a., 2005)

With the enhancement of the technologies and having a good terms with the trading partners and as well as customers than logistics demand would be more and customers will in turn order more because it saves the cost of the companies and for them it is an cost effective strategy. Logistics is becoming a trend now and many companies are implementing it because logistics services offer a full range of capabilities to deal with your challenges in the field of cost reduction, return on assets and customer service.

Outsourcing and globalization are such a familiar concepts these days and the concept of logistics has increased and progress to a greater height with different job opportunities. Now the every business in this modern era heavily relies on the logistics. The problems of the movement of the goods, warehousing, distribution, storage, customer service, all are highly benefited by the logistics. In this current global scenario, where the competition is tough and no organization want to be left behind (n.a, 2010).

Rationale of the Study

The main purpose of this research is that logistics service providers are trying to build and maintain a good relationship with their customers.

Developing customer loyalty is very important for every business firms in chase of sustainable growth. International Logistics Provider Services goal is to provide services through shipping and intermodal transportation. By using logistics firms and international marketers can play a vital role to allow the firms to operate in an environmentally conscious way. International logistics is concerned with the physical distribution and managing the raw materials (Wallenburg, 2004).

In Asia, the logistic...
tracking img