The Transaction - Relationship Dichotomy in Logistics and ... · exchange and relationship...

Trust and Collaboration in the Supply Chain

Introduction

The customer-supplier dyadicexchange and relationshipmarketing are well-establishedresearch areas in the marketingdiscipline. Customer-supplierrelationships in logistics andsupply chain management (SCM)have also received attention byacademics since the late 1980s. Theliterature has encouraged firms todevelop customer service policiesto satisfy customer needs andpromote long-term and profitablerelationships, and has documentedthe benefits for firms that do so.And yet, empirical studies inlogistics customer service (LCS)have revealed a different situation.Transaction-oriented dimensionssuch as availability, timeliness andprice appear to be more importantto customers than relationshipdimensions that include trust,

integrity and commitment. Thispaper investigates this dichotomybetween customer attitudes andbehaviour regarding transactionsand relationships. First, the natureof relationships and the importanceof LCS for relationships arediscussed. Then, the dichotomy isexplored on conceptual andempirical levels from the literatureand extant studies. Next, a model ispresented to address thesedichotomous customer attitudesand behaviour. Finally, the paperconcludes with suggestions forfuture research using the proposedmodel.

Whither Customer Service and Relationships in Logisticsand SCM?

Firms face a number of importantchallenges in the new millenniumwith respect to their logistics and

The customer-supplier dyadic exchange and relationship marketing arewell-established research areas in the marketing discipline. Supplier andcustomer relationships or partnerships in logistics and supply chainmanagement have also received attention amongst academics since thelate 1980s. The literature has encouraged firms to develop customerservice policies to satisfy customer needs and promote long term andprofitable relationships, and has documented benefits for firms that doso. However, empirical studies in logistics customer service have revealeda different situation. Transaction-oriented dimensions such as availability,timeliness and price appear to be more important to customers thanrelationship dimensions that include trust, integrity and commitment. Thispaper briefly discusses the importance of customer service to relationshipsand then considers the nature of relationships in marketing and logistics.Then, the dichotomy between customer attitudes and behaviourregarding transactions and relationships is explored on conceptual andempirical levels from extant literature. Next, a model is presented as apotential research framework to address such dichotomous attitudes andbehaviour of customers. Finally, the paper concludes with suggestions forfuture research using the model.

The Transaction -Relationship Dichotomy in Logistics and SupplyChain Management

38Supply Chain Forum An International Journal Vol. 6 - N°2 - 2005 www.supplychain-forum.com

David B. GrantLogistics Research Centre

Heriot-Watt [email protected]

The author acknowledges and thanks thethree anonymous reviewers and Professor

Suzanne de Treville for their encouragementand their useful and enlightened comments on

drafts of this paper. Any remaining errors inthe manuscript are the author’s alone.


supply chains (SC). Two of thesechallenges are focusing oncustomer service and managingcustomer–supplier relations(Mentzer 1993, Bowersox, Clossand Stank 2000, Skjøtt-Larsen 2000).

Firms need customers to buy theirproducts to generate sales revenueto offset costs and derive profits(Christopher, Schary and Skjøtt-Larsen 1979). Customers who aresatisfied with a firm’s products andcustomer service should developincreased customer loyalty, repeatand increased purchases, and apropensity towards establishinglong-term relationships (Buzzelland Gale 1987, Reichheld andSasser 1990). Thus, relationshipdevelopment is considered anatural outcome of customersatisfaction derived from customerservice.

Firms are also encouraged toprovide value-added customerservice and be customer-responsive in order to differentiatethemselves in the market andenhance a customer’s purchase.This focus on customers shouldenhance a firm’s financialperformance (Christopher 1997,Daugherty, Stank and Ellinger 1998,Emerson and Grimm 1998, Stank,Keller and Daugherty 2001).Customer service strategies shouldlead a firm’s customers to adoptthe behaviours noted above anddevelop long-term relationships orpartnerships with them. Thus,customer service can beconsidered an antecedent forrelationship development.

