FORMATION, IMPLEMENTATION AND MANAGEMENT OF PARTNERSHIPS BETWEEN CUSTOMERS AND LOGISTICS OPERATORS: A CASE STUDY

The objective of this article is to study the dynamics of the partnership relationship between customers and logistics operators, through the use of a conceptual model that contemplates not only the successive stages in the development of this type of relationship, but also their initial motivations for the formation of partnerships, their facilitators and the different perspectives with which the degree of success in this relationship can be measured.

The first part of the article introduces the issue of partnership between two organizations within the current environment of market globalization and technological revolution. In the second part of this article, partnership (trust) is positioned as an alternative to vertical integration (hierarchy) and market transactions (price). In the third section, the relevance and topicality of the topic for Brazilian companies is addressed. The fourth section is devoted to comments on some existing models regarding the formation of logistical partnerships, as well as detailing the proposed model used as a tool in the case study. The fifth section presents the case study carried out on the formation, implementation and administration of a partnership relationship between a company in the phonographic sector and a logistics operator. Finally, the sixth section is dedicated to the conclusions of the work.

THEMATIC AREA: INDUSTRIAL PRODUCTION AND SERVICES

FORMATION, IMPLEMENTATION AND MANAGEMENT OF PARTNERSHIPS BETWEEN CUSTOMERS AND LOGISTICS OPERATORS: A CASE STUDY

1. INTRODUCTION 

Throughout the 80s, several transformations influenced the buying and selling relationships between various organizations that operate in the same distribution channel. The restructuring of corporations in search of higher levels of quality and productivity, the globalization of markets and the emergence of new technologies for data processing and transmission have played and continue to play a key role in changing business relationships between companies. The ever-faster penetration into new markets, or the consolidation of a certain position in others, often involves the adoption of new management strategies for the physical distribution process in the supply chain. Through the expansion of organizational boundaries, companies have been shown to be able to eliminate inefficiencies and duplication of activities at supply chain interfaces, while increasing service levels to the final customer, be it a manufacturer, wholesaler, retailer or the final consumer. .

Particularly, the globalization of markets is leading several organizations to seek alternatives for their current sources of supply of goods and services, for the location of their production and distribution facilities, as well as for their consumer markets. This growing pressure stems from various market conditions, such as, for example, the shift in the balance of power from industry to retail, the dispersion of demand patterns across different consumer niches, and also from the development of alternative arrangements in distribution channels.

Second, the continuous development and diffusion of faster and more accessible data processing and transmission technologies allows the collection and exchange of information in real time in the distribution channels. This feature streamlines the evaluation and decision-making process, making them viable in contractual relationships, as it extends the scope of control of each of the channel members to the subsequent activities of the physical distribution process (LA LONDE et al., 1989 ). For example, real-time information systems allow immediate updates on the level of products in stock at a retailer, allowing its suppliers to reschedule production and distribution schedules in a timely manner, if necessary, in order to maximize the productivity of allocated resources. .

It is in this scenario of profound transformations, where organizations are increasingly turning to their key capabilities, that the demand arises for the external acquisition of certain activities or logistical processes in a service provider. In this way, the basic purpose of these new contractual relationships is to increase the efficiency and effectiveness of business practices in the supply chain, via the creation of a sustainable competitive advantage in the long term. Specifically, the development of logistics partnerships to obtain the benefits associated with vertical integration (eg, greater control and predictability of supply sources) without, however, incurring the costs associated with a verticalized corporate structure (eg, costs associated the maintenance of a large-scale bureaucratic apparatus), avoids the loss of strategic flexibility, a common fact in vertically integrated organizations (HAYES et al., 1984). More specifically, the benefits and limitations of vertical integration are complex, and organizations, in different circumstances with different objectives, are likely to make different decisions. The vertical integration question that all organizations must answer is relatively simple, even if the decision itself is not (SLACK et al., 1997). Do the advantages that vertical integration confers, given an organization's particular set of circumstances, meet the performance objectives necessary for it to compete more effectively in its markets? The decision should reflect the organization's competitive priorities. For example, if an operation's primary performance objectives are delivery reliability and meeting short-term changes in customer supply needs, the key question to ask is how vertical integration improves delivery reliability and flexibility. ? In this sense, several authors such as DEVLIN et al. (1988) present the partnership relationships inserted in the context of the strategic planning of the organizations,
as a possible alternative for the acquisition of logistics services, vertical integration, free market, consortia, joint ventures, etc.

