Personal relationships within the context of supply chain management is one of the least understood and researched areas in this field.
The purpose of this qualitative study was to investigate the complexities relating to the interaction between buyers and suppliers of logistics services when personal relationships are involved.
A descriptive qualitative research strategy was used. Semi-structured interviews were conducted with 10 suppliers and 8 buyers of logistic services within the South African third-party logistics industry.
The main findings indicate several benefits related to building personal relationships with a buyer or supplier of logistics services. These benefits include enhanced personal and business understanding, enhanced communication, enhanced trust, increased business volume, ease of doing business, enhanced problem-solving abilities, ease of conflict resolution and risk mitigation. Subsequently, aspects affecting the nature of the personal relationship were also identified. These include gender, relationship asymmetry, and the ability to adapt to different personalities.
A long-term commitment towards a buyer or supplier was identified as essential in order to reap the associated benefits of forming personal relationships.
The main theoretical contribution of this study can be argued as empirically testing an existing personal relationship framework, confirming the transferability of the framework. Testing the framework in a different context yielded four additional benefits of personal relationships, four supplementary factors influencing the interaction between buyers and suppliers and an additional aspect influencing the nature of personal relationships, thus expanding the body of knowledge of this topic.
The management of personal relationships within the context of supply chain management is arguably the most fragile aspect to be considered, yet it is the area that is least understood by practitioners and academics alike (Bromberger & Hoover
Most of the research on buyer–supplier relationships has focused on business relationships between the individuals and their firms’ supply chains on a macro level (Autry & Griffis
Investigating the role of personal relationships in business is not new. Several studies have focused on the effect that personal relationships can have in a variety of fields, including marketing (Mende, Bolton & Bitner
By investigating the ways in which buyers and suppliers interact when a personal relationship is present, a deeper understanding of the benefits associated with these close relationships can be gained from both an individual and business-level perspective. It is well known within the academic literature that general business decisions cannot be understood if the ongoing personal relationships between the individuals making these decisions are not fully understood (Celuch
Organisations have begun to rationalise suppliers in order to decrease costs and reduce complexity allowing these firms to more effectively manage only a few critical suppliers (Cousins
The study was guided by the following research questions:
What are the benefits of personal relationships for buyers and suppliers in the South African 3PL industry?
How do buyers and suppliers of logistics services interact when a personal relationship is present within South Africa’s 3PL service industry?
Are there additional aspects that need to be considered within the South African 3PL service industry when personal relationships exist?
Personal relationships have been a subject of research for many years. The well-known Greek philosopher Aristotle was among the first to investigate this complex topic (Cooper 1997:622). The investigation of personal relationships involves various fields including psychology (Kelley
Economic sociologists have long indicated the important role of personal relationships in economic transactions (Granovetter
Regardless of the pre-existence of a personal relationship, a distinction must be made between personal and business relationships. According to the literature, there are six main characteristics that differentiate personal and business relationships. Firstly, business relationships are more instrumental. The individuals are expected to perform certain tasks as dictated by their role in the firm, while personal relationships involve more emotions and are deep-seated in nature (Fournier, Dobscha & Mick
Differences between personal and business relationships.
Personal Relationship | Business Relationship | Author/Authors |
---|---|---|
Expressive | Instrumental | (Fournier |
Free-willed actions | Obligated actions | (Allan |
Informal | Formal | (Price & Arnould |
Communal orientation | Feelings of reciprocity | (Lee |
Intimate connections | Arm’s-length connections | (Fowler |
Individuals are not substitutable | Individuals are substitutable | (Silver |
Christopher (
There is a myriad of research on 3PL service providers, ranging from studies done on the external and internal context that influences the development of relationships in 3PL (Bask
Gligor and Autry (
Firstly, the message conveyance shows increased frequency of communication, through various channels and organisational levels, improving the ease of communication and the accuracy of the interpretation of the message. Secondly, the integrity of the message is improved in that more honest information and otherwise confidential information can be shared between the individuals. Thirdly, the environmental interaction explains that managers can decrease the censorship of the message, which results in decreased levels of tension during business exchanges. Finally, the communication process is more efficient and effective when a personal relationship exists between managers, reducing unnecessary communication and having insight into what type of information the counterpart would require (Gligor & Autry
In a recent article, Gligor and Esmark (
A novel study by Gligor and Holcomb (
There are several theoretical frameworks that conceptualise the role of relationships within the context of business. Heide and Wathne (
The first theme is enhanced trust, which can be identified as a prerequisite of a personal and business relationship (Hofer, Knemeyer & Dresner
The second theme is enhanced communication. According to Gligor and Holcomb (
The third theme is enhanced personal and business understanding. When the managers are able to better understand the individual on a personal level, they will gain greater insight about the same individual on a professional level (Gligor & Holcomb
The final theme is increased business volume. By creating a relationship with a customer, the possibility of retaining this customer over a long period of time is greater (Davis & Mentzer
This study uses a descriptive qualitative research design. Merriam (
The unit of analysis for this study was personal buyer–supplier relationships conducted in the context of the South African 3PL industry. From a supplier perspective, the purposive sampling strategy, homogenous sampling, was used to identify the 3PL service providers. In this case, companies were chosen that assume the responsibility of several logistics functions of a client. Snowball sampling was subsequently used to identify specific buyers of 3PL services by asking the participant after each interview to recommend a specific buyer of the firm’s 3PL services (Creswell
The homogenous sampling strategy was used to identify individual participants based on their job title and core responsibilities in the firm (Plano Clarke & Creswell
Participant and company details.
