The Third-Party Logistics in the UAE Thesis

Abstract

This research investigation analyzed factors that have led to Third-Party Logistics (3PL) adoption in Shiseido Group Middle East FZ LLC, Dubai – United Arb Emirates (UAE). The investigation emerges from the lack of empirical literature regarding the use of 3PL plans to improve the performance of Middle East firms. Primary data was collected from 10 informants who worked in the same company as the researcher. The researcher used the thematic and coding method to analyze the data and the findings revealed that the scope of doing business, quality concerns, and sociocultural factors affected the rate of 3PL adoption in UAE enterprises. The evidence adduced in the report was consistent with those of other researchers who have investigated the effects of 3PL adoption in western firms. However, the moderating role of sociocultural factors on understanding the impact of 3PL adoption emerged as a unique quality representing Middle East organizations. Thus, an overlap of experience in 3PL adoption was evident in western and Middle East business contexts.

Introduction

Background and Rationale

As businesses expand their operations into new markets, they often have to make a decision regarding whether to maintain their traditional operational plans or outsource some of them to maintain their expansion streak. In these relationships, outsourcing arrangements are often developed when a business contracts another entity to perform functions on their behalf (Choi, 2022). In the context of this study, outsourcing is referred herein as Third Party Logistics (3PL) planning. It is a relatively new method of operations management that has been applied in multiple business environments.

Based on the above-mentioned definition, the implementation of 3PL plans occurs when a company outsources the services of another to carry out its core supply chain management functions, such as warehousing and distribution. The idea behind its adoption is fixated on the idea that a company can benefit from increased efficiency if it contracts another company to perform non-essential functions (Fredriksson et al., 2021). Therefore, it is assumed that outsourcing supplementary business functions would free up a company’s resources for the speedy completion of core tasks (Giuffrida et al., 2021). However, these outcomes have not always emerged as predicted because each business setting has different operational dynamics that affect 3PL adoption.

Outsourcing relationships are conceived within the broader concept of Supply Chain Management (SCM). SCM is a unique area of business performance associated with the transportation, distribution, and warehousing of goods and services (Moori and Valdir, 2020). SCM is primarily focused on creating material, linkages through various levels of supply chain management. The traditional method of supply chain planning for creating material linkages has been pegged on inventory control (Etokudoh et al., 2017). However, contemporary research studies have gone a step further to link material and informational procedures as key tenets of SCM (Fredriksson et al., 2021). The result has been the presentation of core supply chain management processes as part of corporate strategy management. In this regard, some of the limitations of early works on the integration of systems theory in supply chain management processes are mitigated. This progress signals the need for developing improved information systems as part of the process for addressing supply chain relationships.

As an important concept in business process management, SCM is associated with the improvement of a company’s competitive position. This outcome is plausible because firms with robust SCM systems perform better than their counterparts who do not share similar systems (Delbufalo, 2018). Robust supply chain management systems are known to increase an organization’s agility and flexibility, especially in managing logistical problems affecting business operations (Sayed and Agndal, 2021). These changes are important to businesses if they are to survive in today’s uncertain environment.

Due to the uncertainty permeating in the global business environment, firms are finding it increasingly important to collaborate with one another. This plan has helped to create synergies and capabilities across different areas of supply chain management (Moori and Valdir, 2020). However, despite the push by companies to use 3PL services to manage some of their core operations, services often vary in suitability and may not necessarily yield desired results (Wang et al., 2020). Indeed, some scholars argue that despite the hype around its adoption, 3PL has not always yielded the expected results (Lee, 2022). This finding means that businesses have to critically evaluate the suitability of 3PL in their operational plans before choosing to adopt it. The present study stems from this focus of the investigation because it seeks to analyze factors that lead to the adoption of third-party logistical services in the UAE.

Significance and Motivation of Study

The interest surrounding the adoption of third-party logistics services in the business environment has sparked debate regarding the impact of outsourcing on corporate performance (Thunberg and Fredriksson, 2022). However, most discussions in supply chain management that involve the adoption of this technique in business operations have been skewed towards its implementation in a western business context. Conversely, this biased focus of the analogy means that there has been minimal interest paid towards understanding factors that are relevant to the adoption of third party logistics in a non-western business setting (Thunberg and Fredriksson, 2022). The present study will contribute towards the fulfilment of this growing body of literature by providing insight into factors to consider before the adoption of third-party logistics.

The researchers had the option to use different strategies to undertake their investigations. The major ones included case studies, action research, experiments, surveys and archival research. Given that the present study focuses on analyzing factors leading to 3PL adoption in the Middle East, a case study approach was selected for use in the study. This technique is associated with the development of nuanced research findings (Management Association, Information Resources, 2021). This is the premise for developing the current investigation because it focuses on the UAE business context. The selected case study was conducted at Shiseido Group Middle East FZ LLC Dubai-UAE, which is the same organization that the researcher works for. Shiseido is a multinational company involved in the sale and distribution of beauty, fragrance, and cosmetic products. The main types of goods sold by the company include skin care, make up, body and hair care products. The case study focus of the current investigation means that the adoption of 3PL will be undertaken within the beauty and cosmetics industry.

As an employee of Shiseido Group Middle East FZ LLC, Dubai – UAE, the findings of this study will be relevant to the development of the researcher’s professional practice in supply chain management. The insights gathered from the investigation will notably be relevant in improving the operations of UAE firms by providing a guided and more insightful approach of integrating third party logistical services in key corporate activities. Therefore, the insights developed from the current case study will be useful in highlighting unique opportunities and challenges that the UAE business environment portends for companies intending to use third party logistics.

Research Questions

The research questions underpinning the current probe are designed to help achieve the above-mentioned objectives. They are listed as follows:

1. Which factors should be considered before adopting 3PL in the UAE?
2. What is the impact of adopting 3PL in UAE’s business environment?
3. What risk factors are associated with the adoption of 3PL in the UAE?
4. What are the merits and demerits of adopting 3PL in the UAE?

Research Objectives

The aim of this study is to analyze factors leading to third party logistics adoption in the UAE. It stems from the lack of empirical literature on the adoption of 3PL in non-western companies. Therefore, the priority for the current study is to highlight nuances in the Middle Eastern business environment that influence the adoption of 3PL. To this end, the current probe is contextualized in the UAE and the objectives that guide it are listed as follows:

1. To establish factors associated with the adoption of 3^rd party logistics in the UAE
2. To find out the impact of adopting third party logistics in the UAE business environment
3. To identify risk factors associated with the adoption of 3^rd party logistics in the UAE
4. To recommend strategies that UAE companies can use to enhance 3PL integration plans

Further Chapter Outline

This dissertation contains six main chapters – introduction, literature review, methodology, findings, discussion, and conclusion. The introduction section provides a background of the research topic and sets the stage for the implementation of subsequent steps in the research process. The literature review section is the second chapter of the dissertation and it contains an analysis of the current state of research on the topic of the study. To this end, this literature review section evaluates the theoretical and conceptual foundations of the research topic and reviews empirical literature discussing various areas of business performance affected by 3PL adoption. At the end of this chapter, the gap in the research that justifies the current probe will be identified. This section of the study is followed by the methodology part, which highlights strategies the researcher followed in meeting the goals of the study. As will be explained in subsequent sections of this study, the researcher collected primary data using the interview method and sampled the views of 10 respondents working for a Dubai-based company.