2. TYPOLOGY OF BUYING AND SELLING RELATIONSHIPS: SITUATING PARTNERSHIP RELATIONS AMONG TRADITIONAL SUPPLY APPROACHES

KOTLER (1972) points out that buying and selling (exchange) relationships are the main focus of debate in the marketing area, based on four fundamental concepts. First, the act of exchange serves as a focal event between two or more parties involved. Secondly, the act of exchange is an excellent opportunity to identify relationship networks between individuals and organizations that participate in it. Third, the opportunity is offered to understand the rules governing the transfer of goods and/or the provision of services between the purchasing entity and the selling entity. Finally, and most importantly, there is the opportunity to study in detail the environmental conditions and processes that permeate the act of buying and selling. By environmental conditions, according to LANDEROS et al. (1995), we must understand the set of economic pressures (depression, recession, inflationary or deflationary trends, etc.), social (values ​​and beliefs of the buying and selling actors), technological (use of new information technologies, such as EDI, which compress the delivery time of a product or provision of a service), governmental (regulation of transport modes) and competitive (entrance of new competitors).

Despite the recognized importance associated with exchange relationships, some lines of research conducted by marketing academics do not exhaustively address the behavior of the organizations involved, when studying the buying and selling process as a one-off event (DWYER et al., 1987) . In occasional exchanges, the parties do not present any past and future involvement, limiting the present contact to the simple transfer of ownership of a product or service (FRANKEL, 1995). Therefore, a discreet exchange is based exclusively on price, with little or almost no communication between the parties. The one-time purchase of a freight service from an independent carrier, made in cash, would be an example of a one-off relationship between a customer and a logistics operator.

MACNEIL (1980, apud. DWYER et al., 1987) presents the opposite extreme, differentiating punctual transactions from contractual transactions (from relational exchanges) in different relationship perspectives. The most important of these is time: while in discrete exchanges there is no notion of past and future between entities, in contractual exchanges the previous history between the buying and selling actors must be observed. Table 1 summarizes the main differences between transactions and contractual transactions.

 

It can be seen from the table above that vertical integration is located at the extreme of contractual transactions (COOPER, 1993, FRANKEL, 1995), as opposed to the extreme of discrete transactions, which bear many similarities with the functioning of free markets described by microeconomic theory. It should be remembered that between these extremes, countless other purchase and sale arrangements between two or more entities can be defined. However, it is not our intention to discuss a whole continuum of possible exchange relationships, limiting ourselves to a discussion, below, more illustrative than exhaustive, about the possibility of forming different buying and selling arrangements.

The theory of organizations basically proposes to answer three questions: the nature of organizations, their development and their functioning (rules and procedures) at a given moment in time (AERTSEN, 1993). The analysis of transaction costs proposed by WILLIAMSON (1975) constitutes a very useful tool to position the exchange relationship between two organizations along the continuum defined by the extremes of vertical integration and free market (HEIDE et al., 1990, COOPER, 1993 , AERTSEN, 1993). According to WILLIAMSON (1975), the purchase and sale transactions between two companies can be governed by completely hierarchical mechanisms (vertical integration), or by mechanisms completely based on price (free market) or by any alternative arrangement that maximizes the efficiency of the company. exchange, see figure 1. It is assumed that the most efficient transaction mode will prevail, taking into account three fundamental determinants of the magnitude of transaction costs: the existence of specific assets to enable the exchange, the uncertainty of the external environment and the transaction frequency.

Market transactions should prevail when the specificity of the assets involved is low: several logistics operators compete in the market offering satisfactory services. When asset specificity is high, the choice for hierarchical mechanisms depends on the level of uncertainty and the recurrent character of the transaction (AUBERT et al., 1996). Vertical integration should prevail when uncertainty in the acquisition of supplies or in the measurement of performance indicators occurs in parallel with a high transaction frequency. On the other hand, when uncertainty levels are not so high, there is room for the development of long-term contractual relationships, such as partnerships.

BOWERSOX et al. (1992) suggest that the degree of mutual dependence between the organizations involved is a basic element for classifying not only transactions governed by market mechanisms or vertically integrated, but also for a diverse range of hybrid relationships (partnerships, joint ventures, consortia, etc. ). We must remember that the degree of mutual dependence is a direct result of how the determinants of transaction costs proposed by WILLIAMSON (1975) are combined. Below, we briefly describe other traditional buy-sell relationships.