The literature has called on firms todevelop long-term relationships orpartnerships in logistics and SCMsince the late 1980s (Bowersox1988, Gardner and Cooper 1988,Anderson and Narus 1990).Relationships are deemednecessary to provide firmdifferentiation in a rapidly changingbusiness environment of increasedcompetition, more sophisticatedand fragmented customers,advancing technology, and the‘commoditization’ of products(Christopher, Payne and Ballantyne1991, Christopher 1997, Pels,Coviello and Brodie 1999). This call

in the logistics/SCM discipline hasmirrored discussions in themarketing discipline concerningrelationship marketing.

The Nature of Marketing and Logistics/SCMRelationships

The earliest relationship marketingconception developed as anextension to Bagozzi’s (1975)dyadic social exchange paradigmthat characterises the marketingconcept and includes consumersatisfaction elements. Macneil(1980), writing about contract law,presented an exchange continuumbetween purely transactionalexchanges and relationalexchanges. Macneil’s continuumessentially incorporates Bagozzi’sutilitarian and symbolic exchangesas anchors.

Transactional exchanges arediscrete dyadic exchanges betweenbuyers and sellers with minimalpersonal relationships and noanticipation or obligation of futureexchanges, while relationalexchanges contain elements ofcooperation, sharing and planningbetween both sides of the dyad, inaddition to other relevant actors(Garbarino and Johnson 1999).However other conceptions havesince appeared including theinteraction and networks approachfrom Håkansson and the IndustrialMarketing and Purchasing Group(IMP) and the ‘Nordic School’ orservices marketing approach ofGrönroos and Gummesson (Pels1999). Möller and Halinen (2000)have provided a good review ofconceptual sources and other

issues in relationship marketing,encapsulating the marketingliterature from the 1990s. Theyargue relationship marketingderives from four root disciplines:services marketing, businessmarketing or interaction andnetworks approach associated withthe Industrial Marketing andPurchasing (IMP) Group, marketingchannels, and database marketingand direct marketing. They arguedeach source has its own uniqueperspective towards relationshipmarketing, but all contain anunderlying premise that thetraditional marketing-mix approachof transactional exchange ofBagozzi is insufficient to allowmanagers to cope in their rapidly-changing environments.

Möller and Halinen supportedBagozzi and Macneil’s positionsthat “different exchangecharacteristics and exchangecontexts require different types ofrelationship marketing… firmshave to master several modes ofmarketing” with respect torelationships (2000: 48-49). Butthey also argued there is not yetany developed theory ofrelationship marketing and whatexists “is a variety of partialdescriptions and theories focusingon the broad content of thephenomena” (2000: 34). Muchresearch and many articles havebeen based on anecdotal evidencerather than systematic research(Garbarino and Johnson 1999), thusthere is a paucity of empiricalinvestigation (Naudé and Buttle2000).

Li and Nicholls (2000) summarisedarguments from several authorswho do not share in the excitementassociated with the relationshipmarketing approach. Lack ofuniversal generalisation, marketingchannel relationships that arebecoming less rather than morerelational, and misapplication orcursory application of relationshipmarketing techniques were cited aslegitimate and serious criticisms ofthis approach. Fournier, Dobschaand Mick reported “customersatisfaction rates in the U.S. are atan all-time low, while complaints,boycotts, and other expressions ofconsumer discontent rise” (1998: 43).


Availability, timeliness

and price appear to

be more important to

customers than trust,

integrity and

commitment


Christy, Oliver and Penn (1996) alsoconsidered time an importantdimension of relationships togetherwith product differentiation. Theirmatrix in Figure 1 portraystransactions as being short-term,regardless of the type of productoffering, and they further arguedcustomers would be relationship-indifferent with respect tocommodity offerings, such as basicgroceries. While relationshipdevelopment is not precluded forcommodities “some product-markets will be inherently morelikely to develop marketingrelationships than others” (1996:181). Finally, Pels (1999) notedacademics have a responsibility toassist practitioners and managersto understand this shift fromtransactional to relationalexchanges in order to help themavoid market myopia.

