The process improvement dilemma in dynamic 3PL firms: A systems and agency lens

Abstract

For the past several decades, firms have been shifting from contending as autonomous entities to working and competing as part of supply chains. In this context, warehousing, transportation, and distribution needs are being increasingly outsourced to third-party logistics (3PL) firms. 3PL providers operate in fast-moving, time-sensitive, and priority-changing supply chain environments, constantly demanding efficient, cost-effective, and routinized responses. To attain the ultimate end of maximizing efficiency, reducing costs, and improving customer satisfaction, scholars and supply chain industry opinion leaders alike talk about process improvement as part of a broader organizational learning strategy to be pursued in order to keep a competitive edge. This thesis explores the relationship between daily bottom-line pressures and prioritization and the design, implementation, and control of process improvement initiatives in complex and dynamic 3PL service providers. It uses a systems-agency lens to unveil intra- and inter-firm relations around process improvement activity and the links with organizational learning. The study utilized multi-case study-based qualitative-interpretive methods used in conjunction with system dynamics and agency tools. Data collection was carried out through in-depth interviews with 41 employees from two 3PL service providers and complemented by two collaborative enquiry exercises organized for each case study firm. Contrary to recommendations made by scholars and industry leaders, this thesis has found that day-to-day operational firefighting in 3PL scenarios revolving around managing multiple demands, conflicting priorities, and unexpected events often prevail over less tangible process improvement and broader organizational learning goals. This is aggravated by constant cost-reduction pressures centering on human resources headcount deemed critical for the development of learning and improvement practices. Consequently, there is little evidence that the case study firms demonstrate the necessary conditions for process improvement and organizational learning to actually take place. The study also revealed that when process improvement does happen, its focus mainly centers on customer satisfaction or cost-saving, rather than on the improvement of shop floor work routines aiming at operational effectiveness. It also shows process improvement to be more reactive and ad hoc as opposed to the continuous, widespread, and long-term-oriented practices associated with continuous improvement and organizational learning.