1 Department of Business Development and Technology, Aarhus BSS, Aarhus University2 Department of Business Development and Technology, Aarhus BSS, Aarhus University
The selection of logistics service providers (LSPs) is regarded as a critical and complex process. Within the areas of innovation and development of supply chains, lasting relationships are generally regarded as a positive and value-creating factor. Occasionally, relationships between buyer and LSP come to a crossroad of termination, redefinition or change; attrition of relationships can be caused by poor quality, changed market conditions, management changes, lack of trust, changes in operational conditions on either side, and marketing influence from competitors. This study uses a case-based methodology to provide an in-depth account of the processes associated with private, global supply chain organisations’ use of tendering in the relationship development connected to LSP selection. The study presents tendering in two private companies as a process of re-shuffling business relations, and it stresses the temporal dimension of business relationships. In adapting a governmental-style of systematic purchasing, a number of pragmatic approaches are observed, such as the desire to have a common comparison of suppliers, while accepting that cost is only one out of several factors. Pragmatism of private enterprise purchase additionally relate to the acceptance of some level of dialogue before, during and after the tender due date. Tendering is viewed as an extreme case of relationship management, where newcomers and existing suppliers are put on an equal footing, decades of incorporated relationships are put at stake, and disbelief in the buyer’s sincerity is dominant among all stakeholders. Findings relate to the fact that tenders are a representation of major deficiencies in existing LSP’s relationship management, even if market dynamics and perceived commoditisation of services also may have an impact. During the tendering process, innovation, knowledge management and operational procedures in interaction with the business relationships are often overlooked and need active management and proper contingency planning. This paper contributes to a deeper understanding of both sides of the tendering process, stressing a paradoxical, but inevitable or unforeseeable character of the events. Further implications are presented as a background for volatility in business relationships and radical changes in network configuration.
tendering; logistics; business networks; business relationships; logistics service provider; Supplier selection criteria