A key feature to establishingpermanent relationships is asupplier’s and a customer’sunderstanding of, and willingnessto sacrifice, short-term advantagesfor long-term gains (Earp, Harrisonand Hunter, 1999). However,definitions about relationships areoften ambiguous and non-specific(Blois 1996, Blois 1998, Earp,Harrison and Hunter, 1999, Presseyand Mathews 2000). Further, whilecurrent relationship theoriespromise added value beyond atransactional exchange they do notshow how this value is produced(Tzokas and Saren 1997). Thus,

firms and managers who areevaluated on short-termperformance measures, such asquarterly or annual profitability,might lack the ability or desire toembrace long-term relationships asdiscussed above if the purpose ofdoing so is not clear (Ackerman1996).

Managers might also engage inselfish and individualisticbehaviour that has significanteconomic benefits over co-operative relationships but is notconducive to relationship building(Palmer 1999). Such behaviourcontradicts a ‘humanist’ interpretationof relationship building thatconsiders individuals to be stable,identifiable and autonomous, andmoral due to encompassingwholesome and beneficial valuesshared by everyone (Smith andHiggins 2000). But it does notcontradict arguments (Pels 1999,Smith and Higgins 2000) thattransaction and relationshipexchanges are based on differentparadigms.

There have been several strategiesproposed to effect a transition fromtransactional to relational businessinterfaces. Two examples arepresented to illustrate this point.Möller and Halinen (2000)proposed two managerial modesfor relationship marketing: amarket-based mode that manages afirm’s customer base and anetwork-based mode that manages

interdependencies betweenbusiness actors. They arguedmanagers have to master andutilise both modes in conjunctionwith traditional marketingmanagement techniques.Christopher (1997) proposed firmsdevelop multiple points ofconnection between variousfunctional areas of suppliers andcustomers in order to strengthenbonds. These connections wouldsee suppliers becoming ‘preferred’for customers and thus barriersbeing erected against competitorentry and customer switching.

A disadvantage of these proposedstrategies is that they add levels ofcomplexity to firms. The firststrategy suggests firms may have towork at bimodal levels with theircustomer base. The secondstrategy requires extra effort byfirms to establish and managemulti-level customer contacts.Thus, firms that utilise suchstrategies for relationshipdevelopment may find it difficult toachieve ‘promised’ efficiencies andprofitability.

Relationships in logistics and SCMare considered a source ofcompetitive advantage for firms todetermine their future withcustomers and suppliers in anincreasingly complex world(Lambert, Emmelhainz and Gardner1999, Tzokas and Saren 1997). Theconditions for establishing suchrelationships include asymmetry inpower or influence by one firm,desire for business stability, arequirement to establishlegitimacy, regulatory necessity,usefulness of reciprocity, and anability to achieve efficiencies (Blois1996).

Relationships are built upon trustand commitment from sharedvalues and information, mutualdependence, communication andrelationship benefits (Morgan andHunt 1994, Spekman, Kamauff andMyhr 1998, Tate 1996). Further,relationship benefits accruing tologistics suppliers and customersinclude cost reductions, risksharing, shared creativity,understanding of customerdefections and the potential for


Figure 1Offering and Timeframe Matrix(Christy, Oliver and Penn 1996: 179)


new business (Bowersox 1988,Christopher 1997).

Besides the marketing and logisticsdisciplines, concepts of trust havebeen discussed and investigated interms of economic transactions (cf.Williamson 1975, 1985) and inter-organizational relationships amongsuppliers and customers (cf. Sako1992, Nooteboom 2002). Williamsondiscussed the increase oftransaction costs associated withelements of mistrust, such as“contractual completeness andexacting execution” (1975: 107)and, quoting Kenneth Arrow, noted“trust and similar values, loyalty ortruthtelling are… not commoditiesfor which trade on the open marketis technically possible or evenmeaningful” (1985: 405). In short,inter-organizational trust shouldencompass integrity and dignity.

Sako argues trust is “a state ofmind” or “expectation held by onetrading partner about another”which should lead to mutualrespect and predictable reciprocalbehaviour (1992: 32). Sako’sdiscussions centred around long-term manufacturer and supplierrelationships or ‘kerietsu’ in Japan.Such relationships might be moreabout manufacturer power thantrust and “power can have anadverse affect on one’s trust”(Nooteboom 2002: 196).

