Digital transformation at logistics service providers: barriers, success factors and leading practices

• DOI: https://doi.org/10.1108/IJLM-08-2019-0229
• Date: 22 May 2020
• Pages: 209-238
• Published date: 22 May 2020
• Author: Marzenna Cichosz,Carl Marcus Wallenburg,A. Michael Knemeyer
• Subject Matter: Management science & operations,Logistics

Digital transformation at logistics

service providers: barriers,

success factors and

leading practices

Marzenna Cichosz

Institute of Infrastructure, Transport and Mobility,

SGH Warsaw School of Economics, Warsaw, Poland

Carl Marcus Wallenburg

The K€

uhne-Foundation Chair of Logistics and Services Management,

WHU- Otto Beisheim School of Management, Duesseldorf, Germany, and

A. Michael Knemeyer

Fisher College of Business, The Ohio State University, Columbus, Ohio, USA

Abstract

Purpose –The rapid advancement of digital technologies has fundamentally changed the competitive

dynamics of the logistics service industry and forced incumbent logistics service providers (LSPs) to digitalize.

As many LSPs still struggle in advancing their digital transformation (DT), the purpose of this study is to

discover barriers and identifyorganizational elements and associated leading practices for DT success at LSPs.

Design/methodology/approach–This study utilizes a two-stage approach. Stage 1 is devoted to a literature

review. Stage 2, based on multiple case studies, analyzes information collected across nine international and

global LSPs.

Findings –This research derives a practice-based definition of DT in the logistics service industry, and it has

identified five barriers, eight success factors and associated leading practices for DT. The main obstacles LSPs

struggle with, are the complexity of the logistics network and lack of resources, while the main success factor is

a leader having and executing a DT vision, and creating a supportive organizational culture.

Practical implications –The results contribute to the emerging field of DT within the logistics and supply

chain management literatureand provide insights for practitioners regarding how to effectively implement it in

a complex industry.

Originality/value –The authors analyze DT from the perspective of LSPs, traditionally not viewed as

innovative companies. This study compares their DT with that of other companies.

Keywords Technology, Digitalization, Digital innovation, Transformation success, Logistics service

provider (LSP)

Paper type Research paper

Digital

transformation

at LSPs

209

© Marzenna Cichosz, Carl Marcus Wallenburg and A. Michael Knemeyer. Published by Emerald

Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0)

licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both

commercial and non-commercial purposes), subject to full attribution to the original publication

and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/

legalcode

The first version of this paper was presented at the 14th CSCMP European Research Seminar (ERS)

in Warsaw (Poland) in 2019. The authors want to thank the participants for their valuable comments.

Funding: This study was financed by the Collegium of Management and Finance, SGH Warsaw

School of Economics as a research project no. KZiF/S/05/18.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 27 August 2019

Revised 20 January 2020

7 April 2020

Accepted 19 April 2020

The International Journal of

Logistics Management

Vol. 31 No. 2, 2020

pp. 209-238

Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-08-2019-0229

1. Introduction

The last decade, characterized as “the digital age”(Hirt and Willmott, 2014), has

fundamentally changed the competitive dynamics of industries, including the logistics

service industry (Hofmann and Osterwalder, 2017). A host of innovative newcomers such as

Amazon and Alibaba –e-tailers, who invest in technology-supported warehouses and

transport (Cichosz, 2018), or uShip, Delive, Cargonexx –digital startups with different types

of intermediation platforms, including crowd logistics platforms (Castillo et al., 2018), have

entered the logistics market and challenged current business practices and future prospects

of incumbent logistics service providers (LSPs).

To stay competitive and grow, LSPs need toimprove their value proposition for shippers

and their customers (Prockl et al.,2012;Marche t et al., 2017b). This includes increasing

operational efficiency by addressing industry problems such as high fragmentation, low

transparency, und erutilized assets, c ostly manual proce sses and in many insta nces outdated

customer interfaces (Riedl et al.,2018), and offering a bettercustomer experience with smarter,

fasterand more sustainablelogistics (DP-DHL, 2018;Gruchmann and Seuring,2018;Daugherty

et al.,2019). Technologyplays a critical rolein logistics value differentiation(Gunasekaranet al.,

2017). It triggers and enables innovations (Mathauer and Hofmann, 2019), and herebymoves

logisticsto a higher level of efficiencyand responsiveness(Evangelista and Sweeney,2006;Lin,

2008;Evangelista et al., 2013;Gunasekaran et al.,2017). Based on logistics innovations,supply

chain members can adapt to market changes (Daugherty et al., 2005), align to improve their

performance (Fawcett et al.,2011) and increase their agility (Christopher et al.,2016).

As 50–70% of logistics activities are outsourced (Langley, 2019), a significant proportion

of the digital transformation (DT) of logistics rests on LSPs’shoulders. LSPs can serve as

architects of the further development of flows within Industry 4.0 (Delfmann et al., 2018) and

backbones for e-commerce growth (Kembro et al., 2018). In order to fully exploit the

opportunities established by new technologies and transform digitally, LSPs need to evolve

their strategies, cultures and business models.

According to the World Economic Forum (WEF, 2016), digitization in logistics could grow

up to 1.5tn US$ in value by 2025. However, the analyses show that logistics companies are

now behind the DT curve compared to the media, telcom, banking and retail sectors (Riedl,

2018). The logistics service industry has struggled to adopt technologies (Gunasekaran et al.,

2017;Mathauer and Hofmann, 2019) and increase their innovativeness (Wagner, 2008;Busse,

2010;Bellingkrodt and Wallenburg, 2013). Literature points to a lack of technological know-

how (Wagner, 2008), low educational levels of the workforce (Lai et al., 2005) and difficulties

with innovation transfer among various, dispersed LSP’s branches (Busse and Wallenburg,

2014;Cichosz et al., 2017). This study focuses on LSPs which have a special position in supply

chains, between shippers and their customers (Selviaridis and Spring, 2007). It aims to

identify the underlying factors that hinder or stop their DT, and the essential organizational

elements and leading practices that shape their DT success. Therefore, the following three

research questions are investigated:

RQ1. What does DT mean to an LSP and to its value proposition for different

stakeholders?

RQ2. What are the main barriers to DT at LSPs?

RQ3. What are success factors and associated leading practices for DT at LSPs?

To address these research questions, a two-stage approach was adopted with Stage 1 being a

literature review, and Stage 2 a series of nine case study analyses of global LSPs. After

introducing the key concepts of this research in the following section, the methodology is

subsequently outlined. Next, the findings of this study are reported. The final section

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