• Joint Ventures: These are relationships that involve some form of ownership or equity between companies. Among the main motivations found in the literature for forming joint ventures, we highlight the synergy associated with the rapid exchange of information, economies of scale and greater ease in penetrating new markets (COOPER, 1993).
• Exclusive Suppliers/Consortium of Suppliers: relationship between organizations where one of the parties dedicates all of its resources to a single buyer. This buyer could, for example, obtain exclusivity in the use of the supplier's (transporter) fleet, exercising a greater or lesser degree of control over the distribution operation (shipping schedule, issuance of packing lists, routing, etc.). In more extreme cases, the supplier's vehicles would feature the buyer's name, the contracting corporation's color standard and/or some advertisements (AERTSEN, 1993).
• Partnerships: relationship formed between two independent entities in the logistics chain in order to achieve common objectives and benefits. Logistical advantages such as economies of scale in distribution (via cargo consolidation) and reduction in the volume of products and/or parts in stock at supply chain interfaces are identified as the main benefits for forming partnerships (BOWERSOX, 1990). It seeks to maintain a transaction frequency and degree of control characteristic of vertical integration situations, without, however, incurring the same investment volume (SCHMITZ et al., 1994).

Of the relationships described above, exclusive supplier/supplier consortia and joint ventures, formally and clearly specify the degree of cooperation, standards compliance, operating procedures, and required interorganizational integration through the use of legally enforceable written documents. Both parties retain the individuality of their properties, contrary to vertical integration, where individual property gives way to the power of total authority (FRANKEL, 1995). Exclusive suppliers/supplier consortia, however, are governed by unilaterally drawn up legal contracts, unlike joint ventures governed by bilaterally drawn up legal contracts between the parties involved.

On the other hand, partnerships are contractual relationships that may or may not depend on complex legal documents that formalize the role of each organization, this because it is assumed that trust will direct efforts with an emphasis on the long term to achieve common goals ( BOWERSOX, 1990). Trust, therefore, is an existing desire or willingness in an organization to depend, over a series of transactions, on another organization in which it believes (MOORMAN et al., 1992). An important aspect of this definition is the notion of trust as a belief, a feeling, or an internal expectation of the organization about its exchange partner, an expectation resulting from past experiences regarding its expertise, the reliability of its processes and its true intentions. GANESAN (1994) proposes trust as an expectation composed of two distinct elements. The first concerns the credibility of the capabilities of the organization that is acquiring the product or service. The focus is on the partner's ability to perform a given task efficiently and effectively. The second element is integrity (transparency) with regard to the true intentions of one organization towards another, taking into account the increasing speed with which changes in the external environment are processed.

However, which argument supports the hypothesis that relationships governed by trust can be more efficient in terms of transaction costs than relationships governed by hierarchies or prices? Going back to WILLIAMSON (1975), transaction costs include the costs of elaborating a contractual arrangement satisfactory to both parties, adapting the consensus to unanticipated contingencies and ratifying its terms. Due to human limitations in understanding and predicting increasingly complex phenomena and their subsequent developments, the costs of drafting, negotiating and implementing contracts aimed at long-term relationships are prohibitive. In this way, what happens in practice is the execution of incomplete contracts, that is, that do not contemplate a series of contingencies.

Establishing an incomplete contractual relationship in an environment of trust means that both parties agree a priori to reassess their practices and procedures, in the event of an unanticipated contingency, so that the end result is mutually beneficial. Therefore, in relationships based on trust, both buyers and sellers are predisposed to correct inequalities (for example, redefining profit margins) through solutions adopted over time, instead of adopting an opportunistic posture. This suggests that trust therefore reduces the risk of opportunistic behavior in long-term relationships.

However, before proceeding, attention should be paid to the following question: for which profile of corporations is partnership really a viable strategic option? RAMSAY (1996) in an article that reviews the formation of this type of relationship between two organizations suggests that, despite the recognized success when the initiative is taken by a large corporation, partnership relationships are not viable strategic alternatives for small corporations. This is because small companies, even though they have relatively greater bargaining power than their partners, will not be able to dispose of sufficient resources to form and maintain partnership relationships; expensive processes that often require changes in behavior and management and control procedures on both sides. On the other hand, the greater risk associated with a smaller base of buyers or suppliers is usually accompanied by financial support for training and capacity building of partners. Therefore, the breakeven point of the partnership relationship must be evaluated. While its potential net benefit is attractive, the volume of investment required for its formation, implementation and administration is prohibitive for small organizations.

In summary, we have seen in this section that the exchange relationships between buyer and supplier of a product or service can be governed by different mechanisms: price in free market situations, authority or hierarchy when vertically integrating, and trust in alternative contractual relationships such as the case of partnerships. Therefore, the mechanism that will prevail will be the one that, given certain conditions of asset specificity, uncertainty in supply sources and transaction frequency, minimizes transaction costs.