The findings developed from implementing the above-mentioned strategies are highlighted in the fourth chapter of the investigation, which is the findings section. It presents an overview of the main themes that emerged from the interview process together with an analysis of how the same findings compare and contrast with those of previous scholars. The fifth chapter is the analysis section and it debunks some of the major myths of outsourcing relationships. Additionally, it highlights unique benefits that companies can enjoy from its adoption. This discussion formed the basis for identifying factors that should be considered when implementing 3PL plans. The last chapter in this investigation is the conclusion and recommendation section, which summarizes key findings of the study and outlines possible strategies that could be formulated and implemented to improve the adoption of third party logistical services in UAE companies.

Literature Review

This section of the study evaluates the current state of research on the topic of investigation. The purpose is to highlight what other scholars have said on the stated subject as well as highlight the relevance of the present study to the wider body of empirical literature associated with the adoption of 3PL in supply chain management. The last section of the study highlights the gap in the current body of empirical evidence and explains the place for the present study in filling this gap.

Theoretical and Conceptual Review

This study employs agency and systems theories to investigate the research topic. They are integrated in the study because it is important to undertake a theoretical and conceptual review of information associated with the integration of 3PL in supply chain management systems. Employing this technique in the current probe makes it possible to understand the foundations for developing outsourcing plans in supply chain management. The agency theory is relevant to the concept of supply chain management because it explains the implications of managing different relationships in the consumer value chain system (Delbufalo, 2018). Particularly, this theory explains the modalities for managing the relationship between principals and their agents.

In the context of this review, the principal is the company that outsources its services to another entity and the agents are all relevant parties involved in implementing this plan. The agency theory ensures that stakeholders involved in implementing an outsourcing plan incur the least cost in implementing such a strategy (Delbufalo, 2018). They are equally expected to realize operational synergies while doing the same because outsourcing should merge different capabilities of a firm to create a superior operating environment.

Research studies have associated the agency theory with issues of ownership and control in organizations. The theory is mainly preoccupied with improving the relationship between buyers and suppliers by paying attention to elements in their relationship that would improve efficiency (Delbufalo, 2018). This strategy of governance is important in managing supplier relationships because they often exhibit opportunistic behaviors if left unmonitored (Scott, 2019). This conduct can undermine the value for money that clients pay for outsourcing some of their activities or in adopting such relationships to get superior goods and services (Solakivi et al., 2021). In the context of this discussion, these opportunistic behaviors are evident when suppliers promote selfish interests at the expense of those that would serve the broader team. Therefore, the agency theory is implemented as a strategic tool for managing behavioral hazards that occur from the implementation of outsourcing relationships.

Alternatively, the systems theory traces its roots to developments in the natural sciences, such as physics, and biology. However, over the years, the model has gained prominence beyond this scientific scope to acquire an economic focus that can explain relationships between different firms (Eweje and Bathurst, 2019). The identifiable feature of the systems theory is its focus on understanding the totality of organizational decisions, as opposed to fragments of it (Eweje and Bathurst, 2019). This relationship is relevant to the field of organizational management because firms are believed to be either closed – manageable, or open – unmanageable (Choi, 2022). Given that supply chain systems involve players that are known to one another, the systems theory argues that such schemes are closed or manageable.

As its name suggests, the systems theory focuses on explaining the impact that organizational structures will have on outsourcing relationships. It draws attention to the importance of understanding unique structural dynamics of daily firm operations that may impede or aid in the implementation of organizational decisions (Hutchins, 2019). Therefore, in the context of the present study, the institutional plans associated with supply chain management are assumed to have a significant impact on the success of outsourcing plans.

Proponents of the systems theory argue that there is a continuous chain of functional processes that underpin an organization’s activities (Hutchins, 2019). The role of the systems theory in explaining changes to supply chain management systems is linked to materials management. Particularly, it is associated with materials flow and not necessarily the transfer of information across different layers of management and operation (Eweje and Bathurst, 2019).

Empirical Review

Etokudoh et al. (2017) investigated the implications of 3PL adoption in the oil and gas industry of Nigeria. The investigation sampled the views of 40 respondents working for three multinational companies using the interview technique. The probe was on understanding the implications of 3PL in the Nigerian oil and gas industry (Etokudoh et al., 2017). The findings of the study imply that community issues, vendor capabilities and employee reactions posed the most significant challenge to the implementation of 3PL (Etokudoh et al., 2017). The researchers also pointed out that relationship management, contract framing, and change management were the three most commonly used tools for managing perennial challenges. These issues affected the overall pace of adopting 3PL by forcing oil and gas companies to implement it in piecemeal. At the same time, the research study indicated the existence of a significant potential to harness the benefits of 3PL. However, the study can harness synergies between local vendors and international companies need to develop more robust findings.

A study by Zhong et al. (2019) suggested different ways of integrating the capabilities of local vendors and their international counterparts. It drew attention to the importance of using digital tools of trade and communication to achieve this goal. However, it emphasized the importance of ensuring that all negotiations and contracts developed between companies and their vendors are based on an equitable revenue sharing model (Zhong et al., 2019). The researchers likewise suggested that duties and responsibilities associated with each of the partners involved need also be based on the revenue model. The implications for these findings is that 3PL adoption can be a reliable basis for which managers can use to develop business relationships between 3PL service providers and their clients. In spite of the abundance of evidence adduced above, the importance of having robust frameworks for promoting the adoption of third party logistics ought to be emphasized if the findings are to be enriched.

The seminal works of Lee (2022) examined the importance of matching supplier competencies with task complexity as a tool for 3PL management. The findings were developed from evaluating the outsourcing performance of Chinese manufacturing firms. Data was collected using online surveys across corporate and academic fields within China. The informants included university students and top executives of international and local firms based in China. After sampling their views, the evidence indicated that task complexity undermined the performance of outsourcing relationships (Lee, 2022). The implications for these findings on SCM is that the goodwill created when developing contractual relationships is a formidable tool for managing the complexity of tasks associated with outsourcing processes. If the authors promoted good stakeholder relationships in SCM, they could undermine the negative effects of task complexity on 3PL practices. Nonetheless, despite the negative effects of task complexity on firm performance, some researchers have pointed out that the benefits of outsourcing are likely to overshadow those of other techniques adopted in the corporate space.

Based on the recognition of task complexity in SCM, Ma et al. (2022) supported this view through a research study aimed at assessing the risk of outsourcing. The findings indicated that outsourcing relationships are generally risky. However, they give companies autonomy of operations, which equally gives them control over important business functions. The implications of this assertion on SCM is that each type of leverage adopted in the study allows them to improve business performance by exerting more control on activities that are critical to the realization of the good performance of an organization. However, all stakeholders need to be involved in the process to realize positive results.

In a related study, Omrani et al. (2017) indicated that the main challenge associated with the adoption of 3PL in the healthcare sector is the lack of clarity on which services should be outsourced and which ones to maintain. The findings were developed after sampling the views of 56 health professionals. The implications of these findings is that healthcare services are a risk to human health and may require specialized training and skills before task transfers are completed. Thus, it emerged that the workplace environment associated with the healthcare industry makes it problematic to adopt 3PL successfully. To this end, health stakeholders should come up with comprehensive strategic plans that would guide the adoption of 3PL.

