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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 identify organizational 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 literature and 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 to improve their value proposition for shippers
and their customers (Prockl et al.,2012;Marchet et al., 2017b). This includes increasing
operational efficiency by addressing industry problems such as high fragmentation, low
transparency, underutilized assets, costly manual processes and in many instances outdated
customer interfaces (Riedl et al.,2018), and offering a better customer experience with smarter,
faster and moresustainable logistics (DP-DHL, 2018;Gruchmann and Seuring, 2018;Daugherty
et al.,2019). Technology plays a critical role in logistics value differentiation (Gunasekaran et al.,
2017). It triggers and enables innovations (Mathauer and Hofmann, 2019), and hereby moves
logistics to a higher level of efficiency and 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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provides a description of the study’s contributions and outlines limitations and future
research directions.
2. Literature review
2.1 Digital transformation
Although the concept of DT has recently gained strong interest in both academia and
practice, it lacks consensus with respect to its definition (Morakanyane et al., 2017;
Osmundsen et al., 2018). Scholars view it as a strategy (Bharadwaj et al., 2013;Kane et al.,
2015), a process (Hansen et al., 2011;Berman and Marshall, 2014;Morakanyane et al., 2017;
Cichosz, 2018;Hausberg et al., 2018;EC, 2018) or a business model (Henriette et al., 2016).
Typically, they emphasize “the use of new digital technologies (..) to enable major business
improvements”(Fitzgerald et al., 2014, p. 1). It must be stressed that DT is not about a single
technology, but major changes based on a “combination of information, computing,
communication, and connectivity technologies”(Bharadwaj et al., 2013, p. 471), i.e. “a fusion of
advanced technologies”that are integrating physical and digital systems (EC, 2018).
Importantly, not all technologies within DT have to be digital. In the context of DT, even
technologies that themselves are not digital (i.e. delivery vans, forklift trucks and conveyers)
can become an element of DT (Mathauer and Hofmann, 2019) when equipped with new
technology components so that they, for example, can be tracked with regards to their
location and speed. Morakanyane et al. (2017, p. 11) add the role of “leveraging digital
capabilities”by people in DT.
Creating value is identified as a key output of DT. Value includes, but is not limited to:
operational efficiencies, improved customer experiences, enhanced business models,
strategic differentiation, competitive advantage, improved stakeholder relationships, costs
savings, etc. (e.g. Berman and Marshall, 2014;Morakanyane et al., 2017).
The DT is a continuous evolutionary process (Marakanyane et al., 2017;Cichosz, 2018),
which will differ depending on the digital maturity of the implementing organization, defined
as “the degree to which organizations have adapted themselves to a digital business
environment”(Kane et al., 2017, p. 3). The term “digital maturity”has received attention in the
work of Westerman et al. (2014), who suggests that firms with higher digital maturity exhibit
superior corporate performance. Their research separates the concept of digital maturity into:
(1) digital capabilities, which indicate the intensity of digital initiatives and (2) transformation
management capabilities, which address managerial aspects that drive DT (i.e. leadership,
culture, change management, governance). Companies with strong digital capabilities and
weak transformation management capabilities are coined Fashionistas while companies with
strong transformation management capabilities and weak digital capabilities are coined as
Conservatives (see Figure 1). To advance digital maturity and achieve digital mastery,
companies need to develop both capability dimensions. The word “advance”is critical, as
even within the Digirati quadrant companies could present different levels of digital mastery.
“The phenomenon of DT is context-specific and can take an idiosyncratic path”(Remane
et al., 2017, p. 2). Thus, while “coming of age digitally”(Kane et al., 2018), it is important to: (1)
recognize the stage at which one’s DT departs from, i.e. assess the firm’s digital maturity
using a digital framework (e.g. Westerman et al., 2014;Kane et al., 2018), (2) understand where
one is going, i.e. the nature of digital disruption in terms of value for customers, employees
and other stakeholders, (3) identify barriers and (4) implement success factors via leading
practices to progress DT.
2.2 Barriers and success factors for digital transformation
The implementation of DT is a complex process accompanied by numerous barriers that may
limit its success. Many firms still struggle to realize their DT potential due to different
barriers, i.e. “those few things that can hinder or stop the successful implementation of DT”
Digital
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at LSPs
211
(Vogelsang et al., 2019a, p. 4938). Thus, identifying obstacles, understanding their nature and
roots, is an important aspect of being able to counteract them. Additionally, it is worth
recognizing success factors, i.e. “factors that enhance the probability of success”(Williams
and Ramaprasad, 1996, p. 255) with related leading practices which are both enablers to
superior DT implementation. However, Williams and Ramaprasad (1996, p. 255) emphasize,
that, when a success factor is an enhancing factor, “the absence of a critical success factor
would not necessarily be a critical failure factor.”
The topic of barriers and success factors for innovation implementation has already been
studied within the information systems (e.g. King and Burgess, 2006;Ngai et al., 2008;Nikpay
et al., 2013), innovation management (e.g. Oke, 2004) and change management literature (e.g.
Oakland and Tanner, 2007;Oliveira et al.,2018). However, the characteristics of DT (e.g. the
simultaneous use of many technologies that have a significant impact on creating digital
products/services, digital processes and digital business models), requires specific
investigation (Pellathy et al.,2018). Table 1 summarizes selected studies on barriers and
success factors to DT, conducted in manufacturing and service settings. The list contains
qualitative and quantitative research as well as a literature review paper. AsDT is an emerging
topic, most of the items listed in Table 1 are conference papers derived from the AIS eLibrary.
The analysis shows that prior studies identified people as both the biggest challenge and
main source of success to DT. Kane et al. (2018) point out “competency traps”with employees
being prisoners of their past successes. Toytari et al. (2017) report difficulties with changing
people’s mindsets and beliefs, while Vogelsang et al. (2019a) focus on people’s IT capabilities. At
Fashionistas
•Many advanced digital features
in silos
•No overarching vision
•Underdeveloped coordinaon
•Digital culture may exist in silos
Conservaves
•Overarching digital vision exists
but may be underdeveloped
•Few advanced digital features
through tradional digital
capabilies may be mature
•Digital governance across si los
•Tacit acve steps to build digital
skills and culture
Beginners
•Management skepcal of the
business value of advanced
digital technologies
•Many carry out some
experimentaon
•Immature digital culture
Digiras
•Strong overarching digital vision
•Good governance
•Many digital iniaves
generang business value in
measurable ways
•Strong digital culture
Transformaon management intensity
Digital intensity
Source(s): Adapted from Westerman et al. (2014)
Figure 1.
Digital maturity matrix
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the same time the literature review demonstrates that digital leaders with a vison supported by
empowered, knowledgeable and collaborative employees are critical to DT success.
2.3 Logistics service providers and digital transformation
The logistics industry spans a broad variety of players (LSPs) that perform logistics services on
behalf of others (Delfmann et al., 2002). With globalization, outsourcing and the development of
technological innovations, the logistics service industry evolved from a commoditized industry,
with hundreds of thousands of logistics companies performing just transport or warehousing
services (Marquardt et al., 2011), into an industry also embracing third-party LSPs (3PLs)
offering bundled and more complex logistics services (Selviaridis and Spring, 2007;Wagner
and Sutter, 2012) and fourth-party LSPs (4PLs) subcontractingand orchestrating other service
providers (Win, 2008;Zacharia et al., 2011). LSPs differ in size of the firm, ownership structure,
scope of services they offer (Evangellista et al.,2013), and how they add value to shippers’
businesses, i.e. either through volume-, process- or innovation-oriented models (Marchet et al.,
2017b). They also differ in the way they deal with technologies.
Technology constitutes a precondition for DT. In the logistics service industry, Germain
et al. (1994) distinguish between hardware and software technologies. Mathauer and
Hofmann (2019, p. 419) notice that through digitalization “even hardware solutions are
undergoing technologization and have gradually become high-tech products”(e.g. smart
flexible conveyers following a warehouse worker). For the hardware and software solutions,
whether standardized or customized ones, to be considered as technological innovations does
not require them to be new to the market. In most cases they are only novel to the individual
firm that decides to implement them. The technologies constitute the base for LSPs’
innovations which span from incremental improvements to radical changes (Soosey et al.,
2008). Findings show that LSPs have traditionally been focused on incremental cost or
service improvements to daily operations (Wagner, 2008), which are mostly “pulled”by the
customer (Soosey and Hyland, 2004;Flint et al., 2005). The range of possible LSP’s
advancements could be extended by proactive (LSP-initiated) improvements which are,
according to Deepen et al. (2008) and Wallenburg’s (2009) empirical research, beneficial to
customer loyalty and LSP performance.