Personal relationships in the South African third-party logistics industry.
A total of 16 semi-structured interviews were conducted with 18 participants. Ten participants were from 3PL services suppliers, with two participants from the same firm, while eight were buyers of 3PL services, all from different firms. A total of four direct relational links were made from the 18 participants, while the rest presented their own accounts and perceptions of interpersonal relationships. Francis
The method of data collection for this study was semi-structured interviews. Semi-structured interviews were appropriate as it extracted as much information as possible on the role of personal relationships within a supply chain context (Sandelowski
The average duration of the interviews was 51 minutes. The authors transcribed 14 of the interview recordings, with the remaining 4 transcribed by a professional transcription service because of capacity constraints. Transcriptions were subsequently compared to the actual recordings, and corrections were made to ensure verbatim transcriptions.
A thematic analysis approach was used to analyse the data collected in this study. This is a way of analysing data across a data set in order to systematically identify, organise and understand emerging themes within this set of data (Braun & Clarke
Data frequency table.
CODES list | P0 | P1 | P2 | P3 | P4 | P5 | P6 | P7 | P8 | P9 | P10 | P11 | P12 | P13 | P14 | P15 | P16 | P17 | Frequency |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Code 3: Business understanding | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 18 |
Code 6: Relating/bonding | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 18 |
Code 13: Gender preference | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 18 |
Code 2: Core responsibilities | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 17 |
Code 7: Personal understanding | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 17 |
Code 8: Honesty | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 17 |
Code 10: Ease of communication and negotiation. | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 17 |
Code 15: Operating within an ethical boundary/governance | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 17 |
Code 17: Trust | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 17 |
Code 20: Cultivating loyalty | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 16 |
Code 46: Symbiotic relationships | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 16 |
Code 28: Performance as prerequisite for a closer relationship | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | - | 15 |
Code 31: Time commitment | - | - | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | 1 | - | 1 | 13 |
Code 11: Ease of conflict resolution | 1 | 1 | 1 | - | 1 | 1 | - | 1 | 1 | 1 | - | 1 | 1 | 1 | - | 1 | - | - | 12 |
Code 14: Relationship asymmetry | - | 1 | - | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | 1 | - | 1 | 1 | - | - | 12 |
Code 33: Disclose personal information | - | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | - | 1 | 1 | - | - | - | - | 1 | 12 |
Code 37: Enhanced problem-solving ability | - | 1 | 1 | 1 | 1 | 1 | - | - | 1 | 1 | - | 1 | 1 | 1 | 1 | - | - | 1 | 12 |
Code 44: Being intellectual – adapting to personalities | 1 | - | 1 | 1 | 1 | 1 | - | - | 1 | 1 | - | 1 | 1 | - | - | - | 1 | 1 | 11 |
Code 25: Creating multi-level relationships | - | - | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | - | 1 | 1 | - | - | - | 1 | - | 10 |
Code 39: Risk mitigation | 1 | - | - | 1 | 1 | 1 | - | 1 | 1 | - | - | 1 | 1 | 1 | 1 | - | - | - | 10 |
Code 9: Sensitivity of information shared | 1 | 1 | 1 | - | 1 | - | 1 | 1 | 1 | - | - | 1 | - | - | - | - | 1 | - | 9 |
Code 24: Cultivating reciprocity | 1 | - | 1 | - | - | 1 | - | - | 1 | 1 | 1 | 1 | 1 | - | 1 | - | - | - | 9 |
Code 50: Ease of doing business | - | - | 1 | 1 | 1 | 1 | - | 1 | 1 | 1 | - | - | 1 | 1 | - | - | - | - | 9 |
In order to comply with the ethical principle of informed consent, all participants were required to read and sign an informed consent form. Anonymity and confidentiality assurance was also provided within the informed consent form. Participant and company names were replaced with pseudonyms, listed in
For this study, a rich and thick description of the participants, methodology, sites and context ensured the transferability and authenticity of the study (Creswell
By replicating an existing framework and relating the data back to existing literature, the internal credibility of the study is ensured (Shenton
This study identifies four main themes, and various sub-themes, on personal relationships within the South African 3PL industry (see
