Customer integration and operational performance: the influence of learning mechanisma in third party logistics

Third party logistics companies, also known as 3PLs, must adapt their operations to the supply chains of each of their customers. 3PLs either replace existing assets and resources operated by their customers or manage assets and resources on behalf of their customers. There are likely to be significant levels of complexity associated with these organizational adaptations, requiring ongoing adjustments to maintain relevance. To place these levels of complexity into context, consider that the larger 3PLs will have billion dollar US revenue streams and are likely to manage hundreds of individual operations on behalf of their customers. Despite 3PLs being placed in these integral management roles within their customers’ supply chains, surprisingly little is known about 3PL customer integration and operational performance. The present study is designed to partly close this gap in our knowledge by fulfilling two objectives: to identify direct effects of 3PL customer integration on 3PL operational performance; and, to identify how learning mechanisms influence 3PL customer integration and 3PL operational performance. Learning mechanisms are processes that are capable of effecting change in operating capabilities, such as those that 3PLs require to integrate effectively with their customers. Organizational components that may be associated with learning mechanisms include learning processes, learning (absorptive) capacities, and customer oriented learning cultures. The present study examines how these elements influence 3PL customer integration and 3PL operational performance, both directly and indirectly, by addressing the high-level research question of how 3PL companies serving multiple customers are able to maintain effective levels of integration with their customers to positively influence operational performance. More than 450 employees of a very large 3PL firm and its customers in Australia were surveyed using an email and web-based survey technique. A total of 230 surveys were answered and 214 were usable in the final analyses, which employed a recently developed structural equation modeling technique to test both direct and indirect relationships between five latent variables representing the constructs of interest. The results demonstrate that 3PL customer integration has a significant, positive, direct effect on 3PL operational performance. The results also demonstrate that learning processes, absorptive capacities of individual employees, and a customer oriented learning culture, significantly and positively, influence both 3PL customer integration and 3PL operational performance. The results contribute to organizational learning theories by demonstrating how components of organizational learning interact, and by demonstrating how learning mechanisms affect customer integration and operational performance. The results clarify theoretical arguments relating to the roles of organizational learning processes and customer oriented learning cultures. The absorptive capacity of employees is shown to be important to operational performance of 3PLs, closing an empirical gap in theories of absorptive capacity. Both customer orientation and absorptive capacity of employees are shown to act as dynamic capabilities with direct effects on 3PL customer integration and indirect effects on 3PL operational performance. The latter result suggests extant theories of absorptive capacity should be adjusted to reference its indirect, rather than direct, effects on performance. The results contribute significantly to our understanding of how 3PLs are able to adapt to the supply chain environment of each of their customers by identifying learning mechanisms that influence customer integration and operational performance. The results also add to our understanding of the relationship between customer integration and operational performance by demonstrating that its positive nature holds in 3PL environments, extending existing knowledge of the impact of logistics integration. This is an important finding for managers of 3PLs. The results further contribute to managerial practice by demonstrating that specific investments in learning mechanisms have positive effects on operational performance.