Proactive and reactive technological improvements transform an LSP. Researchers have
argued that certain features of organizations will influence the adoption of innovation at an
LSP. Soosey and Hyland (2004) on the one hand, point out internal organizational conditions
such as employee and stakeholder orientations, financial reasons, quality, speed, efficiency
and having a leading edge in the industry, and on the other hand, they emphasize external
organizational conditions such as competition. The study by Lin (2008) suggests a significant
positive influence of organizational encouragement and quality of human resources. Marchet
et al. (2017a) point to the need of establishing partnerships with shippers and technology
providers. Mathauer and Hofmann (2019) identify the importance of different technology
access modes (i.e. make, buy or ally). These findings support Grawe’s (2009) approach to
LSP’s innovativeness as a dynamic capability which requires the ability to integrate, build
and reconfigure –not only internal but also external –resources and competences.
3. Research method
3.1 Research approach
The research adopts a two-stage approach. Within Stage 1, a literature review was conducted
to identify potential barriers and success factors in order to isolate patterns and facilitate a
more precise analysis within the qualitative part. The literature review was also used to
prepare an interview protocol, perform coding and conduct the results’analysis in order to
compare the differences regarding DT for LSPs and DT for other industries. In Stage 2,
multiple case studies, utilizing semi-structured interviews with experts from LSPs, were
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Authors Research method
Objective of the
study Barriers/Challenges Success factors
Kane et al.
(2018)
Quantitative (4300
respondents from
different
industries)
To understand
challenges and
opportunities
associated with the
use of social and
digital business
(1) Competency traps
(2) Lack of
experimentation and
iteration
(3) Dealing with
ambiguity and
constant change
(4) Buying and
implementing the
right technology
(5) Lack of org. support to
develop employees
skills
(1) Developing digital
leaders
(2) Push decisions down
(culture of
distributed
leadership)
(3) A growth mindset
(4) Being likely to
experiment and
iterate
Vogelsang
et al. (2019a),
Vogelsang
et al. (2019b)
Qualitative
(manufacturing)
To identify and
describe key
barriers and success
factors (in the
second paper) to DT
in manufacturing
(1) Missing skills (IT and
process knowledge)
(2) Technical barriers
(3) Individual barriers
(fear of job loss,
transparency, loss of
control)
(4) Organizational and
cultural barriers
(keeping traditional
roles, no clear vision,
resistance to change,
risk aversion, lack of
financial resources,
lack of time)
(5) Environmental
barriers (no standards
and no laws)
(1) Organizational
success factors (pilot
projects, prepare for
future, customer
needs, autonomy,
employee
qualifications,
culture, (Big) Data
use, management
support)
(2) Environment
(connectivity,
transparency,
collaboration, hybrid
value creation,
standards)
(3) Technology
(infrastructure,
reliability, relevance,
adaptability,
security)
Toytari et al.
(2017)
Qualitative
(service issues in
industrial
companies)
To explore barriers
in adopting smart
services
(1) Internal barriers and
management practices
(culture, change of
mindset, beliefs,
identity)
(2) Lack of resources and
capability gaps to
provide smart services
(3) External barriers
(industrial buying
culture and
relationships,
reputation and brand
image, unwillingness
to outsource,
nonmatching solution
visions)
(continued )
Table 1.
Barriers and success
factors for digital
transformation
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conducted. The case study is an effective methodological fit for the current stage of DT
conceptual development (Edmondson and McManus, 2007). It is recommended for
exploratory and theory-building research (Eisenhardt, 1989;Gammelgaard, 2017). We
analyzed multiple cases in order to provide a more robust and generalizable consensus
(Yin, 2014).
3.2 Case selection
According to Yin (2014), a multicase study approach should follow a sampling logic.
Therefore we decided to identify case firms by purposefully applying the following criteria.
First, we decided to select LSPs who have introduced or are introducing at least a few digital
initiatives. Second, we restricted the geographical scope to Poland –the biggest logistics
market in Central Europe (BVL, 2017) and in the top 3 of Europe’s most desirable logistics
country location in terms of value proposition (ProLogis, 2017). Third, we focused on large
LSPs, in the top 20 LSPs (Brdulak, 2018), who are global players with experience in
digitalization. It was decided that these LSPs could provide comprehensive insight regarding
barriers they experienced and how they can be overcome, as well as the most important
success factors that helped achieve a particular stage of the DT. In order to increase
theoretical generalizability, we selected case firms that differ by the level of their digital
maturity from Fashionistas, through Conservatives, up to Digirati (Westerman et al., 2014).
Beginners were excluded because of their limited experience within DT. Our case firms
embrace two groups of LSPs, i.e. (1) transport and logistics companies (T&L) which are
working with business clients more on a time-contract basis and (2) couriers, express and
parcel companies (CEP) which have more centralized structure and standardized solutions
offered to either business customers (B2B) or final consumers (B2C). Within the nine case
firms that made up our sample, we identified the digital experts primarily leading the
organization’s DT, i.e. CIO, IT Managers, Operating Managers, Managing Directors,
Marketing Directors) as informants (Kane et al., 2018). Initial e-mail or phone contact with
potential informants confirmed their interest and expertise to take part in the study. Table 2
presents a description of case firms and interview participants.
Authors Research method
Objective of the
study Barriers/Challenges Success factors
Osmundsen
et al. (2018)
Literature review To understand how
to accomplish DT
and how DT affects
organizations
(1) Supportive
organizational
culture
(2) Well-managed
transformation
activities
(3) Leveraging external
and internal
knowledge
(4) Engagement of
employees
(5) IS capabilities
(6) Dynamic capabilities
(7) Digital business
strategy
(8) Aligned business
and IS Table 1.
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3.3 Data collection and analysis
Based on the literature review, we developed an interview protocol that helped us structure
our conversations with the subject matter experts (Bryman et al., 2007). We organized
interviews into four main parts: (1) Introduction, (2) Digital Business Strategy (DBS), (3)
Digital Transformation –Barriers and Success Factors and (4) Conclusions (see Appendix 1).
The instrument was pilot-tested with a Managing Director from a large LSP. The interview
protocol was shared with interview participants in advance. In total, 17 interviews took place
in 2019. Our interviewees were involved in coordination and implementation of DT, with
operations in Poland being either a pilot or part of a roll-out. Interviews were conducted either
face-to-face, via Skype or over the phone. The interviews lasted between 60 and 125 min
(85 min on average). The interviews were recorded, transcribed and complemented with data
from additional sources, like companies’websites, industrial and companies’reports and
study visits.
In the data analysis stage, we analyzed each case individually and compiled a within-case
description, concluding with a list of major findings (Eisenhardt, 1989), containing barriers,
success factors and leading practices provided by interviewees from the case LSP. Then, we
sent this summary to our informants requesting feedback and additional information on their
individual case. When the feedback arrived, we discussed it and included it in the analysis.
Next, we conducted a thematic analysis and coded the material for identifying cross-case
patterns; firstly, within each digital maturity group, and then across them. Based on our
findings, we were able to prepare a preliminary version of common barriers and success
factors to DT. Then, we discussed the list for synthesis. When the shortened list of barriers
and success factors was ready, we sent it out to our interviewees with a request to evaluate
the importance of each element, using a 10-point scale from 1 (not important) to 10 (critical).
This allowed us to confirm particular barriers and success factors and establish the final
importance ranking (see Appendix 2).