This study confirms the findings of Gligor and Holcomb (
Gligor and Holcomb (
‘He [
‘I took my whole team to the client and I say this is the people that you deal with on a daily basis because they don’t know them. And we took them through the warehouse and showed them what the place looks like where does the container go. You know that kind of thing. And it is amazing what that does for the whole process and the relationship between the guys.’ (P9, male, customs and trade compliance specialist)
According to Gligor and Holcomb (
‘If you have that [personal] relationship with that person, then you can, with confidence phone him when you are in trouble and need his help.’ (P14, male, manager primary transport)
‘I think we were we would share stuff with P12 that we wouldn’t … we wouldn’t share with some of the current people that we are dealing with.’ (P1, male, key accounts manager)
There are three actions by managers that lead to enhanced trust between individuals, namely being able to relate to each other, disclosing personal information and being honest (Gligor & Holcomb
‘I spend literally ten fifteen minutes of my meeting chatting to you about what you did last weekend because that for me is more of a connection than just understanding what, you know, what your business requirements are ….’ (P7, female, strategic client lead)
‘So every now and then we play golf with the bank or might have a dinner or you know that type of thing. And we have a discussion we talk about our families we talk about our wives you know.’ (P3, male, COO)
According to Gligor and Holcomb (
‘You have that relationship with the client where they won’t just abruptly say listen here, you messed up … so goodbye we are changing suppliers you know.’ (P5, female, key accounts manager)
‘The lady that does the shipping bakes cakes if I need a cake I’ll order a cake from her just to kind of integrate, you know one hand washes the other type of thing.’ (P2, female, key accounts manager)
The findings indicate that the framework of Gligor and Holcomb (
Personal benefits include ease of doing business, which refers to a working environment that is more cordial. Routine tasks such as meetings are more likely to be seen as a way to improve current business rather than just a task that needs to be completed. A shared vision drives individuals towards a common goal and allows individuals to better understand the value of resource and information sharing (Tshai & Ghosal
‘When we are in the monthly SLA meetings the vibe is different. You know when I get into a meeting it is also easy for me to say that can we have coffee guys because of the level of comfort and the level of confidence that we have built over time.’ (P13, male, manager parts logistics)
‘We are on a much better level now where if we he wants to confront me, we will do it on a one-on-one basis and not in front of other people.’ (P4, male, general transport manager)
Business-related benefits include an enhanced problem-solving ability, which describes the ability of individuals from the buyer and supplier firms to work together to solve business-related issues. Because of the close relationship, the individuals are much more willing to work together and find a solution. Secondly, consistent with the findings of Gedeon
‘The relationship plays a big role in resolving issues. When you have issues, when you have fights about demurrage and detention, who is responsible for what and why you are not accepting responsibility for a claim in that sense relationships, plays a very big role in resolving these issues.’ (P15, male, key account manager)
Participant P5 explains a scenario where she accidently overcharged a client for certain logistics services provided by her company. She explains that because of the strong personal relationship, she was able to honestly admit to the mistake without fear of being reprimanded by the client. The following quote states her feelings about the situation:
‘If I didn’t have that relationship with P9, he would have most likely lost his temper over the quite costly mistake and demanded that we give him credit. But because we had that relationship he understood that it was an honest mistake and we were able to rectify the issue.’ (P5, female, key account manager)
One of the research questions of this study is to understand how buyers and suppliers interact with each other when personal relationships are involved. The following sub-sections describe the prerequisites for a personal relationship in the South African context and the ethical and formal factors that have an impact on the interaction between individuals.