These concepts of trust from twoalternative disciplines that containelements of integrity, dignity andactors expectations are in concertwith elements in the marketing andlogistics disciplines, which are thefocal disciplines of this paper.However, while these theoreticalaspects of relationships and trustare cogent and sensibleapplications and implementation inpractice have been problematicand present a dichotomy for firmsbetween using transactional orrelational behaviour.

The Transaction-RelationshipDichotomy and AssociatedIssues

Some authors (Grönroos 1994,Brodie, Coviello, Brookes and Little1997) consider that moving along

Macneil’s (1980) continuum fromtransactions to relationships mightprovide further explanation of thisphenomena and also represents aparadigm shift. However, the lack ofstrong empirical evidence throughapplication and implementationdiscussed below does not supportthat such a shift may to haveoccurred. There are also someconceptual difficulties withlinkages between customer serviceand relationship development anda ‘gap’ between normative theorypostulated by academics andeveryday practice of marketers infirms (Fournier, Dobscha and Mick1998, Li and Nichols 2000).

Further, evidence from severalempirical business-to-businessstudies suggest buyers orcustomers in exchange situationsmight be of ‘two minds’ and notready or able to fully embracerelationship concepts. Customersappear to focus on transactionalissues in customer service whilepromoting the value andimportance of relationships. Theconcept of supplier–customerrelationships is still relatively newin Western business settings andold habits of using suppliercompetition to maintain low pricesand releasing those suppliers whodo not do so are slow to change(Krause and Ellram 1997).

Assuming relationship theory pre-empts practice as opposed toreflecting it, transition from atransaction to a relationship focushas been problematic in practiceand the dichotomy remainsbetween transactional andrelational exchanges. Evidencefrom several empirical studiesreinforces this confusionsurrounding transactions andrelationships and the subsequentbehaviour of suppliers andcustomers. These studies alsosuggest it is primarily buyers orcustomers in an exchange that areless willing to indulge inrelationships while acknowledgingthe importance and need for them.

Campbell (1997) studied firms inthe European flexible packagingindustry in four partnershipcategories: customer-centred,

political control, personal loyaltyand mutual investment. The lattertwo categories correspond to usualrelationship characteristicsdescribed above. Sellers orsuppliers had higher percentagepositive responses regardingchoice in these two categoriescompared to buyers or customers,whilst the converse was recordedin the two former categories.Campbell concluded that buyersand sellers do not always agree onthe sentiments or behaviours thatoccur in relationships, and thatthere is a wide diversity betweenbuyers and sellers about what arelationship or partnership entails.

Spekman, Kamauff and Myhr (1998)examined five broad industrygroups in terms of respondents’immediate customers andsuppliers, a true SC context.Dimensions included supply chainfactors, customer service, partnerselection and SCM processes andpractices. They found significantdifferences between a buyer’s andsupplier’s perspective for somevariables amongst the dimensionshowever their work wasexploratory and suffers from asmall sample size. Spekman,Kamauff and Myhr only had 132total respondents, 73 sellers and 59buyers and dozens of variablesacross their dimensions. Thus,deep quantitative analysis was notpossible and no generalisationscould be made to any dimensionsor industry sector. They didcontribute however in terms ofgeneral differences between buyerand supplier outlooks.

Naudé and Buttle (2000) noted ageneral lack of discussion aboutrelationship quality and arguedthere is not one measure ofrelationship quality – it is amultidimensional construct. Theyinvestigated five dimensions from asurvey of 40 middle to seniormanagers attending a managementdevelopment course: trust, needssatisfaction, integration orcoordination, power and profits. Acluster analysis of respondents wassignificant for all dimensionshowever trust and needssatisfaction had higher attributescores and part-worths. Naudé and



Buttle’s work was cross-sectionaland consisted of a non-random andsmall sample, and they noted afurther need to consider temporaleffects as well as macro variablessuch as industry sectors andgeneral economic conditions. Thus,while Naudé and Buttle contributedto the dimensional discussion it didnot square the circle with Spekman,Kamauff and Myhr’s work.