4. Findings
The data analysis showed that leaders of the logistics industry are experiencing prevailing
pressure from their customers, employees, business partners and competition, including
entrance of new competitors, to pursue digital change. Leaders of the logistics service
industry have already taken steps toward developing, implementing and diffusing different
technologies, which helped them progress their digital maturity. The most digitally advanced
LSPs, Digiraties, undertook a strategic approach to DT. Within the last five years, they have
developed and introduced digital business strategies (DBS) as well as a chief digital officer
role to their board of directors. Their strategies translate into several programs with up to 30
projects and initiatives. However, even LSPs without DBS have several digital projects and
initiatives. The most common ones are as follows: standardization of operational systems in
different country markets, eliminating paper documents from order management processes,
introducing track and trace capabilities which provide an ability to estimate time of arrival
(ETA), digitizing contacts with customers and partners (e.g. carriers/couriers) through
platforms, utilizing predictive analytics to optimize the usage of their systems’capacity,
automation of simple transport, warehousing and value-added logistics processes, and
digitizing back-office operations such as HR and others.
4.1 Digital transformation notion and value in the logistics service industry
Managers across case companies exhibit a very similar understanding of DT at LSPs. They
see it as the evolutionary process of “moving an LSP from analog to the digital world”(C1, C3).
All interviewees emphasized the need for being technology-oriented. C1 explained: “Using
digital technology changes our business, (i.e., services we offer, processes and business
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Company
code
Company
profile
Company’s
digital
maturity Interview participants
Experience of interview
participants
C2 CEP
Publicly
owned
8.000 EE
(Poland)
Digirati (1) Marketing Director
Poland
(2) IT Director Poland
(1) 10 years of experience in
marketing; 6 years in CEP;
engaged in many digital
projects in Poland and in
the region
(2) 20 years of experience in IT
project management; 8
years in CEP; supervising
all digital projects in
Poland in his division
C4 T&L
Publicly
owned
146.000 EE
(worldwide)
Digirati (1) CIO Central and
Eastern Europe
(2) Distribution and
Production Center
Manager
(1) 20þyears of experience in
IT, incl. 15 in T&L;
supervising all digital
projects in Poland and in
the region
(2) 20 years of experience in
CEP; 1 year of experience
in T&L; engaged in all
digital projects in his
facility
C6 T&L
Publicly
owned
15.000 EE
(worldwide)
Digirati (1) Managing Director
Poland
(2) Supervisor IT
Poland
(1) 20 years of experience in
T&L; IT background;
responsible for many
digital projects in Poland
(2) 15 years of experience in
T&L; earlier IT Project
Manager; responsible for
many digital projects in
Poland
C9 T&L
Publicly
owned
100.000 EE
(worldwide)
Digirati (1) General Manager
Poland
(1) 20þyears of experience in
T&L; supervising all
digital projects in Poland
C1 T&L
Family
business
10.000 EE
(Europe)
Fashionista (1) Managing Director
Poland
(2) Innovation Center
Manager Poland
(1) 20þyears of experience in
T&L; supervising all
digital projects in Poland in
his division
(2) 20þyears of experience in
T&L; 3 years managing
Innovation Center;
responsible for all projects
in Poland
C8 T&L
Family
business
1.400 EE
(Europe)
Fashionista (1) Head of Project
Management Office
(2) CEO Contract
Logistics Domestic
Distribution
(1) 15þyears of experience in
T&L; supervising all
digital projects in Poland in
her division
(2) 13 years of experience in
T&L; last 2 years
responsible for digital
projects in contract
logistics in Poland
(continued )
Table 2.
Description of case
firms and interview
participants
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models we operate), and our communication.”C9 stated: “Technology induces front- and
back-office changes and makes sure that LSPs are no longer just logistics companies, they
start being technology firms offering logistics services.”Technology innovations facilitate
logistics capabilities such as logistics measurement, information exchange, integration with
supply chain partners, serving customers and learning. They support LSPs in becoming
more dynamic and adaptable to a fast-changing environment.
While describing the motivation behind DT, the respondents stressed creating value for
different groups of stakeholders, i.e. customers, business partners, employees and society.
According to case LSPs, technology helps innovate. That means to
(1) increase operational efficiency (by tracking and tracing shipments and being able to
ETA, applying robotic process automation in picking, palletizing, loading/unloading
vehicles or (predictive) big data analytics and artificial intelligence systems that
assist humans in making decisions) (C1); delivering social benefits related to eco-
efficiency through process optimization and reducing fuel consumption and the
movement of pallets (C8);
(2) improve customer experience (by becoming faster, more flexible and responsive
through robots and automation (C5); more reliable through sensors, geolocation and
blockchain applied in monitoring of loads’status which provides an opportunity to
react in case of any problems (C1 C2, C5) and easier to contact with through platforms
(C1, C2, C5, C9);
Company
code
Company
profile
Company’s
digital
maturity Interview participants
Experience of interview
participants
C3 T&L
Family
business
30.000 EE
(worldwide)
Conservative (1) Managing Director
of European
Logistics Poland
(2) IT Manager Poland
(1) 20þyears of experience in
T&L; supervising all
digital projects in Poland in
his division
(2) 15þyears of experience in
T&L; engaged in most
digital projects in Poland
and many in the region
C5 T&L
Publicly
owned
72.000 EE
(worldwide)
Conservative (1) CIO NE Europe
(2) European Head of
Operational
Excellence
(1) 20þyears of experience in
IT project management; 1
year of experience in T&L;
supervising many digital
projects in the region
(2) 15 year of experience in
T&L; responsible for
digital projects aimed at
operational excellence in
the region
C7 T&L
Publicly
owned
47.000 EE
(worldwide)
Conservative (1) Head of Innovation
Services for Europe
and Middle East
(2) Sales and
Marketing Director
(1) 20 years of experience in
T&L; responsible for many
digital projects in Poland
and in the region
(2) 20 years of experience in
T&L; engaged in many
digital projects in Poland
Note(s):EE–employees
Table 2.
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(3) introduce new services based on information about customers’demand, available
capacity and end-to-end product visibility (C2, C6, C7);
(4) introduce platform business models for customers and carriers (all case LSPs).
C8 emphasized visibility and “fair play”as a consequence of it. C9 –enhancing return on
investment (ROI) by using technologies that better leverage capital expenditures in people
and equipment. C4 and C6: “Growing faster than the market.”C5 admitted: “Thanks to
technology, it is easier to scale the business up”. However, case LSPs had doubts whether
digital technology could guarantee a competitive advantage and help with winning
customers in the long run. As noticed by C1: “More and more often, digital technology
becomes the standard which qualifies for a contract but does not win the contract.”In the
context of value proposition, all case LSPs mentioned that technology innovations introduced
within the DT of an LSP are an important element influencing their companies’image. As C1
and C4 explained: “Not only customers and business partners appreciate dealing with an
innovative LSP, but it is critical for gaining and retaining young generations of employees
with digital capabilities.”
Based on the review of literature and the views of our interview participants, we define
DT at LSPs as an evolutionary process of change that leverages technologies and
digital capabilities of an LSP, its employees, partners and customers to enable major
improvements within the LSP, regarding operational efficiency (including eco-efficiency),
customer experience, as well as new services and digitally enabled business models to create
value for its stakeholders.
4.2 Barriers to digital transformation
The analysis of the case study data revealed five major barriers that LSPs face when
implementing technological innovations within their companies: (1) complexity of the
logistics system and underlying processes, (2) lack of resources including skilled resources,
(3) technology adoption, (4) resistance to change and (5) data protection (Figure 2). The main
difference between the impediments identified by our study compared with those from the
general DT literature relates to the fact that people, and their resistance to change, are not
the top barrier at the LSPs. This barrier is overtaken by other factors that stem from the
characteristics of the logistics service industry and its processes. As stated by C2 IT Director:
“DT in the logistics service industry is different from DT in, for example, the telecoms. It isn’t
taking place only in virtual reality, but the flow of goods must be organized in the
analog world.”
4.2.1 Complexity of logistics network and underlying processes. Complexity was viewed as
the main barrier to DT in the logistics industry with an overall score of 7.57. Our analysis
shows this factor to have two dimensions. First, the complexity of the logistics industry,
which consists of different types of LSPs that deal as an intermediary with shippers and
customers of different sizes and types dispersed around the world along with the associated
challenges of coordinating the network of contract- or spot transaction-carriers, warehouse
operators and terminal operators. Therefore, DT of an LSP is a megaproject that influences
multiple network members and requires coordination across different companies, countries,
locations and departments. C1 called it “a big puzzle that requires enormous organizational
effort.”We found that harmonizing different IT systems, standards and levels of knowledge
among DT project partners is the biggest challenge for LSPs.