Relative to the findings highlighted above, Zare et al. (2018) similarly analyzed the impact of outsourcing on healthcare services and repeated the same concerns mentioned above. He additionally pointed out that outsourcing is an important process in healthcare service delivery because of the influence of technology on the provision of services (Zare et al., 2018). This descriptive analytical study was conducted in 2017 and it involved an analysis of the views of IT and accounting experts working in the healthcare industry. The findings imply that the lack of skilled personnel to implement aspects of Information Technology (IT) is an impediment to the adoption of 3PL in the healthcare sector. However, concerns about the security of patient information should be addressed to make this process successful.

Besides the healthcare sector, the implications of 3PL have also been examined by Taponen and Kauppi (2020) who compared the impact of outsourcing decisions on private and public sectors. Their aim was specifically to understand factors that are needed to support outsourcing relationships in the public service sector. To accomplish this goal, the researchers used multiple case studies for conducting assessments and evaluating results. The findings implied that the public service sector trails the private division in successfully integrating 3PL. The same finding means that decision-making processes in the public service sector were slower and poorly resourced. To address this problem, organizations should introspectively examine their service functions to understand which activities to outsource and maintain.

Relative to the above findings, Ma et al. (2022) likewise conducted a similar study to evaluate the impact of outsourcing decisions on the performance of firms in the construction industry. The researcher employed a dual methodology characterized by the collection of primary and secondary data. The latter was done through archival research, while primary data was collected from 48 informants who worked in senior managerial positions in the construction industry (Ma et al., 2022). The findings of the study revealed that restrictions on outsourcing decisions, as well as an organization’s strategic needs and objectives all played a role in influencing the impact of outsourcing on business performance. The implications of the study findings are that 3PL is relevant in bridging the knowledge gap between cost and capability concerns. Nonetheless, the researchers ought to have expanded their sample population to develop findings that can be generalized further.

A study authored by Fredriksson et al. (2021) similarly investigated the impact of outsourcing relationships on the performance of firms in the construction industry. The authors indicated that the use of 3PL in the construction industry is gaining prominence but it is still a relatively new idea. The investigation was designed to understand how structural and management functions of supply chain management impacted firm performance. The evidence generated from the investigation was developed using a case study approach and involved the collection of views from 24 professionals who worked in 13 multinational firms operating in the Swedish construction industry (Fredriksson et al., 2021). The findings implied that logistical design patterns were a source of competitive advantage in the industry. However, the setup and organizational design of the logistics plan should play a critical role in improving firm performance.

A Chinese-based study conducted by Lai et al. (2022) equally evaluated the impact of outsourcing on business relationships in the construction business. After sampling the views of 13 industry experts working in the Chinese construction industry, the researcher found that most firms are driven by a desire to reduce their costs, improve efficiency, and enhance their technological capability when developing their outsourcing strategies (Lai et al., 2022). The findings of the investigation implied that the level of a firm’s technological progress significantly impacted its ability to integrate its services with those of other companies. Technology also influenced a firm’s outsourcing practices by defining the platform through which supply chain management relationships were formed (Lai et al., 2022). However, researchers should pay attention to legal restrictions in the institutional environment because they play a significant role in influencing the impact of 3PL on firm performance.

In a different study authored by Solakivi et al. (2021), differences in the adoption of 3PL plans in Europe were analyzed in Estonian and Finnish business settings. The aim of the investigation as to find out whether the different economic systems adopted by the two countries impacted the effectiveness of outsourcing relationships on corporate performance (Solakivi et al., 2021). After conducting the investigation using two survey variables, it was discovered that the Estonian logistics supply chain industry was relatively underdeveloped compared to Finland. The findings of the investigation implied that, the cost of integrating 3PL plans in Finland were higher than those in Estonia. Thus, implementation costs were important in assessing the success of 3PL.

The impact of institutional systems on the performance of outsourcing plans has been explored by researchers, such as Sayed and Agndal (2021). They investigated the impact of laboratory information systems on the performance of offshore firms. The investigation was undertaken by evaluating the outsourcing relationship between western firms and their Indian subcontractors. The findings implied that information control used by parent companies to manage their overseas operations acted as tools of neo-control in the market. To address possible concerns, the demand for specific services by western firms should be managed because they create a hierarchy of control in the local business context, thereby affecting their growth and structure.

The impact of outsourcing on organizational performance has equally been examined in the educational context with Choi (2022) suggesting that it portends significant benefits to learner. This study was focused on understanding policy issues that impeded the integration of outsourcing plans. Particularly, it highlighted path-dependency heuristics in shaping educational policy. This investigation generated its findings from a systematic review of empirical literature developed after sampling the views of Korean and Hong Kong respondents (Choi, 2022). The findings of the study implied that path-dependency interactions occur at specific stages of the outsourcing plan. However, to get optimum results, it is important to understand agency relationships between school heads and the institutions they serve as a predictor for the success of outsourcing relationships. Overall, the researchers concluded by saying that school heads should be provided with a facilitative environment that allows them to better appreciate the advantages of 3PL by breaking down elements within the education system that constrain their actions and creativity.

Overall, the empirical evidence analyzed in this chapter suggests that integrating the activities of third-party logistics services in the structure of an organization requires an integrated supply chain management system to be developed. This framework is likely to merge the operations of the vendor and supplier in one framework or platform of operation. This kind of system integrates different aspects of logistical planning and material management operations to create a robust model of outsourcing arrangement.

Research Gap

The main interest for analyzing the adoption of 3PL in business is promoting internationalization processes for local UAE companies, such as Shiseido Group Middle East FZ LLC Dubai-UAE. After examining the economic reasons for adopting outsourcing plans in this literature review, it could be assumed that third party logistical services have helped international companies to navigate the logistical challenges of cross-border trade. Particularly, the evidence adduced in this section of the study shows that 3PL has helped companies to address logistical uncertainties of operating in new markets.

At the same time, the pieces of literature reviewed in this study have shown an increased trend of researchers to explore the implications of 3PL adoption in supply chain management systems domesticated in western and specific Asian countries, such as China. In terms of the willingness to adopt 3PL, the construction industry received the highest mentions in this review, followed by the healthcare sector. This focus of present investigation stems from an existing interest to explore the implications of outsourcing on organizational performance. Therefore, the attention on supply chain management, as a unique area of academic interest, is refreshing. It provides a contextualized understanding of the impact that 3PL has on specific operational plans within the broader corporate management system (Thunberg and Fredriksson, 2022). Indeed, as has been adduced in this study, different functional areas of an organization have unique characteristics that may moderate the impact of outsourcing. The focus on maintaining business relationships as a function of successful outsourcing strategies has also emerged as an interesting area of research. These lines of academic interest indicate that there is a growing breadth of research describing the impact that outsourcing plans have on business performance.