3. RELEVANCE OF THE TOPIC FOR BRAZIL

Surveys carried out by the Center for Studies in Logistics (COPPEAD/UFRJ) in several Brazilian fuel, lubricant and beverage distribution companies determined a high level of inefficiency in road freight transport, especially in loading and unloading activities, where waiting times generally exceed six hours (FLEURY et al., 1997). The lack of interest in monitoring these loading, unloading and travel times can often be explained by the fact that those responsible for logistical management do not associate them with a significant portion of freight costs, and therefore do not direct efforts towards their reduction. On the other hand, high permanence times at suppliers and customers are often determined by inefficient bureaucratic methods of controlling and processing information relevant to loading and unloading activities, by ineffective internal traffic management, etc.

The authors propose the formation of partnerships between shippers and logistics operators, based on a rational structure for determining freight costs, margins and prices. The premise involved is that once the potential net benefit of the partnership is known, both parties would work together to obtain mutual advantages, seeking to reduce loading and unloading times via redesign of product reception and dispatch activities, as well as the architecture current exchange of information. The existence of these opportunities to be explored makes the study on the formation of partnerships with logistics operators quite opportune and adequate to the reality of the moment. Add to this the fact that transport represents the most visible and important element of the logistics cost in most companies. Freight usually absorbs approximately 60% of logistics costs and something between 9 and 10% of Gross National Product (GNP) in a relatively developed country (BALLOU, 1992).

4.  MODELS FOUND IN MARKETING AND LOGISTICS LITERATURE

The conceptual models that describe the process of forming logistic partnerships (GARDNER et al., 1994; FRANKEL, 1995; LAMBERT et al., 1996) generally converge to five main stages, namely: (1) initial motivation, (2 ) analysis of the external environment, (3) selection, (4) implementation and administration, and (5) evaluation. Although the representation of an organizational evolutionary process by stages is somewhat incapable of clearly distinguishing its starting, ending and transitional phases (BENNIS, 1987), as well as incapable of predicting future events; its descriptive power and its ability to explain and articulate past events overcome these shortcomings (SCHMITZ et al., 1994).

These conceptual models are structured in some components responsible for the evolution of the partnership relationship throughout the successive stages. The components in question are basically divided into processes, motivations and facilitators or logistical constraints (GARDNER et al., 1994; FRANKEL, 1995; LAMBERT et al., 1996). Below is a description of each of these components.

Processes are sets of activities or tasks performed jointly in some stages with the objective of making the partnership relationship viable, through the formalization of operational procedures, policies for sharing risks and benefits, exchanging information, etc. Motivations, on the other hand, are formed by internal desires or expectations, as well as by factors or characteristics of the external environment, which lead an organization to rethink its current practices of physical distribution via à vis the possibility of forming a partnership with a logistics operator. Finally, the enablers or constraints are elements that determine an organization's ability to discover and identify opportunities internally and in the external environment with regard to decision-making and partner selection. The following paragraphs describe the model proposed in Figure 2, taking into account the processes, motivations and facilitators or restrictions present in each of its five stages.

4.1 Initial Motivation

In this initial stage, the organization recognizes the need for change, envisioning the partnership as a viable element for improving current business practices. Some of the possible motivations are a break with the past or the natural evolution of an existing relationship, associated with obtaining strategic, administrative and economic/operational benefits (ELLRAM et al., 1990). Table 2 contains a non-exhaustive list of these three categories of benefits and their respective citations in the literature.

 

4.2 Analysis of the External Environment

Stage characterized by organizational motivation and allocation of resources in obtaining more detailed information about the partnership formation process. The information collected usually involves issues such as potential benefits and momentary opportunities for forming partnerships with logistics operators. The main sources for data collection and analysis at this stage are success stories, analysis of ongoing relationships with other companies, etc. At this stage, personal and organizational beliefs play an important role as facilitators or restrictions in the perception of the partnership as a viable strategic alternative to the verticalization of logistics operations or acquisition via free market.

Personal and organizational beliefs constitute the deepest perceptions and values ​​shared by the various members of an organization, operating unconsciously and affecting not only the way people communicate, their procedures and routines, but also the strategic decision-making process. (SCHEIN, 1985). In other words, the perception of the external environment and the decision to form a partnership or not with a logistics operator are strongly influenced by the accumulated experience of decision makers and by political and social processes that permeate the organization.

4.3 Partner Selection

At the selection stage, potential candidates are examined in greater detail with regard to the feasibility of forming partnerships. Strengths and weaknesses between companies are compared, potential problems that may arise are identified, and the benefits most likely to be realized are considered.

