Exploring supply chain finance as an instrument for enabling logistics service providers to upgrade their service offerings

Abstract

Due to high levels of competition (CMP) and diminishing returns in the traditional transportation and warehousing services, logistics service providers (LSPs) are differentiating themselves by providing value-added services (for competitive advantage) to supply chain members. By exploiting their visibility and control of physical and information flows (IFLs) in the supply chains, LSPs have tapped into the supply chain finance (SCF) market. SCF as a value-added service extends the scope of LSPs’ service offerings by integration and control of physical, information and financial flows (FFLs) across the supply chain. This facilitates the reduction of financial risk in supply chains by improving the collaborative cash-to-cash (C2C) cycle and working capital of the supply chain members. The two major research streams associated with SCF are financial supply chain management (FSCM) and trade credit. FSCM mainly focuses on the supplier-buyer relationships and the FFL while trade credit emphasises the short-term financing enabling the cash flow management that is fundamental to SCF. The existing studies in the literature provide insights into the SCF services, their mechanisms and ‘enablers and inhibitors’ for SCF adoption but a comprehensive understanding of the capabilities required by a particular supply chain member, such as an LSP, to offer SCF service offerings as a part of their service portfolio is still missing. In order to properly design and develop SCF service offerings, LSPs should be supported by a comprehensive theoretical knowledge pertaining to their capabilities. The provision of offering SCF services is associated with the new service offerings discussed in the strategic management literature, which emphasises the need for renewed skills, processes and routines developed within the frame of operations (operational capabilities) to offer new services. As the operational capabilities draw on the resources, the development of an adequate resources base by obtaining, reconfiguring, integrating and releasing of the resources (dynamic capabilities process) plays a crucial role in offering new services such as SCF. In this context, the strategic management literature provides an opportunity to carry xxviii out empirical research that identifies all the relevant characteristics, contextual factors and capabilities that might lead LSPs to offer SCF services. Keeping this in view and to explore this prospect, the purpose of this thesis is to identify LSPs’ capabilities and associated mechanisms necessary to offer SCF services. The research design that was developed to address this opportunity is a case-based approach with four embedded units of analysis. This provides the opportunity to look for literal replication of the guiding principles that underpin the capabilities an LSP can leverage to extend its service provision to SCF services. The research concludes that the interrelationships between the dynamic capabilities process and its antecedents, generic operational capabilities of LSPs and SCF adoption capabilities, provide a mechanism to understand the LSPs’ capabilities required to offer SCF services. Subsequently, the thesis contributes to theory and practice by developing a conceptual framework that can be used by researchers to extend the horizons of new service development such as SCF services and by practitioners to evaluate their firms’ (LSPs) capabilities to extend their service portfolio to offer SCF services