The most successful outsourcing relationships are often developed when the quality standards of in-house and outsourced teams are similar. However, the research studies sampled in this review mentioned multiple factors that are relevant to the suitability of 3PL in various sectors of the economy. This approach to strategic management is consistent with global corporate management principles, which strive to meet strategic corporate goals through SCM improvements (Moori and Valdir, 2020; Etokudoh et al., 2017). Particularly, the role of availing adequate financial resources in training, skills development, and strategic planning has been highlighted in texts that have focused on organizational management (Management Association, Information Resources, 2021). Consequently, researchers emphasize the importance of having both monetary and non-monetary support in accomplishing 3PL plans.

Overall, a gap that emerges from the above discussions is the lack intense focus on non-western organizations as the basis for evaluating the impact of 3PL on firms. This plan has been implemented at the expense of other firms that do not share similar backgrounds. Particularly, there is a lack of focus on the impact that 3PL adoption would have on Middle Eastern firms. The present investigation seeks to fill this research gap by analyzing factors that could lead to the adoption of third-party logistics in the UAE.

Methodology

This chapter contains a review of the techniques that the researcher adopted to complete the present investigation. The format for the analysis is based on the research onion framework proposed by Management Association, Information Resources (2021), which outlines six layers of analysis, which include research philosophy, approach, method, strategy, time analysis, and data collection/analysis.

In terms of research design, three techniques are commonly applied – exploratory, descriptive, and causal. An exploratory investigation refers to a research study whose outcomes are unclear (Saunders et al., 2019). Comparatively, the descriptive research design adopts a systematic approach in investigating a research phenomenon, while the causal technique explains the cause and effects of different research variables (Ahmed and Meryem, 2019). Based on the characteristics of the designs defined above, the researcher adopted the descriptive approach because the outcomes of the current probe were unknown.

In terms of research philosophy, the researcher had four major philosophies to consider – positivism, interpretivism, postmodernism, and pragmatism. Proponents of the positivism research philosophy believe that societies shape individuals and not individuals shaping society. Comparatively, pragmatism is based on the premise that research techniques should be prioritized based on their suitability to the research context (Saunders et al., 2019). Nontheless, the researcher used the interpretivist approach because it relies on scientific or mathematical proof to substantiate arguments (Ahmed and Meryem, 2019). Furthermore, it has a rich history of application in qualitative investigations, which is the main research context for the study. It supports the view that human experience should be used to justify or address research problems.

Related to the context of the investigation, the researcher had two options to consider – inductive and deductive techniques. The inductive framework collects evidence to develop a theory, while the deductive method looks for evidence to test a theory (Patrick, 2021). At the same time, the latter technique assumes a top-down decision-making model, while the inductive technique follows a bottom-up framework (Saunders et al., 2019). The inductive method was used in the study because the evidence developed from the investigation came from the views of employees based on their history and experience implementing 3PL.

In terms of methodological choice, the researcher considered the use of qualitative and quantitative techniques. Qualitative methods are those which employ studies that measure subjective variables, while quantitative investigations are those that measure standardized variables (Booth and Williams, 2021). The present study used the qualitative research method because of its exploratory nature. This technique does not constrain researchers on the type direction their research should follow (Saunders et al., 2019). Therefore, the qualitative method was consistent with the purpose of the investigation – to analyze factors leading to third-party logistics adoption in the UAE.

In terms of sampling, the researcher had the option to choose from convenience, random, snowball, and purposive sampling methods. The snowball technique is associated with the recruitment of a select group of respondents who recruit others to take part in a study (Saunders et al., 2019). Alternatively, the random sampling method gives respondents an equal chance of taking part in a study, while the purposive method relies on the researcher’s judgement to select who to participate in a study (Patrick, 2021). Relative to these definitions, the researcher used the purposeful sampling technique to interview ten colleagues. This method was selected because the researcher wanted to interview employees of Shiseido Group Middle East FZ LLC Dubai-UAE, who were knowledgeable about its SCM activities.

In terms of analyzing the time schedule for conducting the current probe, the researcher considered the use of cross-sectional and longitudinal techniques. The latter method is adopted in research contexts where the investigator collects data over a prolonged period (Management Association, Information Resources, 2021). Comparatively, the cross-sectional research method is employed in instances where the researcher collects data in one time (Patrick, 2021). The present investigation fits this profile because the researcher collected data in only one instance throughout the course of the investigation. Therefore, the cross-sectional research technique fit the description of the current investigation.

Interviews were used as the preferred mode of data collection because of their interpersonal nature. As highlighted above, the researcher accessed the respondents because they were colleagues working for the same company. The interview had nine open-ended questions to give the researcher unlimited ways of responding to the probe (see Appendix 1). The researcher’s familiarity with the informants made it simpler to accommodate varying time schedules of the discussions. Thus, the researcher was flexible to conduct interviews at any time of the day and at a place within the workplace that was convenient for the respondents. The methods used by the researcher to preserve the data collected form the informants formed a critical area of ethical assessment in the present investigation. This concern has been highlighted by researcher such as the Management Association, Information Resources (2021) who have highlighted its importance in effecting ethical leadership. To meet the expectations of set out in these guidelines, the researcher ensured that the information collected from the interviews were stored safely in a computer and secured with a password that was privy only to the researcher. At the end of the investigation, the information stored in the computer will be destroyed to preserve the confidentiality of the participants’ data.

In terms of data estimation, researchers point out that there is no standard way of analyzing data from qualitative investigations (Management Association, Information Resources, 2021). Instead, the choice of data analysis technique is influenced by the purpose of a study (Ahmed and Meryem, 2019). However, given that the present research was qualitative, the researcher adopted the thematic and coding method for analysis. Broadly, the thematic and coding technique contains six levels of data analysis, including familiarization of data, generating initial codes, searching for themes, reviewing themes, defining themes, and final write-up. These steps guided the researcher’s data analysis process and the procedures adopted highlighted below.

Table 1. Steps followed in the thematic and coding method

The thematic and coding method provided the researcher with several advantages, including helping them to identify themes or patterns in interview data (Gibbs, 2018). Researchers have widely adopted this technique in social research investigations because it fits exploratory and deductive research discourses (Patrick, 2021). Stated differently, it is a good fit for research investigations where the researcher has no idea what to expect from the study and in scenarios where the focus of the investigation is relatively known. These characteristics aligned with the exploratory nature of the current study.

The last part of the research probe related to the ethical treatment of the informants. Indeed, researchers have a fiduciary duty to protect the interests and rights of respondents when taking part in a research study (Saunders et al., 2019). Particularly, the use of human subjects in academic investigations portends several ethical implications some of which touch on the duties of researchers to comply with institutional rules of ethical research and the role of informants in giving accurate information (Booth & Williams, 2021). Subject to the ethical implications defined above, two areas of ethical focus emerged from the present investigation – informed consent and anonymity/confidentiality. In terms of informed consent, employees who chose to take part in this study did so voluntarily. In other words, the researcher did not coerce or incentivize them to give their views about the topic of study. At the same time, respondents were free to withdraw from the investigation at any point in time. In the same breadth of analysis, the researcher recognized the importance of protecting the identity of the respondents by presenting their views anonymously. Similarly, to maintain the confidentiality of their private data, no personal identifiable information, such as the respondents’ names, race, religious affiliations, and similar data were included in the investigation. This strategy of protecting the informants is consistent with the recommendations of Etokudoh et al., (2017) who advocates for the anonymous presentation of data to protect the identities of informants. It is believed that this plan made the respondents feel safe and assured that their involvement in the study would be of no repercussions to their personal or professional lives.