At this moment, several criteria for partner selection are considered, which, depending on their amplitude and complexity, can make this step more or less slow. In other words, they can function as facilitators or restrictions to the selection of a partner. These criteria are divided into two main groups: operational criteria, which focus on the executing tasks that make up the physical distribution process, and managerial criteria that cover issues such as cultural and technical compatibility and the competitive position of the potential partner in its respective industry. Table 3 contains a non-exhaustive list of these two categories of criteria and their respective citations in the literature.

 

4.4 Implementation and Administration

In this stage, the partnership or superorganization takes place. Operational, technical, social and strategic information is exchanged. Changes to procedures that had been identified as efficient and effective are implemented. Generally, parties identify and implement plans for incremental improvements. In this way, confidence is created about the capabilities of the partner. In the implementation phase, there is the beginning of processes that involve the design of operating systems and the design of management systems. The design of operating systems, as shown in the figure below, is basically based on the meta-method binomial definition as a basis for evaluating the discrepancy between the quality of service effectively provided by the logistics operator and the quality of service expected by the customer. The smaller this discrepancy, the greater the operational success.

The project of management systems, in turn, is based on the definition of four basic policies for the partnership relationship: exchange of information, investments in deferred assets, sharing of risks and benefits and contractual formalization. The definition of a policy for the exchange of information has an impact fundamentally on the degree of affinity of the relationship (HEIDE et al., 1990) and on the business performance indicators, due to greater flexibility to meet market requirements and greater control (traceability) in physical distribution. The investment policy must reflect the degree of involvement of each party in the acquisition and operation of assets (warehouses, vehicles, etc.) and in the training and exchange of human resources, being strongly supported by a policy for sharing risks and benefits. The level of contractual formalization seeks to correct any power imbalances between the parties by establishing contractual safeguards, which establish horizons for renewal, as well as detail exit barriers, exclusivity clauses, financial incentives, etc. (BUCKLIN et al., 1993)

Finally, relationship management refers to the ongoing management of the partnership in terms of the people, technology, facilities and other resources allocated to enable it to function. In this way, adjustments are constantly made that are identified as necessary in the next stage of Evaluation.

4.5 Evaluation

In the evaluation stage, the success of the partnership is analyzed from both a managerial and operational perspective. The evaluation process is an ongoing mechanism that provides feedback to previous stages, making explicit considerations regarding the viability of the partnership in the future. There are three possible future directions in this step: maintenance of the status quo, modification or termination, and the degree to which the initial objectives, investments, benefits are achieved by the results obtained determines the scope of the necessary changes. The managerial success of the partnership is evaluated as the state of positive perception resulting from the evaluation of all aspects involved in the partnership relationship between companies (ANDERSON et al., 1984; BUCKLIN et al., 1993). It takes into account several dimensions such as: business performance indicators, affinity, existence of contractual safeguards, transaction costs, etc. On the other hand, operational success, as we have seen, is directly related to the gap between the quality of the service provided in the perception of the shipper and his expectation in relation to its quality (goal).

5. CASE STUDY: PARTNERSHIP RELATIONSHIP BETWEEN COMPANY IN THE PHONOGRAPHIC SECTOR (ESF) AND LOGISTICS OPERATOR (OL)

ESF has gone through a profound overhaul of its logistical processes over the last four years. The company in charge of the physical distribution of its products (CDs, LPs and cassette tapes), which was located in Rio de Janeiro and was a joint venture between ESF and another similar company in the phonographic sector, had gone bankrupt in 1993. advantages of a single distribution center, where ESF and its counterpart shared fixed storage costs, as well as exploited economies of scale in consolidating parts transported to various retailers in Greater São Paulo and the rest of Brazil, the disadvantages proved to be greater over time. Conflicts of authority and power between ESF and its counterpart, two large multinationals in the phonographic sector, with regard to shipment of cargo, made constant questions such as “which product comes out first?”. Add to this the lack of accounting and physical control over the entry and exit of parts of each company in the single distribution center, as well as the low precision in the apportionment of freight for each title transported, greatly impairing the control of each company about your cash flow.

This abrupt break with the past led the ESF to rethink its physical distribution based on three alternatives drawn up by its board of directors. The first would be to inject resources into the bankrupt joint venture, modernizing it and preparing it for future increases in demand. The second would be to expand the range of associates in the operation of the distribution center, moving it from Greater Rio de Janeiro to Greater São Paulo, where the market is substantially larger. Finally, the last alternative was the complete outsourcing of the physical distribution of the ESF via the contracting of a logistics operator. Outsourcing, however, was a completely unknown term in the phonographic sector until then, given that in Europe, the USA and Asia almost all distribution centers were owned.