The second dimension of complexity that LSPs struggle with is the intricacy of the
underlying processes and difficulties with their standardization. These, on the one hand,
result from difficulties related to constraints from IT or legal systems specific to
multinationals which grew in different markets by acquisitions. C3 reported an interesting
example of legal constraints: “E-invoice or the equivalence of an electronic signature to the
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LSP’s Business
LSP’s Digital Business
Value Proposion
for stakeholders
•New products / services
•Improved operaonal processes
•Increased customer experience
•Digital business models
Digital Transformaon
Barriers / Challenges
•Complexity of logiscs network and underlying processes
•Lack of resources including skilled resources
•Technology adopon
•Resistance to change
•Data protecon and security breach
Digital maturity
Success Factors
•Leadership
•Supporve organizaonal culture
•Employee and partner engagement
•Aligning business and IT strategies
•Process standardizaon and data integraon
•Employee training and skills developmen t
•Agile transformaon management
•Leveraging internal and external (technological) knowledge
Digital maturity
Figure 2.
Model of barriers and
success factors to
digital transformation
at LSPs
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standard ‘stamped and signed paper’is making digitalization easier, but certain countries
may still require paper copies to be generated and handled. In some cases, while standard
document digital flow ‘order-shipping document-delivery note-invoice’is fully supported and
legally compliant, it is the exception to the handling process that still requires not only paper
documents but also the physical signature upon its receipt by the other party to be fully
recognized as valid by an external authority (e.g. correction invoices in Poland, shipping
documents in Hungary).”On the other hand, the intricacy of the underlying processes results
from difficulties related to customization. C1 admitted: “When a company transforms
digitally and works on its standards, it happens that pressure from big, powerful clients
appears. All exceptions we agree on are later very difficult to manage.”
Besides the reasons above, much of the inefficiency in processes is the consequence of low
labor cost in various countries across the globe, for example in Central Europe, which does
not encourage LSPs to make an effort to simplify their business processes. “Some LSPs try to
digitalize a mess. They think that digitalization is a Holy Grail that will resolve all their
problems. However, ultimately, it does not work”(C1).
4.2.2 Lack of resources including skilled resources. Our findings show that the second
biggest problem LSPs face during DT (with a 6.79 overall mean) is lack of different types of
resources. Case LSPs reported to lack time and money, but foremost they struggle with
shortages of digitally skilled employees. As revealed by C1: “It is quite common that digital
projects to be implemented are waiting for available skilled IT people.”Moreover, LSPs lack
drivers, couriers and warehouse employees. According to C2: “Nowadays, Courier, Express
and Parcel companies compete for employees with Uber, Uber Eats and other last-mile
delivery companies. Technology can help prepare the workplace in a way that makes it
possible for a courier to be productive from the first day of his/her work.”C4, C5 and C7
perceive technology as supporting the automation of simple work in a warehouse, so that
fewer people are needed for simple repetitive work. Thus, technologization, according to C9, is
the way LSPs must take as it becomes more and more difficult to encourage people to work.
However, C3 concluded: “Up to now, technology in logistics is still more of a marketing tool to
show how innovative a company is, rather than solution to real problems.”
In terms of money, C5 and C7 explained that main problem relates to the fact that, in most
cases, digital projects demand significant (up-front) investments in assets and that is why
each time they consider launching a digital project, they prepare a business case and calculate
the ROI. Lack of money or too long of a payback period bothers even large players. C4
clarified: “In most cases, the cost of DT is on each division’s P&L, which is a big burden for its
budget and could make LSPs stop (if the decision is made at the local level) or postpone the
change to the last possible moment”.
4.2.3 Technology adoption. C2, C4 and C5 stated: “It is not technology, but strategy, that
drives DT.”Nevertheless, we found that case LSPs (especially Conservatives) consider
picking the right technology at the right moment in time an important challenge (6.29 mean
score). They even placed this barrier ahead of employees’resistance to change. We noticed
that in spite of LSPs having their IT competence centers supporting their technology
adoption decisions, “it happens even to the best that technology turns out to be an
unfortunate investment”(C2, C3, C9). This was the case for a global CEP operator, who, a few
years ago, launched a European online marketplace “All you need”that, after two years of
huge investments, had to be closed. C1 explained: “The decisions for a particular technology
are quite often influenced by the hype from vendors and the media.”The reason behind this is
often related to low operations engagement in the process of the right technology recognition
and adoption, due to the perception that any project with the adjective “digital”should be the
domain of IT. According to C5: “Very often DT projects are left to be led by IT organizations,
without sufficient and quality contribution from the future business owners. It may lead to
making choices between the hottest and novelty solutions from technological perspective, but
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not necessarily the most effective and efficient ones from the perspective of satisfying and
supporting the core operational needs of a company and its customers.”Moreover,
Conservatives signaled a problem with huge investments in specific hardware and/or
software technologies which are difficult to redeploy for alternative clients or locations. These
investments must be secured against the client’s opportunism with long-term contracts.
4.2.4 Resistance to change. Resistance to change is the most frequently mentioned barrier
to DT in the literature. It applies to the logistics service industry as well, after the barriers
related to complexity, resources and technology. However, Fashionistas, with rather weak
transformation management capabilities, ranked it higher (i.e. the second on their
priority list).
Based on the interview analysis, we identified two dimensions of resistance: institutional
and individual. The former one was more often signaled by Conservatives. C3 and C7 stated
that one could hear the following in the boardroom: “We are successful. Why should we spend
money to change something that works well?”It happens quite often, in the logistics service
industry, that people think that the factors that led to past achievements will also be
associated with future success what leads them to “competency trap”. Such a problem exists
also at the individual level. To illustrate it, C2 gave an example of implementation of a courier
routing system in her company some time ago. Based on data of delivery points to serve
within a coming day, the algorithms calculated the best route for a courier. The findings of the
new system challenged couriers’previous work areas and suggested completely new areas
and routes, which resulted in the couriers’resistance to change. As C2 noted: “Couriers hadn’t
understood why they should change their daily routines and they were trying to continue
working applying old patterns.”Unfortunately, the system was integrated with another
system informing addressees about the estimated time of delivery. Therefore, the couriers’
resistance to change was visible to management in terms of unmet key performance
indicators (KPIs) and customers’complaints.
We observed that the resistance to change at the individual level is less related to LSP’s
digital maturity but more often is attributed to various types of fears. C1 and C2 gave an
example of track and trace systems that could cause “fear of transparency and control”
among carriers. C2 pointed out “fear of job loss”as a reaction to the implementation of a new
sorting machine in a hub. C3, C4 and C5 named a “fear of failure”, or more often, “a fear of a
significant decrease in operational performance and worsening customer experience”when
implementing a new digital service or a new operational system. They stated: “We transform
a company that is operating. We have agreements with our customers and we have to be very
careful.”The Conservative risk mitigation culture they operate in leads to a cautious
approach to DT. Nevertheless, their comments that “service laboratories”and pilots are
solutions that limit this type of fear, can suggest that the real problem behind the fear of
failure could be the inability to experiment. This is a significant problem in any service
industry, including the logistics one.
4.2.5 Data protection and security breach. The final barrier on our list, that did not surface
in the literature review, regards data protection. C6 stressed: “Successful DT implementation
requires strong integration among various business applications and information stores
supporting business processes.”All case LSPs stated that provision of more sophisticated
and complex services to customers or carriers, with an increasing number of self-service
functions and commercial data that is made available (e.g. full company data, history of
transactions, online payments, invoices, etc.), imposes a particular focus on protecting such
information. C3 noted: “Cloud solutions enabling ‘anytime, anywhere’access to services that
nowadays are required by more and more customers, puts an even bigger stress on data
access security and prevention against data breaches or unauthorized access. If not managed
properly, failure in securing company and customer data could turn into a nightmare, with
negative consequences ranging from customer loss to legal lawsuits.”