Research Findings

As highlighted in the methodology section of this study, the data collection process was undertaken using the interview method. According to the interview schedule highlighted in the Appendix section, the informants were asked several questions relating to the adoption of 3PLs in the UAE. Their views are summarized in six thematic areas as highlighted below.

Meaning of Third Party Logistics

The first question posed to the respondents related to their understanding of third party logistics. To recap, 10 interviewees responded to this question and all of them linked it to outsourcing services. This response was consistent with research investigations that have equally drawn a link between 3PL and outsourcing services (Omrani et al., 2017). Particularly, they paid attention to the implications of third party logistics on supply chain management services by saying it offers a support system for an overwhelmed organizational structure. Relative to this statement, one of the respondents remarked as follows,

Well… I believe that third party logistics mean that a company seeks the support of other entities to accomplish specific tasks or processes. These activities mays stretch further beyond the traditional scope of supply chain management systems to include value additional services that improve business processes. Conversely, these services are ordinarily attached to the availability of auxiliary services that these service providers can offer their clients. For example, a company that can offer warehousing services for its clients can equally provide transportation services, thereby creating additional value to the business relationship.

One of the respondents sampled in the study gave a more definitive description of 3PL by saying it refers to the management of all shipping activities related to the Shiseido. He further mentioned that most of the outsourced relationships feature the use of integrated technological systems to manage all supply chain management functions on behalf of its clients. His mention of the integrated transport management system was consistent with the responses of the other informants who equally highlighted it as a common example of outsourced company services. An integrated freight management system was also mentioned by two other respondents who mentioned its relevance in the management of finished products from overseas factories and markets.

Implications of Adopting Third Party Logistics

The respondents sampled in this investigation suggested that outsourcing services has several implications on the management of corporate affairs. Seven of them mentioned its adoption positively by saying it streamlines operations and improves efficiency in the company. Two others suggested that it helped to free up organizational tasks by allowing third party entities to perform mundane tasks, such as accounting, while freeing up other resources to complete core tasks and activities. Relative to this assertion, one of the respondents said,

I believe that third party logistics helps companies to harness the potential that unrelated businesses could offer to their core value proposition. I have seen it improve efficiency in business processes by integrating different value chains to create synergy in business operations. At the same time, it helps to improve transparency and accountability to business operations because third party entities have to be accountable for the value they instill in a business relationship.

Three of the respondents who took part in the study equally mentioned the management of supply relations as one of the implications of 3PL adoption. They argued that the inclusion of new business partners in such unions introduces the need for prudent and sound stakeholder relationships to manage varying interests. One of the respondents who remarked this way, said he preferred working in departments that have a lean operations management system that does not involve 3PL. he believed the extra layer of operational control makes it difficult to control product quality.

The respondents similarly said that the adoption of 3PL will help to streamline efficiency gains in an organization. This outcome is possible through the integration or interfacing of different operational procedures in an organization. One of the respondents gave the example of the firm’s supply chain management functions, which have been streamlined through the inclusion of input from external players or parties. Another respondent drew attention to the adoption of 3PL on the organization’s resource plan. He said that the organization’s strategic management framework is primarily based on its ability to finance recurrent and future plans, including those that involve supply chain management systems. Likewise, he argued that such frameworks should be based on the availability of organizational resources as opposed to any other considerations.

A different respondent support the views of the respondent mentioned above by drawing attention to the need to prioritize resources in in 3PL implementation. She said outsourcing has significantly overstretched the organization’s resources because it deems resource implications as the primary impact of 3PL adoption. Therefore, all other considerations for implementation, including community acceptability and business process compliance, are secondary concerns.

In this context of the review, the informant suggested that a resource-based view of supply chain management should help to marshal all organizational resources – man-made or artificial – towards the protection of unique values and benefits that can help in the integration of outsourcing plans in the firm’s supply chain management value chain. The relevance of integration and collaboration was highlighted in intra and inter-organizational settings as the basis for effective and efficient resource distribution. To this end, the informants preferred that Shiseido Group Middle East FZ LLC Dubai-UAE should collaborate with some of its partners to keep up with the changing resource requirements for 3PL implementation. In this analysis, they believed that basing the success of 3PL adoption on the company’s resource capabilities would help to redesign spending plans to only concentrate on areas that are of importance to the success of an organization.

Basing the aforementioned corporate developments on the capacity of organizations to provide resources for implementation emerged as a strategy for helping Shiseido Group Middle East FZ LLC Dubai-UAE to develop and maintain agility in 3PL implementation. Broadly, they argued that their recommendations would help the company to align its 3PL plans with the objectives and goals of the organization. Likewise, one of the informants believed that it helps companies to develop separate capabilities that would allow them to fulfil their strategic goals and objectives.

Implications of Third Party Logistics on Order Fulfilment, Delivery Lead time, and Inventory Accuracy

The implications of implementing 3PL on order fulfilment, delivery and lead time emerged as another theme in the investigation. It was supported by research studies which have highlighted the relationship between third party logistics implementation and various aspects of supply chain management systems. In the area of order fulfilment, all the ten respondents sampled in the investigation responded affirmatively by saying that 3PL has helped the company to better fulfil its orders. One of the respondents said this situation was unlike past practices where the company’s supply chain manager had to supervise all aspects of the delivery system. Relative to the positive impact that 3PL has had on the company, one of the respondents said,

Third party logistics helps to improve order fulfilment rates by enabling various agents in our business ecosystem to specialize on their core areas of operation. For example, a company that manufactures goods by contracting a third party to transport the same products to the market cannot complete both tasks effectively, as would be the case if both tasks were allocated to different entities.

In terms of delivery lead times six of the informants argued that 3PL has helped the company to reduce its lead time. At the same time, two of the respondents were unsure how to answer this question because they gave instances where 3PL helped to reduce lead times and alternative situations where the same indicator worsened. Therefore, they expressed a neutral view regarding the impact of 3PL on lead times. Respondents who argued that 3PL helped to reduce lead times pointed to increased efficiency and the adoption of better inventory management systems as the main indicators for this outcome. Relative to this assertion, one of the respondents said,

Delivery lead times have declined as well when third party logistics were integrated into business processes. Using the example I have just mentioned you… you can understand how delivery lead times are reduced. I mean…uhhm…when a transport company is contracted to offer support services to a manufacturing company…their specialization in transport services enables them to reduce the time it would take for goods to reach their destination based on the superior transport network that the transport company would have.

In terms of inventory accuracy, all the respondents said that 3PL adoption improved accuracy levels. They attributed this outcome to the presence of sophisticated systems of data management and integration offered by most vendors. One of the informants remarked that the top tier vendors in the industry make few mistakes in terms of inventory accuracy. Therefore, their data can be used reliably to formulate supply chain management decisions.