Internal resistance in the ESF to the last alternative was not small, statements such as “if it is not done abroad, how will it work here in Brazil?” were constantly made. ESF then requested support from the North American headquarters, which sent a team of logistics consultants to Brazil. Its final report stated that "technically the idea of ​​outsourcing the physical distribution of phonographic products is feasible, however not very advisable". Despite resistance, outsourcing was carried out and the process of selecting a logistics operator (LO) started. In the selection process, issues such as ISO 9002 certification, competence recognized by the LOs market and suggestions from some large retail clients were strongly taken into account.

The chosen OL is a subsidiary of a large European electro-electronics multinational located in Brazil. OL was initially created in 1974 as an internal division, serving all the business units of this multinational. As of 1991, OL became an autonomous unit, offering physical distribution services for the entire national market. With regard to infrastructure, the OL has two warehouses in Greater São Paulo and one in the Northeast, totaling 102.000 m2 of built area, 820 employees, 200 equipment for handling materials (including forklifts, conveyor belts, etc.), configuring a capacity for storage of more than 70.000 pallets.

The organizational structure of the OL is process-oriented, consisting of operating cells fully dedicated to individual customers or product groups (cosmetics, phonograph, household appliances). Until the beginning of 1996, the structure was departmentalized, and in March of the same year, the structure changed to that of process management, where there is a manager responsible for each cell. Depending on the volume of parts handled, the cell can encompass a specific customer or a group of customers. The phonographic cell currently has two customers: ESF and its former partner in the distribution joint venture.

In the second half of 1993, the ESF and OL teams began to work together on the physical distribution project, which included several stages as described below. Initially, the fiscal model was defined, that is, the fiscal characteristic of the business: branch, warehouse, distribution center or closed deal. After defining the fiscal model, the OL was in charge of locating the new distribution center, as well as building the physical space and setting up the infrastructure. The location chosen as ESF's new distribution center was one of the OL's warehouses in Greater São Paulo, where proximity to the consumer market in Greater São Paulo and exploration of economies of scale in storage, material handling and fleet management via expansion of the existing logistics infrastructure were the determining factors in the choice. Subsequently, the location of the OL and a third company specialized in systems began preparations for the configuration of hardware and software, aiming to guarantee connectivity between the billing systems and the issuance of invoices between the ESF and the OL. At this stage, the ESF and OL chose, among several alternatives, such as RENPAC, STM 400, Dial-up Line, Direct Line, Private Line, the type of connection most suited to the business.

At the same time, the OL defined internally with its team the project of various operational activities such as the receipt and storage of raw materials; electronic receipt of orders (invoices); routing and picking generation; the separation and conference of products; the calling and loading of vehicles; the generation of the invoice and shipment; and the definition of the escort, which will depend on the value of the goods and the delivery locations. In this case, there was the possibility for the ESF to opt for the implementation of a virtual release where the vehicle is tracked in real time, in addition to being already equipped with radio frequency. The physical distribution process ends with the electronic receipt of information, from the carrier contracted by the OL, about the status of delivery to the customer. The OL was also responsible for the administration and payment of freight to contracted carriers, as well as for the collection of taxes such as ICMS, etc.

Finally, the ESF and the OL jointly defined the methodology for determining service levels and accountability. The service level was established in a renewable contract every two years and refers to a volume of products to be handled during a certain period of time. In this way, once the level of service was defined, it was possible to measure the capacity of the physical distribution system in terms of space for storage, forklifts, operators, checkers, vehicles to be hired, computer equipment, etc. The monitoring of the level of service basically takes place in the daily comparison of the contracted capacity for reception and dispatch versus the capacity used on that day. Another performance indicator of the physical distribution system is the number of damaged parts in transport that the OL measures with contracted transporters. In addition, the level of delivery service is measured, which is the ratio between the actual travel time to the customer and the travel time stipulated in the contract. This indicator only measures the reliability of the carrier in delivery, ignoring any wait for unloading at the end customer (retailer). The data that feed this indicator are obtained via EDI systems, which inform the date and time of dispatch of vehicles in the OL. On the other hand, carriers inform the customer via radio frequency of the date and time of arrival and unloading of the vehicle.

The initial test of the physical distribution system took place in July 1994 with the launch of a title by a great national singer. The adjustment phase lasted until November of the same year, when problems such as low reliability in the telephone lines connected to the EDI, determination of safety stocks for each product and reconciliation of stocks were overcome. In practice, at the end of 1994, an ESF “branch” had been created inside the OL warehouse, and an ESF employee works daily in this warehouse, acting as a “front committee” to solve the most varied problems: breakdowns in products, returns from retail customers, cancellation of invoices, emergency resupply in case of peak demand, contact between OL and ESF customers, etc.