The culture of an individual was thought to determine the importance of a personal relationship in business interactions. Some cultures require that a bond between the business parties be established before any business transactions can commence (Hutchings & Michailova
‘It takes some time you know. We have to get to know each other a bit and he [P9] has to obviously see you know, do I deliver.’ (P5, female, key account manager)
‘The first point that I want to mention is I am finding that it is actually easy for me to form informal relationships with suppliers or service providers who are performing.’ (P13, male, manager parts logistics)
All the participants are governed by strict corporate governance rules and policies. This influences the interaction between the individuals. The supplier has to follow lengthy procedures and policies if he or she wants to take a client to a sporting event or even dinner. Many of the buying firms have policies in place that restrict the value of a gift that can be accepted from any supplier, ranging from R300 to R500. Corporate governance is an essential mechanism to prevent fraud and corruption within a firm as noted by Salanta and Popa (
‘It’s migrated to a point now where relationships will get you so far. But there’s always a governance issue that needs to be dealt with.’ (P11, male, executive: business development)
‘If I wanted to for instance take a client out for lunch I’d have to invite them, they’ll have to declare it and you know it can’t be construed to be a bribe. When the last rugby world cup happened, I made arrangements to buy rugby jerseys for my clients and when I offered it to them they were very cagey about accepting it. They had to declare it internally that they’d received this gift from a supplier and it has become very tight with regards to that kind of thing.’ (P1, male, key accounts manager)
Trust has been described as a governance mechanism for relationships (Han, Han & Brass
‘I think the relationship that I’ve built up with both P1 and all the other people that I’ve dealt with and something that I really strive to do is have a strong personal connection but both parties must know where personal ends and where business starts.’ (P12, male, distribution planning manager)
‘I would never expect P12 to breach those [ethical] boundaries.’ (P1, male, key accounts manager)
The formal role of the individual also influences the interaction between him or her and the buyer or supplier. Most of the suppliers have individuals dedicated to certain buyer accounts. They will go out of their way to save a contract or help the buyer and it is expected of them to do this. The massive exit barriers are also a factor that can influence behaviour. For a buyer to switch to a different logistic supplier or vice versa will have a detrimental effect on the business in terms of lost revenue and operational issues. The individuals are more likely to make the current relationship work as shown below:
‘But if the customer needed more stock delivered, whether it means a bakkie or renting a truck or going the extra mile is part of what we do.’ (P8, male, CEO)
‘It’s going to be very difficult to get the same understanding that S4 [supplier] has currently with another company, it’s not impossible. [
Gligor and Esmark (
Six of the 18 participants were women. In total, only three participants prefer to work with men rather than women, two of whom were women. The other 15 participants had no gender preference and were able to form personal relationships with either gender.
Findings in terms of gender.
Participant | Gender preference | General comments |
---|---|---|
P0 (M) | None | - |
P1 (M) | Males | Relate better with men. |
P2 (F) | None | Men are more abrupt |
P3 (M) | None | Personality more important |
P4 (M) | None | Ladies will be treated not as harsh as when two men are in conflict |
P5 (F) | None | - |
P6 (F) | Males | Men are more logical and to the point |
P7 (F) | Males | Easier to converse with men. |
P8 (M) | None | Attitude and approach more important |
P9 (M) | None | Approachability more important |
P10 (M) | None | - |
P11 (M) | None | Being knowledgeable and not ‘being dumb’ is a bigger factor |
P12 (M) | None | Men relate better with men but understanding the individual is a bigger aspect |
P13 (M) | None | Ability is more important |
P14 (M) | None | Competency is more important |
P15 (M) | None | Getting the job done is more important |
P16 (F) | None | Understanding the individual is a bigger aspect |
P17 (F) | None | Culture plays a role when different genders work together. |
According to Caniëls and Gelderman (
‘There is no point in me having a relationship with you bleeding you for price and not allowing you to make a profit. There is something as a healthy profit. You need to make a profit. On that basis you will provide a beneficial service to them.’ (P3, male, COO)
A novel aspect identified in this study is the ability of the individual to adapt to the diverse personalities that he/she comes across. This is important to build stronger relationships. If an individual is unable to read people and have a conversation with a new buyer or supplier, then the likelihood of forming a closer relationship is diminished. This skill has to be applied to avoid clashing with a differing personality, which has a negative impact on the personal and business relationship:
‘In logistics and supply chain you are the ultimate diplomat.’ (P3, male, COO)
‘Because you are going to meet so many diverse people that today you’re … how’s it my bru and tomorrow it’s … Mr. Q are you well? You know? Intellectual. Being intellectual plays a big part.’ (P11, male, executive: business development)
The intent of this study was to replicate the study of Gligor and Holcomb (
Additionally, academic contributions to the framework of Gligor and Holcomb (