Merits and Demerits of Adopting Third Party Logistics

The decision whether to adopt 3PL services, or not, usually depends on an evaluation of the merits and demerits of the plan. This consideration emerged as a core theme in this study because it highlighted unique factors relating to the operations of Shiseido Group Middle East FZ LLC Dubai-UAE and the suitability of 3PL. Relative to this statement, seven of the respondents acknowledged the demerits of 3PL, while the rest believed that Shiseido Group Middle East FZ LLC, Dubai-UAE did not have anything to lose by adopting 3PL. Subject to this outcome, one of the respondents said,

There are several advantages and disadvantages associated with adopting the technique. In my experience, I believe that the suitability of each method depends on the dynamics of the business or industry involved. For example, I would not recommend having third party logistics services in service-oriented businesses because of the challenges associated with managing multiple business relationships. I mean…It may look easy but managing outsourcing partners in service-oriented businesses could be twice as hard as managing employees in one organization from a different industry.

In terms of the drawbacks associated with the adoption of 3PL, the respondents argued that cost and time concerns were the most commonly mentioned reasons for the failure to adopt such practices. Those who mentioned cost concerns believed that outsourcing increased operational costs, while those who criticized it on account of taking too much time believed that this type of relationships are difficult to manage. One of the informants argued that 3PL creates a loss of control for the company if it initiates an outsourcing relationship. This concern was voiced after the respondent expressed her frustration on the poor reliability of some vendors and her inability to control the outcomes. Relative to this statement, she said,

You see…If they were my employees, I would simply talk to them or take appropriate disciplinary action. However, in outsourcing relationships, we are basically at the mercy of our suppliers. Therefore, it is difficult to maintain order in such situations.

Relative to the above findings, one of the respondents said that the adoption of 3PL without proper financial advice may be detrimental to the future performance of an organization. Consequently, it is important for managers to understand the financial implications of 3PL adoption before undertaking such a plan. The common expectation expressed by most of the informants was that 3PL adoption should improve the financial performance of a business and not burden it some more. This condition drew attention to a statement made by three of the informants who stated the importance of a resource-based feasibility study before adopting 3PL. They indicated that the failure to ensure the availability of adequate resources of implementation was one of the biggest contributors to the failure of some firms to benefit from 3PL adoption.

Suitability of Adopting Third Party Logistics in the Company

The suitability of adopting 3PL in an organization depends on its suitability to the desired environment. This theme emerged as a core tenet of analysis in the interview process when the respondents were asked to explain the suitability of 3PL to the operations of the company and their role in the process. Three of the ten informants sampled in the investigation said they were not directly involved with the implementation of third party logistics management plans, while four believed that they were. The remaining three admitted to proactively being engaged in the implementation of 3PL activities in the organization. These sets of responses showed the varying roles of the informants in the organization. One of them who opposed being directly involved in 3PL implementation said as follows,

I am not involved in the implementation of third party logistics services because those kind of decisions are made by the highest levels of business management. You see…in the UAE and most parts of the Middle East, many executive decisions are made by top tier executives who may not necessarily consult other workers when making such important decisions. Personally, I do not see a problem with it but it excludes most of us who understand the importance of using third party logistics services in today’s turbulent and uncertain business environment.

The three respondents who admitted to being directly involved in 3PL implementation hailed it as a solution to some of the problems facing Shiseido Group Middle East FZ LLC Dubai-UAE. They believed that the firm benefitted from the process by allowing the organization to free up some of its resources from the accomplishment of mundane tasks to the fulfilment of core business activities. In terms of suitability, they argued that the firm was receptive to a 3PL plan because its business culture and structure recognizes the input of additional players in the company’s business model. Relative to this assertion, one of the respondents said as follows,

I mean…we are designed to augment our core services with those of other parties out of the company’s scope of influence because we are an international company. Most of our systems are designed to withstand several shocks, unlike traditional organizational models that are rigid and may collapse when a foreign entity usurps powers from any department.

One of the respondents who affirmed the above statement highlighted differences in business cultures between international and local UAE firms as the basis for determining the suitability of 3PL. He said that UAE firms are largely modelled to mimic international models of governance but cultural influences have made the technique less suitable for some organizations. Notably, family-owned firms were identified as having the least suitability levels with 3PL, while larger firms could easily absorb their effects. The argument made for this distinction was predicated on the varying cultural orientations between Small and Medium Enterprises (SMEs) in Dubai and large international companies that operate in the same space. Thus, it was concluded that 3PL systems were more suitable for large multinational companies as opposed to smaller ones.

Advantages and Disadvantages of Adopting Third Party Logistics

Companies often adopt outsourcing services after evaluating the merits and demerits of doing so. The research informants who took part in the present study were aware of the advantages and disadvantages of adopting 3PL, based on their experience in the workplace. Three of the respondents argued that 3PL had more advantages than disadvantages, thereby making it attractive to firms that strive to scale their businesses. The respondent made a notable reference to multinational companies and their potential to leverage outsourcing services for better resource efficiency, as highlighted below.

As I have indicated, the suitability of third party logistics to a company should be subject to the nature and dynamics of the industry or organizations involved. However, in our company, I consider improved efficiency to be one of the basic advantages of adopting third party logistics services. I believe it is so because there are several untapped operational areas that could be merged or outsourced to free up more resources for the fulfilment of core services. On the flip side, I would say that the adoption of third party logistics in the company would complicate the administration of supply chain management services by creating different centers of command. Therefore, it is important to ensure that the goals of the new partners are consistent with those of the organization.

One of the respondents said that 3PLs increased the efficiency of business operations by making it simpler and more efficient to carry out specific tasks. He notably mentioned the relevance of including 3PL in operational planning because it allows companies to keep up with the latest technology. Referring to the impact that automated integrated service models have had on supply chain management systems, this respondent believed that the pace of technological development in this sector was too rapid to keep up with. Relative to this assertion, he said,

Hiring a third party to complete certain supply chain management tasks is not only a good but necessary idea. Think of it this way, there are so many developments going on in the supply chain management sector. With a company that has vast operations such as Shiseido, it would be difficult to compete with another business entity that exclusively focuses on SCM. There would be no competition because that is what they do every day. On the technological front….3PLs has helped us to stay abreast with the latest developments in the SCM sector. This way, we are never left behind…:”

Another respondent said that 3PLs has helped the organization to expand to new markets that would have otherwise been difficult to access. He said the company lacks the knowledge and intelligence to manage a robust SCM system in new markets. Seeking the support of third-party entities helped to familiarize the company with these new markets. When asked to elaborate on this issue further, the respondent clarified that they have experienced challenges in availing their products to remote areas of the UAE. Particularly, the company found it difficult to service customers who reside in emerging metropolitan areas around Dubai without a 3PLs plan. Relative to this assertion, the informant remarked as follows.

The challenge with emerging markets is the lack of reliable marketing intelligence about new customers and markets. Sometimes we get surprised at how cheap or expense servicing certain markets is without the adoption of 3PL. I would say that it varies…However, we have found that some partners are more tolerable about the market than we are. Therefore, we rely on their understanding and expertise to navigate existing challenges before we develop our strategy. Therefore, they act as “curtain raisers” of sorts before we fully get acquainted with the market and develop our distribution plan.