From the end of 1994 until today, ESF went from fifth place in market share to third place, with the difference for second place being less than one percentage point. The company credits this success to the fact that it was able to deliver its products to retail customers located in São Paulo within 24 hours, in Rio de Janeiro within 48 hours and in other regions of the country within a period not exceeding one week, with the region north is supplied by air transport. These deadlines are counted from the seller's visit to the retailer.

6. CONCLUSION

The relationship between the ESF and the OL has several dimensions that characterize it as a partnership, differentiating it from other types of relationship. Among them we highlight the exchange of human resources, the high standardization and daily frequency of the flow of information between both parties, and the possibility of modifying the physical distribution process without prior communication to the other party due to abnormal circumstances (telephone line outage , cargo theft, customer request, etc).

It should be noted, however, that some dimensions remain very close to a relationship governed by free market rules, such as the fact that the contract is limited to a time horizon of two years and is very detailed with regard to contracted capacity and to the number of pieces to be moved per day. The contract is regulated by safeguards that provide for two different situations: the first, in the case of the ESF drastically reducing the volume of parts to be handled daily, establishes compensation proportional to the initially contracted capacity and in common agreement. The second situation, in case the volume handled becomes much higher than the contracted capacity (demand explosion), allows the contracting of extra capacity for as long as necessary. Another dimension close to free market relationships is the definition of performance indicators, limited only to monitoring the volume of parts handled daily, the number of breakdowns and the unloading time exceeding the forecast. Several other indicators such as those proposed by HOPKINS et al. (1993) are not used to assess the other delivery service quality variables. On the other hand, the high sophistication and precision of information on items stored, handled, transported and billed would allow the calculation of profitability indicators by product or type of product for a specific customer, which is currently not done.

Finally, this work presents as a contribution a model that allows to decompose a logistic partnership relationship in its several dimensions, allowing to individually analyze its degree of sophistication, comparatively to the relationships ruled by market forces.