Another objective of this study was to determine how buyers and suppliers interact with each other when a personal relationship is present. As indicated earlier, the findings show that an individual’s performance, not his/her culture, is regarded as a prerequisite for the development of a personal relationship in a South African context (Hutchings & Michailova
Four additional factors were identified that influence the interaction between buyers and suppliers when personal relationships are involved. These are corporate governance policies and rules, integrity and trust between individuals, core responsibilities and exit barriers. Salanta and Popa (
Finally, this study considered factors that could influence the nature of the personal relationship. There are three aspects to consider: gender, relationship asymmetry and the ability of individuals to adapt to different personalities. Significant academic contributions are made in terms of research on gender roles in supply chain management. Contrary to the findings of Gligor and Esmark (
Firstly, the findings contribute to the understanding of the benefits related to personal relationships in the 3PL industry. Managers, more often than not, restrict employees when it comes to forming closer relationships with a buyer or supplier. This study highlights that not only are there many benefits to be gained from forming these relationships but also strong corporate governance and even stronger individual integrity mitigate the risk of potential unethical behaviours.
Secondly, by understanding that a closer relationship requires a long-term commitment, managers must be willing and able to commit to a new buyer or supplier for the long run and not have a short-sighted approach to logistics services. Costly exit barriers and risks such as supply shortage or loss of business stress to managers that these types of relationships must have a future view of at least 3–5 years in order to gain the most out of the relationship.
Finally, performance is identified as the foundation of a closer relationship. Suppliers especially have to deliver the logistics services as agreed. A personal relationship cannot be built on a foundation of weak performance. If individual performance and time commitment are prerequisites for the formation of personal relationships, then the account managers of 3PL service providers should be sensitised about the importance of these aspects. In addition, these account managers should be trained on how to understand their clients’ expectations regarding their individual performance and time commitment. Furthermore, these account managers could also be trained on how to deal effectively with client representatives with personalities that differ form their own.
Despite contributing to supply chain relationships research, the findings of this study are based on opinions of a limited number of participants. Only four direct relational links were made between participants; in other words, only 8 of the 18 participants could be linked with each other. If more direct links were made, differing opinions might have surfaced.
Furthermore, the participants in this study, buyers and suppliers, were all from large firms that are required by law to have formal corporate governance policies in place. They also have strict business processes in place, which to some extent can restrict personal relationships from forming. It would be interesting to conduct this research on smaller firms, where adherence to formal processes and governance might not be as stringent.
Finally, previous studies including this one have focused on the benefits in isolation or in combination with the dark side of personal relationships. This leaves us with an understanding of only one side of the coin. Future research should focus on the negative impact of not having personal relationships or strictly formal relationships in this context. This can provide a more comprehensive view on personal relationships within a 3PL services context.
The goal of this study was to replicate an existing framework on personal relationships in a logistics environment in the South African 3PL industry. A descriptive qualitative research strategy was used. Semi-structured interviews were conducted with 10 suppliers and 8 buyers of logistic services. The results showed that the benefits of enhanced personal and business understanding, enhanced communication, enhanced trust and increased business volume were present within this cultural context. Four additional benefits were identified; namely, ease of doing business, ease of conflict resolution, enhanced problem solving and risk mitigation, which adds to the body of knowledge on personal relationships in the field of logistics. Secondly, this study aimed to understand how buyers and suppliers of logistics services interact when a personal relationship is present. The results showed that performance and time commitment serve as prerequisites for forming personal relationships. Subsequently, corporate governance, individual integrity and trust, core responsibilities or formal roles and high exist barriers are all factors that influence the interaction between individuals who have formed personal relationships. Finally, gender, relationship asymmetry and the ability of individuals to adapt to different personalities are factors that have an impact on the nature of the personal relationship. This study ultimately allows academics and managers to gain a deeper understanding of the benefits and influencing factors of personal relationships in a 3PL environment.
The authors would like to acknowledge reviewers of the draft manuscript.
The authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article.
This article is based on the MPhil dissertation of K.M.; thus, he was the main researcher. W.N. assisted as supervisor with the conceptualisation, literature review and research instrument. T.K. provided methodological guidance and technical support.