Another respondent who took part in the investigation alluded to the relevance of 3PL in improving customer services. She said that 3PL helps to increase an organization’s awareness of the issues that affect their customers. The involvement of third-party players in the relationship between a company and its customers helps to give managers a fresh perspective on how to improve the same. Indeed, third party players come with a unique and unbiased perspective on how the relationship between the two can be improved, thereby laying the foundation for the improvement of customer services. These benefits have been achieved by

Summary

The findings of this study reveal that the respondents largely held favorable views about outsourcing relationships. However, there are challenges to implementation that need to be addressed before its adoption. However, the solutions to be developed will be contextual because each market or institution shares its unique challenges and opportunities. These findings are further analyzed in subsequent sections below.

Discussion and Analysis

Based on a review of the views presented by the employees of Shiseido Group Middle East FZ LLC Dubai-UAE, several issues emerged as critical factors to consider before adopting 3PL services. One of them was the job designation of the informants because most of the informants were logistic coordinators, which means that they are actively involved in the daily management of 3PL adoption. Their views were depicted as follows.

Factors Leading to the Adoption of 3PL in the UAE

Factors leading to the adoption of 3PL services in international firms are varied and far-between. Some of these influences have been explored in the literature review section of this study, but the evidence presented in this chapter refers to different industries and business contexts. The present study assumes a Middle-Eastern focus of the research investigations and, based on the findings adduced from the respondents, the scope of business, expertise and quality assurance of the vendors, as well as opportunities for optimizing efficiency, emerged as factors that have led to the adoption of 3PL at Shiseido.

Scope of Business Operations

One of the main considerations for adopting 3PL is the scope of the projects associated with the plan. Particularly, the breadth of operations across the company’s main product divisions and markets creates an overwhelming environment for the company to sustain all functions efficiently. Consequently, there has been a need to outsource some of the company’s activities to offset this burden. This view is consistent with the assertions of Fredriksson et al (2021) who suggests that the most important criterion to evaluate the growth of a company is the variety and scope of its projects. The same challenge has been witnessed in the e-commerce space where retailers are struggling to maintain their presence across different layers of customer interaction (Ahmed and Meryem, 2019). The result has been overstretched company resources, thereby undermining the overall efficiency of its processes.

Companies have had to outsource transactional processes including human resource functions and payroll management activities. Accounting, customer and technical support services are also commonly outsourced in such kinds of relationships. The underpinning idea is that non-core services can be easily outsourced to concentrate on more important functions. The same approach has been evidently adopted in Shiseido to promote the adoption of 3PL. Relative to this statement, focusing on the scope of business as a determiner of 3PL adoption draws attention to ideas of the agency theory, which was discussed in chapter 2 of this document.

The basic assumption underpinning the agency theory is the belief that actors in a supply chain management system are individual utility maximizers and given the opportunity they would advance their interests at the expense of others. The concept of rationality emerges when evaluating the extent that the above-mentioned actors intend to maximize their interests. Here, the agency theory shares similar beliefs with classical economists who believe that people are rational actors.

The adoption of the agency theory has significant implications on supply chain management practices. For example, it contains mechanisms through which contractual agreements that address supply chain management relationships can be addressed (Rezaee et al., 2019). This plan also makes it possible to understand the transaction and agency costs associated with making such commitments. Based on the principle of rationality, the agency theory affirms the possibility of developing contractual relationships that cover all risks areas associated with contractual relationships. Agency costs that emerge from this process are results of contract drafting. Contract enforcement and monitoring activities also account for a significant percentage of agency costs.

Expertise and Quality Assurance

Developing sound businesses using outsourcing plans is not only dependent on the revenue increases to be realized from the implementation of the plan but also the quality of services to be offered. The expertise of the individuals who are expected to manage the outsourcing relationship also emerged as a critical factor to consider in the implementation of outsourcing relationships and plans. Research evidence indicates that increasing a company’s employee workforce should be part of the plan for maintaining outsourcing relationships (Choi, 2022). This is why some of the most successful multinationals invest their resources in upscaling employee skills as well as improving their mastery of digital tools (Choi, 2022). The result is a more satisfied consumer workforce whose needs are not only addressed online but offline as well.

The task of improving the quality of services offered by 3PL should be contextualized within the broader systems or processes associated with quality assurance. This statements stems from the proposals made by proponents of the systems theory to evaluate operational issues systematically and within the broader ecosystems in which they exist (Wang et al., 2020). Their suggestions indicate there is often a high demand for information in supply chain relationships because these ecosystems are today managed through efficient knowledge flow systems (Etokudoh et al., 2017). In this context of analysis, information overflow can often times distort operational plans, leading to over production or underproduction of goods and services. The respondents alluded to this concern when mentioning the drawbacks of 3PL adoption because they highlighted the importance of evaluating the suitability of outsourcing systems before implementing the concept. Thus, it is proposed that a systems-wide approach to supply chain management be adopted to address this problem (Wang et al., 2020). This technique is likely to address all unforeseen risks that may affect the wellbeing of the entire supply chain system. The sensitivity of Shiseido Group’s product to quality issues underscores the importance of managing quality issues holistically.

Effects of Culture on 3PL Adoption

The second chapter of this document highlighted the gap in the literature, which necessitates the current investigation. To recap, the review demonstrated that there was a lack of empirical literature regarding the adoption of 3PL in the Middle East business setting. Therefore, the current probe investigated the research phenomenon from the lens of a UAE-based organization. The main factors to be considered before adopting 3PL in the UAE are the same ones that other scholars who have investigated the research phenomenon in western business settings have reported. Efficiency gains, quality concerns, and scope of business activities have been mentioned as critical issues to consider before adopting 3PL in the case study.

The above-mentioned factors are universal considerations of business performance and they point to the converging interests of both western and Middle east companies regarding the importance of maintaining efficiency through 3PL. However, for a long time, researchers have pointed to difference in business dynamics between Middle east and Western companies. For example, the Hofstede model mentioned by Giuffrida et al. (2021) showed that western and Middle East companies have varying degrees of power distance and information control. Given that these cultural factors impact the performance of employees in both sets of cultures, it was important to investigate the role of cultural differences between Middle east and western companies on the findings of the investigation.

Overall, as highlighted in this chapter, the researcher was an employee of Shiseido Group, which is the focus of this study. According to Management Association, Information Resources (2021), studies that have high levels of researcher involvement could be probe to bias, which occurs when informants skew the study to fit a predetermined narrative based on their experiences in the firm. This risk was mitigated by subjecting the findings of the study to third-party approval before publishing the report. This technique is associated with improved reliability and validity of findings. At the same time, the above-mentioned bias was addressed through the adoption of the member-check technique, which works by seeking validation from the respondents about the findings of a study before its publication (Management Association, Information Resources, 2021). Broadly, these two techniques were instrumental in addressing researcher bias.

Summary

This chapter has highlighted techniques and procedures used by the researcher to conduct the investigation. The qualitative method was used as the primary research method, while interviews were deployed to get in-depth data regarding the adoption of 3PL in the UAE. The case study approach provided a contextualized framework for understanding the nuances in organizational planning and performance that influence 3PL adoption. At the same time, data that was gathered in the investigation was analyzed using the thematic and coding method, which is commonly associated with the analysis and development of qualitative data. The findings generated from implementing the above-mentioned techniques formed the basis for the development of the subsequent chapter.