BIBLIOGRAPHY

AERTSEN, F., 1993, “Contracting Out the Physical Distribution Function: A Trade-off Between Asset Specificity and Performance Measurement”, International Journal of Physical Distribution & Logistics Management, v.23, n. 1, pp. 23-29.
ANDERSON, JC, NARUS, JA, 1984, “A Model of the Distributor's Perspective of Distributor-Manufacturing Working Relationships”, Journal of Marketing, v. 48, Fall, pp. 62-74.
AUBERT, BA, RIVARD, S., PATRY, M., 1996, “A Transaction Cost Approach to Outsorcing Behavior: Some Empirical Evidence”, Information & Management, v. 30, pp.51-64.
BALLOU, RH, 1992, Business Logistics: Transport, Materials Management, Physical Distribution. 1 ed. Sao Paulo, Atlas.
BENNIS, W., 1987, “Using Our Knowledge of Organizational Behavior: The Improbable Task” in: Handbook of Organizational Behavior, Prentice-Hall, Inc.
BLEEKE, J., ERNST, D., 1995, “Is Your Strategic Alliance Really a Sale?”, Harvard Business Review, January-February, pp. 97-105.
BOWERSOX, DJ, 1990, “The Strategic Benefits of Logistics Alliances”, Harvard Business Review, July-August, pp. 36-45.
BOWERSOX, DJ, COOPER, M., 1992, Strategic Marketing Channel Management. 1 ed. New York, McGraw-Hill.
BUCKLIN, LP, SENGUPTA, S., 1993, “Organizing Successful Co-Marketing Alliances”, Journal of Marketing, v.57, n.4 (April), pp.32-46.
BUZZELL, RD, ORTMEYER, G., 1995, “Channel Partnerships Streamline Distribution”, Sloan Management Review, Spring, pp. 85-95.
COOPER, M., 1993, “Building Good Business Relationships – More than Just Partnering or Strategic Alliances?”, International Journal of Physical Distribution & Logistics Management, v.23, n.6, pp. 14-26.
DEVLIN, G., BLEAKLEY, M., 1988, “Strategic Alliances: Guidelines for Success”, Long Range Planning, v.21, n.5, pp. 18-23.
DWYER, FR, SCHURR, PH, OH, S., 1987, “Developing Buyer-Seller Relationships”, Journal of Marketing, v.51, n.4 (April), pp. 11-17.
ELLRAM, LM, COOPER, MC, 1990, “Supply Chain Management, Partnerships, and the Shipper-Third Party Relationship”, The International Journal of Logistics Management, v.1, n.2, pp. 1-10.
FLEURY, PF, AVILA, MG, WANKE, P., 1997, “In Search of Efficiency in Outsourced Cargo Transport: Cost Structure, Partnerships and Waste Elimination”. Not published.
FRANKEL, R., 1995, A General Alliance Model: an Examination and Design of Alliances Between Manufacturers and Service Suppliers. Ph.D. dissertation, Michigan State University, Michigan, USA.
GANESAN, S., 1994, “Determinants of Long-Term Orientation in Buyer-Seller Relationships”, Journal of Marketing, v. 58, no. 4 (April), pp. 1-19.
GARDNER, JT, COOPER, MC, NOORDEWIER, T., 1994, “Understanding Shipper-Carrier and Shipper-Warehouser Relationships: Partnerships Revisited”, Journal of Business Logistics, v. 15, no. 2, pp.121-143.
GENTRY, JJ, 1996, “Carrier Involvement in Buyer-Supplier Strategic Partnerships”, International Journal of Physical Distribution & Logistics Management, v.26, no.3, pp. 14-25.
HAYES, RH, WHEELWRIGHT, SC, 1984, Restoring Our Competitive Edge. Wiley&Sons.
HEIDE, JB, JOHN, G., 1990, “Alliances in Industrial Purchasing: The Determinants of Joint Action in Buyer Supplier Relationships”, Journal of Marketing Research, v.27, February, pp. 24-36.
HOPKINS, SA, STRASSER, S., HOPKINS, WE, FOSTER, JR, 1993, “Service Quality Gaps in the Transportation Industry: An Empirical Investigation”, Journal of Business Logistics, v.14, n.1, pp. 145-160.
KANTER, RM, 1994, “Collaborative Advantage: The Art of Alliances”, Harvard Business Review, July-August, pp. 96-108.
KOTLER, P., 1972, “A Generic Concept of Marketing”, Journal of Marketing, v.36, n.4 (April), pp. 46-54.
LA LONDE, BJ, COOPER, M., 1989, Partnerships in Providing Customer Service: A Third-Party Perspective. 1 ed. Oak Brook, Council of Logistics Management.
LAMBERT, D., STOCK, J., 1993, Strategic Logistics Management. 3 ed. New York, Richard Irwin.
LANDEROS, R., RECK, R., PLANK, RE, 1995, “Maintaining Buyer-Supplier Partnerships”, International Journal of Purchasing and Materials Management, Summer, pp. 3-11.
LIBERATORE, MJ, MILLER, T., 1995, “A Decision Approach for Transport Carrier and Mode Selection”, Journal of Business Logistics, v.16, n.2, pp.85-115.
MACNEIL, I., 1980, The New Social Contract: An Inquiry into Modern Contractual Relations. New Haven, CT: Yale University Press.
MARCUSSEN, CH, 1996, “The Effects of EDI on Industrial Buyer-Seller Relationships: A Network Perspective”, International Journal of Purchasing and Materials Management, v.32, August, pp. 20-26.
MOORMAN, C., ZALTMAN, G., DESHPANDE, R., 1992, “Relationships Between Providers and Users of Market Research: The Dynamics of Trust Within and Between Organizations”, Journal of Marketing Research, v. 29, August, pp. 314-328.
PARASURAMAN, A., ZEITHAML, V., BERRY, L., 1988, “SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality”, Journal of Retailing, v.64, Spring, pp. 12-41.
PRIMOZIC, K., PRIMOZIC, T., 1995, “Logistics is About Strategic Choices”, Transportation & Distribution, October, pp. 33-38.
RAO, AR, RUEKERT, RW, 1994, “Brand Alliance as Signals of Product Quality”, Sloan Management Review, Fall, pp. 87-97.
RAMSAY, J., 1996, “The Case Against Purchasing Partnerships”, International Journal of Purchasing and Materials Management, vol. 32, November, pp. 13-19.
SCHEIN, E., 1985, Organizational Culture and Leadership, Jossey Bass.
SCHMITZ, JM, FRANKEL, R., FRAYER, DJ, 1994, “Vertical Integration without Ownership: The Alliance Alternative”. In: Proceedings of the Association of Marketing Theory and Practice, pp. 391-396.
SLACK, N., CHAMBERS, S., 1997, Production Management. Sao Paulo: Ed. Atlas, 1st ed.
SONNENBERG, FK, 1992, “Partnering: Entering the Age of Cooperation”, Journal of Business Strategy, v. 13, no. 3, pp.49-52.
WILLIAMSON, OE, 1975, Markets and Hierarchies, Analysis and Antitrust Implications. New York: The Free Press.

 

Paulo Fleury
Tel: (21) 3445-3000
www.ilos.com.br