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4.3 Success factors and leading practices for digital transformation
The analysis of the LSPs case study data revealed eight success factors with related leading
practices. Our list of success factors corresponds with the one derived from the literature
review. However, it offers extra value through: (1) LSPs’perception of the importance of
individual factors (see Appendix 2) and (2) examples of associated leading practices that
worked well for large global LSPs within their DT (summarized in Table 3).
4.3.1 Leadership. Leadership, with a 9.36 mean score on a 10-point scale, is the number one
factor for DT success according to our sample. Many interviewees ranked it as a critical factor
with the highest possible score of 10. As stated by C5: “A good leader is crucial for any
transformation, including digital one.”C1 and C8 (both Fashionistas) emphasized the leaders’
role in “constant monitoring market trends, sensing and seizing technological opportunities
to translate them into business opportunities which allow to keep an LSP in ‘A’league.”case
LSPs see a leader as an orchestrator of change (C3, C5), able to inspire (C9) and motivate
people to be active part of DT process (C2, C4, C6). C4 called it “active leadership”and
emphasized the importance of inclusive management, empowerment and cascading decisions
down. C1 and C9 stated that leadership for DT is not only about creating conditions for
change. “Leaders must also provide execution and a very strong governance to move
transformation forward”(C1). C9 added that in large organizations leaders’execution must be
supported with corporate governance system and procedures.
Leadership is also about providing stakeholders with a DT vision (C1) which clarifies the
direction (C3) and helps guide employees, carriers/couriers and business partners (C2, C4). C4
stated: “If the objectives and the meaning of what DT signifies for the whole organization, in
terms of its operations and customer service, are not clear from the beginning, the end
outcome of technological innovation’s implementation could be disappointing.”According to
C8: “DT vision is extremely important particularly in a highly distributed environment”.
From Digiraties experience, it should be not only developed, translated into goals but also
communicated to stakeholders via different channels and tools.
To illustrate the importance of leadership and DT vision, C2 gave an example of Rafal
Brzoska, the founder of InPost, who in 2009 started the first 24/7 self-service parcel locker
business in Poland. Ten years later, InPost is present in more than 20 countries, with the
Polish network of over 5,000 self-service parcel lockers being the largest business structure of
this type in the world. C2 summed up: “Brzoska consistently waded into vision that brought
him enormous business success in Poland and abroad. He transformed not only his company
but last-mile logistics itself.”
4.3.2 Organizational culture supporting customer centricity and openness to change.
Developing a favorable organizational culture for DT is another key success factor (with an
overall mean of 8.57) identified by our case companies. Organizational culture defines how a
company operates and how it introduces changes. C8 clarified that it is based on a set of
norms, values and attitudes that is clearly communicated and shared among all stakeholders.
Case LSPs use interactive methods, embracing meetings, presentations and workshops to
cascade those values and attitudes from the top down within the organization. Our cross-case
study analysis showed that customer centricity and openness to change are the most
prominent organizational culture components for successful DT in the logistics industry.
C2 explained that for them customer centricity means focusing on both business
customers (B2B) and final consumers (B2C), and educating employees that whatever they do,
they do it for customers. Important is not only recognizing customers’problems and
addressing them with smarter, faster and more sustainable services developed in the
company’s innovation centers but also engaging employees of all levels in proactive
continuous bottom-up initiatives which improve their workplace, operations and allow the
company to perform better for its customers (C2, C4).
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Success factors Associated leading practices
Leadership (1) Leaders monitor market trends, seize technological
opportunities and translate them into business opportunities
(2) Leaders develop and communicate the DT vision
(3) Leaders inspire and motivate employees to be part of the DT
(4) Leaders shape supportive organizational culture for the DT
(5) Leaders empower employees and cascade DT decisions down
(6) Leaders, supported by system and procedures, execute and
govern the DT
Supportive organizational culture (1) Communicating and sharing company’s norms, values, beliefs
and attitudes via meetings, presentations and workshops
(2) Creating a supportive work environment with trust,
empowerment
(3) Building agile organization structure via project management,
fluid teams, flexible processes, people’s openness to
collaboration and change
(4) Bottom-up initiatives proactively improving processes and
services
(5) “Questioning attitude”of employees
(6) Acceptance for mistakes
Employee and partner engagement (1) Programs communicating DT vison and goals
(2) Programs to get the right level of management sponsorship
(3) Programs to bring-in new ideas
(4) Programs encouraging cross-boundaries collaboration
(5) Workshops building strengthening “growth mindset”
Aligning business and IT strategies (1) DT vision and goals as a part of digital business strategy
(2) Pursuing aligning actions to reconfigure resources and
redefine the strategy
(3) “Dynamic synchronization”of business and IT strategies and
resources
(4) Building agile organization for fast adaptation to changing
environment
(5) Communicating aligned strategy to the public in a
comprehensive way
Process standardization and data
integration
(1) PMO –Project Management and Organization
(2) Lean management
(3) Simplification and standardization programs
(4) Best Practice Library
(5) Establishing KPIs
(6) Real-time data and applications integration
Employee training and skills
development
(1) Workshops building digital awareness and enhancing digital
skills
(2) Workshops strengthening “growth mindset”
(3) “Training the trainer”programs
(4) Developing business cases to present reference practices
(5) Creating environment for “on-the-job”learning
Agile transformation management (1) Building agile organization for fast adaptation to changing
environment
(2) Small cross-functional teams
(3) Iteration during innovation development process
(4) Communication and collaboration with clients
(5) Pilot projects for checking barriers and gaining know-how in
innovation
(6) Mixing methods if applying only agile method is impossible
(continued )
Table 3.
Overview of success
factors and leading
practices at LSPs
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This requires openness to change. C9 stressed that, when operating in a volatile, uncertain,
complex, ambiguous world, “Change is imprinted in our firm’s DNA and imposes LSP’s
adaptability.”Building an agile organizational structure, based on fluid teams, organized
around customers’projects, with flexible processes, and people open to change is beneficial
(C8, C5). To stimulate people’s openness, case LSPs created a supportive work environment
with trust (C1, C8), empowerment (C3, C4, C5, C7), encouraging employees’communication
and collaboration within and across the business units, locations and even countries (C4, C6,
C9). The innovation center manager of C1 and C8 emphasized the importance of proactive,
continuous improvement via instilling “questioning attitude”among employees, to identify
areas and propose solutions for more cost effective or higher quality services. Being
supportive for employees also means allowing them to make mistakes when they try to
innovate (C8).
4.3.3 Employee and partner engagement. Digiraties rated employee and partner
engagement as the most critical factor to DT success (9.33 mean value), while Fashionistas
and Conservatives ranked it the third. C9 stated: “DT is not a solo game.”In large, highly
distributed organizations with several digital projects in different business areas, DT leaders
must be supported by the company’s management team which can drive employee
engagement (C1, C8). The list of powerful practices associated with employee commitment
starts with engaging key managers in DT goals’development. C2 and C4 explained: “This
ensures managers’early buy-in and focus on the DT.”All case LSPs applied regular meetings
or conference calls updating top management on digital projects. At the lower organizational
level, case LSPs use presentations, workshops and programs encouraging employees to
bring-in new ideas, stimulating teamwork and strengthening the development of a “growth
mindset”. All these practices instill a common understanding of the DT concept, while
clarifying roles, responsibilities and procedures across different departments and locations.
When established, they are highly effective because LSPs are very entrepreneurial (C1) and
adaptive to customer needs and changes (C7, C9).
The engagement of employees and partners in the process of DT has one more advantage
–it limits their resistance to change. To illustrate this, C1 gave an example of their close
collaboration with carriers on the development of an order management system. “At an early
stage we asked carriers about their expectations towards the new system. They told us that
their preference is fast payment. Taking that into account, we developed a system with alerts
about any missing documents, limiting situations of delay or halt of payments. We also added
a‘factoring’button for super-fast payments reported by carriers in critical situations. This
way, we brought in carriers and created extra value for them within DT.”