The findings highlighted in this study have emphasized the need or a contextual understanding of factors that may affect the adoption of 3PL. Based on the primary data evidence sampled in this investigation and comparing these views with the teachings of existing research frameworks, the scope of doing business, and quality concerns emerged as key considerations for 3PL adoption at Shiseido Group Middle East FZ LLC Dubai-UAE. Culture played a moderating effect in determining how these considerations are addressed before the adoption of 3PL.

Conclusion and Recommendations

Conclusion

This study hails from a growing interest in the area of supply chain management, which is fixated on understanding the impact of third party players on firm performance. Four research questions guided the framework for this study and they included an exploration of factors to consider before the adoption of 3PL, impact of adopting 3PL in the business operations of UAE companies, risk factors associated with the adoption of 3PLlogistics as well as the merits and demerits of integrating it in UAE companies. The main factors associated with the adoption of 3PL included the scope of business operations, quality and service concerns, as well as business culture and traditions. These three elements of the investigation mapped out areas of business focus that managers should consider before developing a 3PL implementation plan.

The first two considerations are consistent with the views of other researchers who have similarly highlighted them as unique factors to consider before adopting 3PL. However, the unique sociocultural dynamics of a market, as a consideration for 3PL adoption, is unique to this study. This is because the UAE is a religious state with business customs and traditions stemming from sharia law and partly common law. The legal basis for the development of UAE laws itself signifies the need to appreciate local and international dynamics of factors impacting 3PL adoption. Therefore, the business culture and tradition of the UAE moderates the impact that 3PL will have on firm performance.

As has been evidenced above, the focus of the research investigation is solely on the UAE and factors that characterize its business operating environment. This focus of the investigation was deliberately made to fill an existing research gap, which is predicated on the lack of academic interest on the implications of 3PL adoption for Middle eastern companies. The current investigation showed that the goals and objectives of adopting 3PL for Middle Eastern firms is the same as their western counterparts. However, due to institutional limitations and cultural attributes associated with the UAE business environment, it has been difficult to achieve the same outcome for both parties. Thus, there is a variation in the performance of Middle Eastern firms, relative to their western counterparts – subject to the influence of culture and institutional control.

The findings generated from the investigation also highlighted the growing expectation that managers have when adopting 3PL. Cost and efficiency gains were the most common recognized expectations to be realized from this process. The underlying premise for holding this optimistic view of outsourcing is based on the understanding that 3PL adoption would lead to the reduction in logistical costs and operational times of supply chain management activities. This hope was the major driving force for 3PL implementation in various business sectors analyzed in this investigation Therefore, it can be defined as a universal expectation to action.

The findings generated from this investigation are consistent with the researcher’s experience as a Logistics manager because adopting custom outsourcing plans has helped to address the needs of Shiseido Group. Relative to this assertion, it could be assumed that low rates of success that are associated with the adoption of 3PL stems from the lack of specificity regarding the context of its adoption. Therefore, it is important for companies to develop outsourcing plans that suit unique company needs. Broadly, the findings of this study are relevant in explaining the impact of shouldering logistical services on various actors or players involved in supply chain management. This outcome highlights the need for a multi-actor perspective in promoting SCM.

Recommendations

The recommendations outlined in this section of the study relate to the possible opportunities for expanding the scope of the literature and improving the methodological rigor of future investigations. The first area of priority should be in taming the risks associated with 3PL adoption. In this area of assessment, a nuanced approach should be adopted to understand the research problem. Particularly, the challenges associated with 3PL adoption should be analyzed from a supply chain management perspective, as this is the focus of the current probe. Afterwards, it could be argued that there is a creeping complexity associated with contemporary logistical planning, which could be exacerbated by the inclusion of third-party players in an organization’s operational plans.

Integrating digital SCM tools could mitigate such risks by providing an early warning system for inconsistencies in policy application. Likewise, they could warn managers of potential losses to be realized from the implementation of the 3PL model. A reversed logistics model could help to minimize the uncertainty associated with such plans by determining the impact of outsourcing on organizational performance The evidence generated from the research informants indicated that supply chain uncertainty could be classified into different categories and addressed by anticipating potential risks and rewards. Therefore, the recommendations presented in the investigation promoted a contextualized understanding of the research problem.

Another area of strategic interest in the adoption of 3PL in the UAE should be relationship management. This study has demonstrated how different actors involved in supply chain management systems shift responsibility among one another. It similarly disclosed that the main responsibilities associated with SCM are cost planning, control functions, and the execution of supply chain management decisions. Based on the experiences of Shiseido Group Middle East FZ LLC Dubai-UAE, a new way of thinking in supply chain management that is predicated on relationship building should be introduced. In this framework of assessment, different actors may share responsibilities for managing the SCM. This proposal means that there should be a shift in responsibilities across different tenets of the supply chain management network to make the system more interactive and engaging. This way, it would be possible to know what each player in the system is doing. The proposed change should be accompanied with a similar transformation of tasks to entrench the practice.

On the academic front, future studies should consider analyzing the same research issue but from the perspectives of the 3PL vendors as opposed to the companies that contract them. The present investigation is based on the views of the latter category of respondents. It means that it is a biased representation of the outsourcing relationship that keeps 3PL active. The use of alternative voices to address the same research issue would bring a new perspective of understanding the research issue. In this regard, it would be possible to have a holistic outlook of the impact of 3PL adoption.

On the methodology front, future studies should consider tweaking the methodology selected for use in this study to find out if the same findings will suffice in a different research setting. To recap, the findings developed in the present research were generated after sampling the views of 10 respondents. Future researchers can use a larger sample of informants to investigate the same research phenomenon and establish whether the findings would be consistent or not. A larger sample size would help to increase the reliability of the findings because a small sample of respondents fails to account for the diversity of views that characterize the organization. Future researchers may also consider expanding the breadth of data collected in investigations to come because the current probe only generated primary data using interviews. Future scholars may use surveys or a combination of interviews and surveys to investigate the research phenomenon. Overall, adopting these recommendations is likely enrich the breadth of research data available for review.

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Appendix

Interview Questions

Dear Team,

Referring to the subject Analyzing factors leading to (3PL) Third-party Logistics adoption in our company and being an employee of Shiseido Group Middle East FZ LLC Dubai-UAE, I am currently organizing a short interview within our organization to have individual insights related to the subject. The objective of the research interview is to find out the advantages and disadvantages and to know if adopting 3PL helps and improves business operations specifically in Dubai United Arab Emirates.

I appreciate your time and effort in participating in this research interview and will assure you that the information shared will be used for academic research and will not be disclosed to anyone else.

Name of Participant : ____________________________

Designation : ____________________________

Years in service : ____________________________

These disparities changed the nature of the business environment in both countries, thereby influencing the impact of outsourcing plans on firm performance (Solakivi, et al., 2021). To get accurate measures of each variable analyzed in this research investigation, the researcher used logistics costs to measure market size. At the same time, logistics outsourcing plans were developed to exploit market leverage opportunities. Overall, this investigation showed that the intensity of outsourcing relationships affected integration costs and the likelihood that this variable would become insurmountable. Creating improvements in logistical support was likewise highlighted as a growing area of firm competitiveness (Solakivi et al., 2021). It could be exploited further to enhance corporate performance.