Other evidence has been the failureor dissolution of much publicisedlogistics relationships orpartnerships, including LauraAshley and Federal Express and aFortune 500 company and its third-party logistics provider (Ackerman1996, Lambert, Emmelhainz andGardner 1999).

The dimension of power has beenmuch discussed in the channels ofdistribution literature beginningwith Gaski (1984). Whilecooperation and collaboration arenecessary in relationships, conflictbetween actors will arise due toincompatible goals and differingideas of roles, functions andperceptions of reality (Wilkinson1996). The use of power byindividual channel members isoften used to manage conflict andmaintain order (Brown, Johnsonand Koenig 1995, Wilkinson 1996).Such considerations have not beensignificantly examined in logisticsor SCM. Cox argued “the concept ofpower is rarely discussed in supplychain writing – except to deny it isimportant or to argue that powershould not be used because ‘lean’approaches should be based onequity, trust and openness” (1999:171). In reality however the abuseof power has been found to play animportant role in SC integrationand relationships.

A.T. Keaney’s study of UKpractitioners found that powercreated due to a firm’s size anddominance in the SC is notdiminished because that firmchooses to build relationships,“much commercial activity issubject to the rule of force ratherthan the rule of partnership” (1994:14). P-E International’s survey of UKpractitioners (1994) determined anenvironment of ‘might is right’

exists in dyadic SC partnerships,and that the customer is usually themightier partner. A.T. Kearneynoted FMCG firms routinelythreatened suppliers to de-listingand charged them for demandforecast or sales data, “giving anovel meaning to the phrase the‘customer is king’” (1994: 15). Themagnitude of the use of threatfound by A.T. Kearney isgraphically shown in Figure 2.

Cox also argued the concept ofbusiness is “about appropriatingvalue for oneself, it is not aboutpassing value to customers unlesscircumstances decree that this isthe only option available to acompany in order for it to sustainitself in business” (1999: 171). Hisviews are contrary to previousdiscussions regarding valueaccruing to customers and generalbonhomie in relationships.

An LCS study we carried out in thefood processing sector alsodemonstrated this dichotomybetween transactional-relationalvariables and we describe itselements in the next section.

Empirical Study in the ScottishFood Processing Industry

We surveyed customers in theScottish food processing industryregarding important variables andconstructs of LCS. This industrialsector is the subject of muchresearch into efficiency andcollaboration by inter alia the UKInstitute of Grocery Distribution(IGD) and Efficient Consumer

Response (ECR) Europe (Kotzab1999, Barratt and Oliveira 2001,Marzian and Garriga 2001). The UKfood processing sector accountsfor £56 billion of gross added valueto the UK economy, or 8% of grossdomestic product (GDP) andemploys 3.3 million people or 12%of the UK’s workforce, excludingthe fisheries and aquaculture andcatering sectors (Food Chain Group1999).

The impact of logistics on thisindustry is also substantial. Browneand Allen (1997) reported averagetransport costs in 1996 were 6% oftotal sales revenue whilemanufacturers are expected tobecome responsible for ownershipof stock that significantly impactsinventory carrying costs. Theyconcluded that for efficiency to bemaintained and improved andhigher service levels achievedactors in the UK food SC will needto improve information sharing andthus increase the level orrelationships with suppliers andcustomers. Information sharing andproduct flow optimization are keyissues for UK food retailers, andinformation technology is the keyfactor behind these issues(Whiteoak 2004).

Conversely, UK food retailers areaccused of exercising considerablepower over their suppliers andfood producers. Instead ofcollaboration there is “a one-waytrade, not a dialogue, and nocriticism or grumbling ispermitted” (Blythman 2005: 139).The Competition Commission, an


Figure 2Use of Power to Withdraw Business(A.T. Kearney 1994: 15)


independent public body in the UK,investigated the grocery supplychain and reported in 2000(Competition Commission 2005).The Commission found that some30 practices of large multiple foodretailers adversely affectedsuppliers and distortedcompetition among suppliers. TheCommission recommended a Codeof Practice, which wassubsequently introduced by the UKOffice of Fair Trading in 2002(Blythman 2005, CompetitionCommission 2005).

