AN EXAMINATION OF RISK AND RESOURCE SHARING BEHAVIOR BETWEEN LTL TRUCKING COMPANIES AND WAREHOUSE PROVIDERS.

INTRODUCTION Over the last fifteen years the use of third-party logistics services in a supply chain has experienced many changes. Logistics outsourcing, also known as using third-party providers, is: ... the decision to use independent, external organizations as the means of accomplishing some, or all of the logistics related functions within the firm (Sheffi 1990). Several changes including rising customer service expectations, deregulation of the transportation industry and new trends in the supply of logistics services have helped to bring about continual innovation and growth in the market for external logistics providers (Cooke 1988, Anderson 1988, and Scribbins 1988). Many current third-party logistics providers began operating as providers of one logistics function (i.e., transportation) and subsequently started expanding service offerings in response to customer demands (McGinnis 1990). Some of these providers are now beginning to realize they cannot provide their customers with the vast array of specialized services desired. Therefore, they have started building relationships or strategic alliances with other logistics providers to offer a more attractive and all-inclusive package to potential customers. A popular view of strategic alliance type relationships is the establishment of, and commitment to, an interactive relationship where both parties benefit by sharing risks and resources (Ellram 1991, Landeros and Monczka 1989). What is still somewhat unclear about alliance behavior is: 1) to what extent an entity involved in a strategic alliance type relationship is willing to share the risks and resources necessary for a successful relationship, and 2) what types of risks and resources a partner is more (or less) likely to share. The current research hopes to provide insight into both issues by examining Class I LTL motor carriers who have elected to expand service offerings to include warehousing. The research also hopes to ascertain if the carriers in the sample are pleased with the risk and resource sharing behavior of their warehouse partner. Therefore, the results of the research will focus specifically on motor carriers' perceptions of risk and resource sharing. The sample used for this research consists of Class I LTL carriers who approached warehouse providers with the idea of establishing a strategic alliance. BACKGROUND By entering into strategic alliances, many external logistics providers are practicing a form of relationship marketing. The goal of these relationships is to establish, develop, and maintain exchanges by the use of long-term relationship building (Morgan and Hunt 1994). Practicing relationship marketing can be done by establishing long-term strategic alliances (Morgan and Hunt 1994) or partnerships (Anderson and Narus 1990) with other logistics providers. This type of relationship involves moving away from treating businesses as adversaries and moving toward a relationship where both entities benefit. The popularity of implementing strategic alliance type relationships with other practitioners appears to be rising as firms realize the high level of achievement available by pooling resources with other companies and employing networking techniques (Morgan and Hunt 1994). Building relationships and pooling resources with other logistics providers not only provides companies with a better resource base but also allows for risk reduction through diversification. Furthermore, building an alliance with other logistics practitioners allows the provider of each logistics function to concentrate on their core competency while still allowing customers to purchase multiple logistics functions through a cohesive entity. However, for the relationship to work all entities must be willing to dedicate resources to, and share the risk of the relationship. Recently many motor carriers have begun to expand service offerings, making logistics outsourcing more attractive to potential customers (Crum and Allen 1991). …