4.3.4 Aligning business and IT strategies. According to case LSPs, DT success also highly
depends on building an LSP’s strategic capability related to developing a DBS that aligns DT
goals and resources to complete the goals. Digiraties plus C5 and C8, which have already
developed and implemented their DBS, have found it powerful. As noticed by the Chief
Success factors Associated leading practices
Leveraging internal and external
(technological) knowledge
(1) Using big data repositories as a source of knowledge
(2) Programs stimulating collaboration with technological
suppliers
(3) Programs stimulating collaboration with startups, e.g.
corporate accelerators, speed-dating summits
(4) Pilot projects for checking barriers and gaining know-how in
innovation Table 3.
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Information Officer (CIO) of C4: “With DBS, the separate and subordinate role of IT strategy
to business strategy is given up for a joint approach to both.”Concluding, he explained that
for his company, the introduction of DBS and establishing a CDO function in addition to an
CIO as a part of the board of directors was a breakthrough in their transformation: “We
moved from the pilot to roll-out phase.”
Case LSPs indicated that dynamism and complexity of the business and technology
environment make it difficult to articulate their DBS upfront. Therefore, the alignment is a
continuous process of targeting of emerging strategy as it dynamically evolves. It requires
simultaneous development and reconfiguration of IT and business resources across multiple
organizational processes. C8 called it “dynamic synchronization”. C5 stressed that DBS
builds on the organizational agility to allow for fast adaptation by collaboration across
functions and organizational boundaries. C9 concluded: “We are no longer just a logistics
company. Now, we are a technology firm offering logistics services. When communicating
our strategy, our global CEO and CIO do it hand in hand, using the language of GAFA
(Google, Apple, Facebook, Amazon) companies.”
4.3.5 Process standardization and data integration. From the organizational perspective,
the complex logistics systems with intricate processes constitute the biggest barrier for DT
success at LSPs. Case LSPs reported that the solution for this could be efficient and effective
operations and process management, particularly simplification (i.e. eliminating the non–
value-added components) and standardization practices. We found that, by definition,
simplification of the logistics system structure is quite problematic, whereas the complexity
of underlying processes is manageable by LSPs. C1, C2, C5 and C7 reported on applying lean
management philosophy and techniques to streamline logistics operations. They shared the
experience that 5S, value stream mapping, measuring takt-time and other lean management
techniques had helped their companies eliminate various types of waste, redesign processes
to increase efficiency and offer better customer experience. C4 has developed a Best Practice
Library containing practices, processes and KPIs that constitute their company’s class-
standard, which can be replicated in other locations for other clients. C7 encourages
customers to comply their process and IT standards with those of C7, by offering them a free-
of-charge plug-in within seven days. Customization is possible; however, it usually takes up
to 45 days and is a paid service. “We are competing in highly distributed service business. We
cannot dictate terms, but we can encourage customers to standardize processes for their and
our profit.”
Standardization also relates to systems, applications and data. It allows LSPs to combine
data residing in different sources, such as online transaction processing systems, TMS, WMS,
applications and mobile devices like handhelds or tablets. Data integration is the first step
toward transforming data into meaningful and valuable information which provides LSPs
with a unified real-time view of their business performance. Therefore, it could help improve
the execution of the underlying processes and increase the utilization of logistics assets such
as trucks, terminals or warehouses. C5, C8 and C9 perceived data integration as fundamental
for understanding business results and making business decisions. C1 noted the possibility of
creating innovative IT-based services such as synchromodality that they offer.
4.3.6 Employee training and skills development. We found that one of prerequisites for
employee engagement is their training. Digiraties, Fashionistas and Conservatives reported
arranging portfolios of different programs related to competencies management, managerial
development, trainings and certification to help employees of all levels adapt to a digital
business environment. Case LSPs reported most effective practices for developing their
employees’digital skills. C2, C3 and C4 described “training the trainer”method which
consists of two phases. First, IT people train a few experts who are selected based on their
digital but also social capabilities. Next, those expert trainers deliver appropriate trainings to
other employees, also fulfilling the role of the first line of support and internal expertise. C4
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and C5 reported developing business cases to present reference practices for training
employees in different locations. All case LSPs apply pilot projects that allow employees
testing innovative technologies.
Employee training is organized either by LSPs’internal academies (C1, C2, C3, C4, C5) or
external education institutions (e.g. C1 hires Persolog to prepare employees’competence
profiles and predefine their “learning curriculum”; C5 worked with Kaizen Institute on lean
leadership project). More and more widely LSPs apply interactive methods of learning and
skills development through workshops (all case LSPs) and interactive multidisciplinary
simulation games (C1, C2, C4, C8). Those methods not only enable employees to leverage their
skills and experience but also learn and understand key integration points between different
functional areas or processes. Such interactions provide also for development of other critical
soft skills, i.e. clear communication, team collaboration or team management. C1 stressed
that, based on 70-20-10 rule and their experience, “around 70% of actual learning experience
and skills are developed while ‘on-the-job’”.
4.3.7 Agile transformation management. To master their DT, firms are striving to become
agile (C7, C8). Agility to reallocate resources and get reorganized rapidly, in order to respond to
customers’volatile demands and increasing market dynamics, was recognized as a success
factor also inour study,but our interviewees placed it behind many of the other success factors.
Case Fashionistas and Digiraties confirmed applying agile methods in their DT projects. As
stated by C6: “Digitalization rewards the first movers and super-fast followers. Thus, when
introducing a new service based on a technological innovation, being agile helps.”An agile
approach, in contrast to plan-based methodology, which entails detailed upfront planning and
extensive documentation, represents iterative development that embraces quick deployment,
responsiveness to change and an emphasis on customer needs (C1, C4, C6, C8).
Our findings suggest that in the logistics industry, transformation relies heavily on
teamwork, employee and client engagement, communication and feedback. C1 reported: “Due
to high acceptance of feedback in agile methodology, we can easily respond to customer
requests, as customers get to validate each iteration that enables us to deliver a high-quality
service within the agreed time.”C4 mentioned regular meetings, C9 small cross-functional
teams, and all case LSPs pilot projects, as leading practices for agile transformation. Pilots are
used for testing innovative software, hardware or services. Case LSPs admitted that pilots
work very well for checking barriers and gaining know-how in innovation. In general, pilots
start with a single client, a location or a country. Case LSPs highlighted that Poland is often
selected for running pilots because of Polish employees’creativity, flexibility and a “growth
mindset”.
Case LSPs particularly appreciated agile methods when working with startups. However,
according to C8, in some cases, obligation to comply with legal and regulatory requirements
puts a constraint preventing the implementation of agile approach. She explained that in such
situations, they try to mix methods and apply an agile approach in further stages if it is
possible.
4.3.8 Leveraging internal and external (technological) knowledge. The final success factor to
DT (with 5.93 total mean value) relates to enhancing LSPs’knowledge and technological
capabilities to increase their innovativeness. Case LSPs reported on investing in their own
R&D centers that are fueled with ideas coming from their employees (e.g. through Idea-to-Net,
Genius Lab programs) and technological partners, also including technological startups.
They collaborate with technological companies on: (1) one-to-one basis when introducing
ERP, TMS, WMS, control tower, voice-picking, vision-picking, co-bots, etc. or (2) establishing
multilateral cooperation within different initiatives working out industry standards for
autonomous vehicles, block chain, Physical Internet, etc.
Our study proposes that LSPs only start using their suppliers and technological startups
as partners in exploration. However, they realize that there is a perfect fit between large LSPs
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with resources, routines, scale and power, and ambitious, agile startups with promising ideas
and willingness to take risks. There are different methods of LSP-startup cooperation. C1
works with selected startups on a few pilot and regular projects (e.g. “Smart ID Card”). C8
follows this path as well. C2 and C4 operate corporate accelerators and run programs
selecting startups they want to invest in. C5 and C7 collaborate with startups that have
already achieved success. We observe that aligning with startups, incumbent LSPs increase
both volume and quality of their technological innovations. C4 noticed that successful
collaboration with a startup requires from a large company to restraint its desire to take full
control of the startup.
Our case LSPs turned our attention to one more promising source of proactive
improvement of logistics processes –big data repositories. They collect lots of data from
thousands of sensors in their loads, means of transport and warehouses; however, until now
they are not able to use the data they have and link it with their capacity for action. They
expect this will change. C1: “In the long run, DT will enable us to have access to broad, reliable
companies’knowledge from data centers, which could be used for optimizing logistical
processes, e.g. in buying centers of LSPs.”