Our study (Grant 2004)investigated important variablesand constructs of LCS from aselection of items derived from theliterature. A sample frame of 380fresh food processing firms inScotland, excluding fruit andvegetable, were surveyed andyielded 105 usable responses for a28% response rate.

The most important variables weretransactional: on-time delivery,products arriving undamaged andaccording to specification, orders

being complete and accurate, andprice. Price was the keydiscriminating factor betweendissatisfied and satisfiedcustomers, in favour of the latter.However, exploratory factoranalysis yielded two prime factorscomprised of relationshipvariables, thus customer attitudesin this group appeared to operateat two different levels regardingtheir suppliers.

We conducted face-to-faceinterviews as a post-study follow-


Table 1Matrix of Key Interview Comments


up to confirm the findings of thestudy and further investigate theemergent issue of transactionversus relationship variables.While 11 respondents or just over15% of the study sample wereselected, only three firms wereavailable and agreeable to beinterviewed. Firm A is a Glasgowfood manufacturer and processorof ready-made savoury snacks andmeals for resale to retailers and theoperations manager participated inthe interview. Firm B is anEdinburgh beef, lamb and porkprocessor and wholesaler, and thesales manager participated. Firm Cis a gammon and bacon processorlocated near Glasgow supplying towholesalers and retailers and theexport sales manager participated.

All interviews were conductedusing a semi-structured interviewschedule for a short time, e.g. anhour maximum. Interviews weretaped, transcribed, and analyzedby the patterning method; i.e.visually comparing responses totopic areas and noting anyrecurring patterns or themes.Interviewees were asked about thetopic areas of customer service andsatisfaction, and suppliers andrelationships. Views of all threeinterviewees are summarised inTable 1. Important variables of on-time delivery and price featured intheir comments, while allinterviewees noted elements ofcommunication in discussionsabout satisfaction. The commentswere consistent with the studyfindings about these topics. Allthree interviewees advisedrelationships are important tothem, they expected goodrelationship behaviour from theirsuppliers, and a theme of trust,professionalism, honesty andintegrity emerged from theircomments. Their commentssupported notions presented byMorgan and Hunt (1994), Garbarinoand Johnson (1999), Williamson(1975, 1985) and Sako (1992).

Rather than a paradigm shift, theforegoing indicates that thetransition from a transaction to arelationship focus has beenproblematic in practice and adichotomy or duality may exist in

firms regarding transactional andrelational exchanges. Thisdichotomy suggests thatacademics and managers inlogistics need to acquire a betterunderstanding of customerattitudes and behaviour towardsrelationships or partnerships inorder to achieve effectiveness. Butis there a model or tool to assistwith future research andapplication? In the next section wepropose a model stemming fromthe literature and our empiricalstudy findings that provide a basisfor further research into thisphenomenon.

Proposed Model

In order to address this dichotomyand address findings from thevarious studies discussed above wepropose a model incorporatingtransactional and relationalelements as shown in Figure 3.

The upper half of the model is fromParasuraman, Zeithaml and Berry(1994) who developed atransaction-specific methodologyin response to criticism of their SERVQUAL instrument(Parasuraman, Zeithaml and Berry1988). This portion of the model,hereafter called the PZB Model,describes a customer’s global

satisfaction in terms of the sum of anumber of specific transactions.The PZB Model proposes that acustomer’s overall satisfaction witha transaction, or transactionsatisfaction, “to be a function of hisor her assessment” of three latentor unobservable constructs of“service quality, product qualityand price” (1994: 121).

These three constructs are first-order constructs and indicatemanifest or observable variables.For example, service quality mightindicate variables of order cycletime and delivery time whilst pricemight indicate variables of quotedprice and opportunities tonegotiate discounts. They are alsoendogenous as they are indicatedby manifest or measurablevariables in the model and are thusdependent on them (Hair,Anderson, Tatham and Black 1995).Transaction satisfaction is anendogenous second-orderconstruct that is indicated by thefirst-order constructs while globalsatisfaction is a third-orderendogenous construct indicated bymanifest variables such asintention to repurchase andfeelings towards suppliers andexplained by the summation of anumber of transaction satisfactionevents.


