Logistics Contracting Effectiveness: The Perspective of Thai Electronics Manufacturers

Abstract

Drawing from the literature and on the insights from customers, the current study empirically developed a six-factor model that explains logistics contracting effectiveness. These six factors include: (1) long-term orientation, (2) information sharing, (3) risk aversion, (4) conflict handling, (5) trust, and (6) proactive improvement. Based upon the study results, the researcher suggests that to enhance logistics contracting effectiveness, both customers and LSPs should emphasize developing long-term relationships, sharing appropriate information, and managing conflict effectively. Apart from these, LSPs should also emphasize building competence trust and trust in integrity. For policymakers, this study suggests that they should emphasize raising the awareness of Thai manufactures, particularly the small- and medium-sized firms, about the benefits of internally-integrated logistics. They should be encouraged to contract out their logistics activities to competent LSPs from whom they will gain almost instant access to sophisticated logistics expertise and technologies without incurring a substantial upfront investment.