5. Discussion and conclusions
5.1 Theoretical implications
To the best of our knowledge, there is no current stream in the logistics and supply chain
literature that deals with barriers and success factors for DT in LSPs (Hausberg et al., 2018).
Addressing this gap, we reviewed current general business literature on the topic and
combined it with findings from the case analysis in the logistics industry. The alignment of
what literature reports and case LSPs perceive resulted in the definition of DT at LSPs, their
value proposition for different stakeholders, and a list of five main barriers and eight success
factors with associated leading practices for successful DT in the logistics service industry.
This serves as the basis for our contribution to research on DT (Figure 2).
The analysis demonstrates that LSPs go through a technological revolution, but they
change gradually. DT is led by the largest industry players for the profit of LSPs themselves
and their stakeholders. With the technological innovations applied in logistics operations and
IT management, LSPs are able to improve “seeing”via enhanced visibility, “thinking”via
advanced analytics and “acting”(Stank et al., 2019). They increase their operational efficiency
and responsiveness, improve customer experience and introduce new services, or even
innovative business model platforms. More and more often they point out environmental
benefits that would not be possible without applying technological solutions.
What was particularly interesting, were the differences in barriers and success factors
when comparing DT in LSPs to DT in other types of companies. The analysis revealed that an
obstacle that LSPs primarily struggle with is complexity of the logistics network and
underlying processes. It seems to be very specific for DT implementation in a multitier LSPs’
context, having not been mentioned by previous studies on DT. Interestingly, the digital
maturity of our case LSPs did not seem to have an impact on the perceived importance of this
barrier. Fashionistas with strong digital capabilities, Conservatives with substantial
transformation management capabilities, as well as advanced in both categories
Digiraties, find the complexity extremely challenging. Even those LSPs with just a few
projects report on the complexity of their system and the challenges of managing the
underlying processes. We assume that this barrier does not significantly differ across the size
of the LSP, as even LSPs with 100 employees are exposed to a similar industry system
complexity. However, in the case of the complexity of underlying processes, the LSP’s size
could matter –the larger the LSP, the more standard operations and processes it has (or tries
to have). C4 with their Best Practice Library, or other case LSPs disseminating efficient
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standard processes across different locations, countries, regions and even customers, give the
base to assume so.
The second identified barrier relates to lack of resources. LSPs suffer from shortages of
human and financial resources. The impact of both mainly depends on the size of LSPs.
Financial impediments are particularly difficult for small players with very limited financial
budgets. Their biggest challenge stems from the fact that, while innovative technology often
requires significant up-front investment, financial institutions are not willing to lend their
money for risky projects involving technological solutions to a small company operating in a
low-margin industry.
In terms of human resources, LSPs oftentimes suffer from insufficient number of people
with digital capabilities (e.g. good computer and smartphone applications literacy). The
problem has already been signaled by Wagner (2008). We found that, while it is typically a
smaller issue within larger organizations which are able to invest in training programs, it
becomes particularly visible in smaller companies or subcontractors operating on spot
contract basis, e.g. small carriers employing experienced drivers close to their retirement,
where investment in digital skills development is not applicable due to frequent changes of
subcontractors.
The barrier related to lack of skilled employees highly correlates with the fourth identified
one, i.e. people’s resistance to change. This challenge, with all aspects addressed within it, such
as openness to change, lack of a change of mindset, falling into the “competency trap”, having
different types of fears, missing skills and the lack of support from the top management, is
related to change. We found this resistance barrier important but manageable within a
well-organized change management process. Our findings from the logistics service setting
support previous research conducted in other industries (Toytari et al., 2017;Kane et al., 2018;
Vogelsang et al., 2019a). In our analysis, this barrier is affected by the digital maturity of the
LSPs. We observed that Fashionistas more often indicated the problem of their employees’
resistance to change. This can be expected to be even stronger within companies that have
just begun transitioning.
The third barrier pointed out by our case LSPs on the top of employees’resistance to
change is technology adoption. Although the literature review shows that DT is more about
transformation than technology (Kane at al. 2018), effective and efficient management of
technological aspects has been reported to be a necessary, even though not a sufficient
condition for successful DT. This has already been pointed out by Kane et al. (2018),IS
literature (e.g. Oliveira and Martins, 2011), as well as in logistics research (Mathauer and
Hofmann, 2019). Our case LSPs admitted that, in spite of having their IT competence centers,
they struggle with decisions what technology and when they should invest in. Most often the
problem lays down in the intra-firm collaboration between the IT department, which in most
cases leads DT projects, and operations, which usually are the future owner of the solution.
Respondents reported that lack of collaboration from the beginning of the technology
adoption process can lead to implementation of solutions which are not the most efficient and
effective in satisfying business needs. Intra-firm collaboration on technology adoption seems
critical for successful DT and not dependent on the digital maturity of LSPs.
However, in terms of partnerships with external technology providers which enhance
LSP’s technological capability, we found that the propensity to take risk varies. Case
Fashionistas and Digiraties are mostly willing to try digital innovations. They proactively
look for technological partners (including young startups) that they can ally with or buy.
Speed-dating with startups during startup summits was mentioned by C1 and C8 as a
practice gaining on popularity. Corporate accelerators and partnership programs are
examples of other leading practices enhancing LSPs’innovativeness which support
Marchet’set al. (2017b) findings.
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The final barrier on our list regards data protection and security breach. It is gaining
importance with the growing volume of business sensitive data made available across
distributed IT infrastructure, oftentimes based on cloud solutions. Respondents, regardless
their digital maturity, ranked it at the lower end of the list, as it is considered to be typical
domain of IT and Data Security departments, where proper implementation and management
is strongly supported by already widely available sets of commercial tools, policies and
protocols.
We also contribute to DT literature by providing a comprehensive list of success factors
that synthesize and extend previous findings (Table 3). Our analysis shows that this list of
success factors is consistent with our case LSPs; however, depending on what has already
been achieved by an LSP in relation to its strategic, leadership, operational processes and
technological knowledge capabilities, success factors are ranked slightly differently.
The analysis presented that, similar to the previous findings, an important for DT success in
the logistics service industry are people –well-selected, trained, motivated and engaged. Our
findings show that employees commitment starts with a leader having and executing a DT
vision and goals. The leader, supported by managers, needs to create organizational culture –
visible in overt behaviors and physical manifestation (Mello, 2006)–reinforcing engaging
employees ofall levels and partners in DT via training them, developing their digital capabilities,
empowering them, encouraging their collaboration across boundaries, supporting their
“questioning attitude”, bottom-up initiatives and experimentation. According to the
experiences of our case LSPs, in order to get managers’, employees’and partners’support
for DT, it is necessary to outline the benefits of DT and to show them their new role in the digital
company. Workshops, presentations and pilots are just examples of the leading practices
which, combined with entrepreneurship of LSPs’employees and partners (Wagner, 2008), and
their adaptability (
Switałaet al., 2018) are highly effective. Our findings related to the success
factors and leading practices responding to employees’resistance to change overlap
considerably with those from the other industries (Kane et al., 2018;Osmundsen et al., 2018).
They have been discussed in change management (Oakland and Tanner, 2007;Oliveira et al.,
2018), as well asin the logistics and supply chain management literature (Van Hoek et al., 2002).
It is critical for LSPs of all digital maturity levels to guide employees toward the goal of DT in a
distributed environment, such as the logistics service industry. We conclude that leadership,
supportive organizational culture, and employee and partner engagement are success factors
perceived as most important by LSPs of different sizes, ranging from small startups to large
global players, with almost no difference in the maturity level.
Another very important group of factors to DT success in LSPs regards strategy and
strategic capabilities. Our case LSPs pointed to aligning business and IT strategies which
responds to the lack of resources’barrier and is understood as the need for a continuous
adjustmentof business and IT strategies with resources within the DBS aligning process (Yeow
et al.,2018). These aligning actions iteratively reconfigure organizational resources and refine
strategy in order to respond to both changes in the environment and internal tensions within an
LSP. We recognize them as a strategic dynamic capability which builds on the organizational
agility, allowing for LSPs’fast adaptation to changing situation. Our findings show that
Digiraties, which have already developed DBS, see strong advantages of this approach. They
consider aligning strategies brings them closer to technology companies’management style
and allows to limit different types of tensions. Interestingly, Conservatives ranked this success
factor higher than Digiraties and Fashionistas as many of them aim to advance their DBS.