Figure 3Proposed Model for Investigating Transactions and Relations


The PZB Model does not take intoaccount relationship variables orconstructs and is thus narrow inscope to address the transaction-relationship dichotomy. However, itprovides a useful starting point forour proposed model. We addedrelationship constructs to thebottom portion of the PZB model tocomplete our proposed model.

We first propose two first-orderendogenous constructs. Relationshipservice is indicated by LCSvariables from the original study,such as helpful customer service

representatives and after-salesservice. Relationship quality isindicated by variables of trust,integrity and commitment derivedfrom Morgan and Hunt (1994),Garbarino and Johnson (1999) andWilliamson (1975, 1985). We furtherpropose that the outcome of thesetwo constructs is a second-orderendogenous construct termedrelationships. This construct isposited to either directly affectglobal satisfaction or indirectlyaffect it through mediation bytransaction satisfaction (Hair,Anderson, Tatham and Black 1995).

A list of all constructs and ourproposed variables emerging fromthe literature and our study isprovided in Table 2.

Conclusions

Logistics customer service andrelationships or partnershipscontinue to be important researchand practitioner topics. Literatureon relationships outlines potentialbenefits available to customers andsuppliers entering into sucharrangements. These includeincreased long-term profits that arefundamental to a firm’s corporatesuccess and health.

However, empirical evidence fromthe literature and our own studysuggests that important customerservice variables tend to betransactional in nature. Customersdo not appear willing to embracerelationships as readily as theirsuppliers do, and revert tohistorical behaviours related totransactional concerns ofavailability, delivery time and price.This behaviour is not easilyexplained within existing logisticsand marketing relationshiptheories. Such behaviour may alsobe geographically-specific, i.e. firmsin one geographical area such asEurope may be more amenable toestablishing relationships thantheir counterparts in NorthAmerica.

We propose an alternative modelfor further research to help developa better understanding of thedichotomy between customerservice transactions andrelationships in logistics. Theproposed model incorporatestransaction and relational elementsbut is parsimonious as regardsconstructs and variables. Somebrief suggestions for the utilisationof this model follows.

Use of the proposed model couldconsider global satisfaction overtime, as a surrogate forrelationships, dependent upon thetransaction satisfaction constructand its dimensions of price andservice and product quality and therelationships construct and itsdimensions of relationship service


Table 2Proposed Model Constructs and Variables


and quality. Areas of interest mightbe correlations amongst thesedimensions, their weights indetermining both transaction andglobal satisfaction, and whetherrelationship intentions or activitiesare equivalent to the latter.

This model is proposed as onepossible method to investigate thephenomenon regarding transactionsand relationships in logistics/SCM.However, it has been presentedonly in strategic and theoreticalterms and requires extensiveempirical testing. Empiricalresearch using this model mighthelp explain the different levels ofcustomer behaviour regardingtransactions and relationships.

In summary, the nature oftransactions versus relationships isstill at an early stage of theoreticaldevelopment and empirical studyin both a business-to-business andlogistics/SCM contexts. We do notaccept or reject either side of the transaction-relationshipdichotomy. Rather, the purpose ofthis paper has been to presentthese issues for discussion topromote ongoing logistics andsupply chain competence inresearch and industry.

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About the author

Dr. Grant is Lecturer in Logistics atHeriot-Watt University, Edinburgh, UK.He received his PhD from the Universityof Edinburgh and his doctoral thesis,which investigated customer service,satisfaction and service quality in UKfood processing logistics, received theJames Cooper Memorial Cup PhD Awardfrom the Chartered Institute of Logisticsand Transport (UK). Dr. Grant’sresearch interests focus on logisticscustomer service and satisfaction,logistics service quality, logistics andsupply chain relationships, reverse andclosed-loop logistics, SME logistics,integration of logistics and marketing,services marketing, research methodologiesand techniques, and teaching andlearning. He is a member of the USCouncil of Supply Chain ManagementProfessionals, the UK LogisticsResearch Network, and the NordicNOFOMA logistics research group. Dr.Grant also holds a ProfessionalCertificate in University Teaching fromthe University of Edinburgh and is amember of the Higher EducationAcademy in the UK.



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