Next group of success factors relates to operational and process capabilities. They are
critical in order to respond to the main DT barrier in LSPs, i.e. complexity of logistics system
and underlying processes. Our analysis revealed the important role of simplification and
standardization, regardless the digital maturity of company. This could be successfully
achieved by applying lean management principles and techniques, such as value stream
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mapping, measuring takt-time and 5S, as already reported in the literature (e.g. Hadid and
Afshin, 2014). Similarly to Bortolotti and Romano’s (2012) findings, our case LSPs follow the
“lean first, then automate”rule which helps them optimize the resources they use, also human
resources and streamline processes (including standard and customer-dedicated ones) before
going digital. Moreover, simplification and standardization limit the number of mistakes and
translate into better quality service. It is gaining importance when preparing the workplaces
for new generations of fluctuating employees used to a simplified world.
Moreover, our analysis showed the emerging role of agile management in the DT of LSPs,
particularly among Digiraties and Fashionistas. It is built on LSP’s organizational agility
which allows for fast adaptation to changing environment (Fuchs and Hess, 2018). In order to
operationalize it within customer-specific solutions based on digital innovations, case LSPs
organize small cross-functional teams to pursue alignment with their members. The teams
include but are not limited to key account managers who identify clients’needs; operation
people who define objectives and processes to satisfy these needs and drive the project and IT
people who support sensing technological opportunities. Team members also mobilize and
reconfigure resources. Fashionistas and Digiraties especially acknowledge agile
management practices when working with startups.
The final success factor on our list relates to knowledge capability which is critical for any
innovation (Busse and Wallenburg, 2014). In our study, this success factor is strongly related
to technology capability. Our case LSPs of different maturity levels, aware of their and the
whole logistics industry shortcomings in this area, open their innovation process to their
suppliers, technological partners and startups. Digiraties and Fashionistas are most
advanced in this. Conservatives see advantages of this approach and start following them.
5.2 Managerial implications
The identified barriers, success factors and associated leading practices provide a reference
point for practitioners and are helpful in guiding managers from LSPs as well as from other
complex industries. Based on the findings, we propose five recommendations for LSP
managers who are undertaking DT.
First, the findings suggest that developing a DT vision and DT goals as a part of DBS is
beneficial. Our case LSPs found that involving key stakeholders, who will be impacted and
whose engagement will be critical for future DT efforts, is helpful. Their understanding of goals
and objectives ensures early buy-in, focus and ongoing support in achieving the DT goals. At
the same time, having a strong leader of DT, who will communicate the vision throughout the
organization and provide its execution with stronggovernance, is critical. The leader, supported
by management team, is also valuable for developing an organizational culture facilitating DT.
Second, a valuable step is to dedicate time and commitment to enhancing the engagement and
training of people critical for DT success. Leading practices which helped our case LSPs in this
process include communicating DT goals, encouraging employees to bring-in new ideas, organizing
workshops that develop digital capabilities and strengthen a “growth mindset”,establishing
“training the trainer”programs, developing business cases andimplementingpilot projects.
Third, from the beginning of a DT journey, it may be worthwhile to put significant
attention and effort into the simplification and standardization of processes. Even though it is
typically very difficult and time consuming, the subsequent digitalization of standardized
processes provided our case companies advantages. LSPs in our sample indicated that these
efforts focused on processes do pay off.
Fourth, LSPs are advised to consider selecting and adjusting relevant technological
solutions for the specific purpose derived from their clear business objectives. This activity
was recognized by our case companies as a critical layer that supported the integration of
streamlined processes and underlying business applications and systems.
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Finally, the case analysis suggests that it is beneficial to break DT implementation down
into projects and stages, with the step-by-step application of the agile project management
approach so that a business continuity of operations is assured and the impact on existing
relationships with clients is minimized. It makes sense to consider DT as an ongoing and
continuous process in order to be able to respond to the dynamic environment, tough
competition and evolving clients’expectations, so it is important to regularly review and
update the portfolio of digital projects, so as to be ready to implement it when and where (in
case of multilocation LSPs) appropriate.
5.3 Limitations
Despite the applied methodical rigor, this study has some limitations that need to be taken into
account when interpreting its findings and conducting future research. We conducted semi-
structured interviews with top managers responsible for DT for large and advanced LSPs in
terms of digitalization. Their organizations typically have the largest budgets and know-how in
any transformation projects; however, they are operating in more complex networks.
Future studies could investigate if there are any differences in barriers and success factors
with DT in medium- and small-sized companies. Scholars could also apply quantitative
methods to examine the importance of each success factor and to test the identified
contingencies (size and digital maturity) or other contingences such as owner structure, or
scope of services. It could also be interesting to check success factors for DT at different
stages of the process, i.e. preparation, implementation or diffusion.
Note
1. DBS understood as the fusion of digital strategy and business strategy.
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Corresponding author
Marzenna Cichosz can be contacted at: marzenna.cichosz@sgh.waw.pl
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Appendix 1
Interview instrument
1. Introduction
(1) Could you please briefly introduce yourself and your current position. What is your experience
with digital transformation (DT)?
(2) What do you understand by DT? How would you define it?
(3) How would you evaluate the digital maturity of your company using the digital maturity matrix
(Figure 1)?
(4) Is your company rather uniformly positioned in the matrix or different business units or
country organizations are very different in their matrix positioning?
2. Digital Transformation –General Questions
(1) Does your company have a digital business strategy (DBS) [1]? If not, does it plan to implement
it? When?
(2) What was your company’s motivation behind DT implementation?
(3) What are the objectives of the DT?
(4) What is the value proposition of DT for clients/carriers/employees?
3. Digital transformation –Barriers and success factors
(1) How does your company manage the DT?
(2) What specific challenges and barriers did your company face during the DT process?
(3) How did your company overcome these barriers?
(4) Which factors were important for a successful DT?
(5) What is the feedback from your employees about the DT?
(6) What are the next steps for extending the DT?
4. Conclusion and outlook
(1) Please draw a brief conclusion. What are the most important barriers and success factors for
digital transformation of your company?
(2) What were the major learnings for your firm and for your personnel from the DT?
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Appendix 2
Mean
total
Mean
Digiraties
Mean
Fashionistas
Mean
Conservatives Ranking
DF CTotal Digiraties Fashionistas Conservatives
n517 n57n54n56
Barriers
Complexity of logistics network and
underlying processes
7.57 7.17 8.00 7.80 1 1 1 2
Lack of resources including skilled
resources
6.79 6.5 F5.33 8.00 DF 22 4 1
Technology adoption 6.29 6.17 5.67 6.80 F33 3 3
Resistance to change 5.71 5.00 6.00 6.40 D44 2 4
Data protection and security breach 4.64 4.83 5.00 4.20 5 5 5 5
Success factors
Leadership* 9.36 8.75 9.67 9.9 1 3 1 1
Supportive organizational culture 8.57 9.00 C9.00 C7.80 2 2 2 4
Employee and partner engagement 8.57 9.33 FC 7.67 8.20 F21 3 3
Aligning business and IT strategies 8.14 8.17 F7.00 8.80 F45 5 2
Process standardization and data
integration
7.14 8.83 FC 6.33 5.60 5 4 7 6
Employee knowledge and skills
development
6.93 7.67 C6.67 6.20 6 6 6 5
Agile transformation management 6.29 7.17 C7.33 C4.60 7 7 4 8
Leveraging internal and external
knowledge
5.93 6.67 C6.00 5.00 8 8 8 7
Note(s): Rating scale 1 (not important) –10 (critical)
*During the course of the research the success factors “leadership”and “DT vision and goals` were merged into one; the values are calculated as the mean of
both
D, F, C, DF, FC –marking of mean difference in barriers and success factors”evaluation between Digiraties (D), Fashionistas (F) and Conservatives (C) only if
absolute mean difference is higher than 1 (the threshold based on expert knowledge)
Table A1.
Ranking of barriers
and success factors to
DT in the logistics
service industry
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