Improving the Warehousing Strategy at Hamburg International Shipping

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Improving the Warehousing Strategy

at Hamburg International Shipping

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IMPROVING THE WAREHOUSING STRATEGY

AT HAMBURG INTERNATIONAL SHIPPING

MARIE BRÜNING

University of Groningen Faculty of Economics and Business Master’s Thesis – MSc Business Administration

Specialization: Operations and Supply Chains

July 2010 Hahnenstraße 44 28309 Bremen, Germany Phone: 0049-421-413809 Email: bruening.marie@gmail.com Student number: 1605615

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PREFACE

In front of you, you have the final version of my Master’s Thesis. It is the graduation project of my Master of Science in Business Administration with the specialization “Operations and Supply Chains”. I wrote the thesis during an internship in the company Hamburg International Shipping. Constantly having an overview of the thesis’ topic presented an interesting challenge for me especially when it appeared to be a more complex task than it seemed to be in the beginning.

I want to use a few lines to express my acknowledgements. At first I thank my supervisors prof. dr. Dirk-Jan F. Kamann and dr. Linda L. Zhang. After the unconventional feedback meetings with prof. dr. Dirk-Jan F. Kamann I was sometimes more confused than before but solving these confusions gave me incentives to continue. In addition, I want to use this space to thank all fellow students of the Master programme for the constructive working atmosphere.

I would like to thank the Supply and Logistics department of Hamburg International Shipping. They never left a question unanswered and welcomed me warmly within the company.

Furthermore, I thank my parents who gave me shelter during the thesis writing period and my friends who distracted me every weekend successfully from the thesis.

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MANAGERIAL SUMMARY

Within the Supply and Logistics department of Hamburg International Shipping, there is a general discontent with the current warehousing strategy. There are several triggers that all together form the need to look for an improvement of the warehousing strategy. One trigger is the increase in capacity requirements for the warehouse because of the increase in the amount of vessels. Based on this a make-or-buy decision should be made. Another trigger is the department’s restructuring of which one consequence is that now two warehouses belong to the Supply and Logistics department. Furthermore, the expectation of a future market orientation to East Asia is formulated. It quickly becomes apparent, that the make-or-buy decision cannot be analysed in isolation. It is crucial to look at the quantity, location and ownership decision areas in order to be able to propose an all-encompassing improved warehousing strategy for Hamburg International Shipping.

In order to satisfy all stakeholders, the different opinions and requirements are recorded and analysed based on a theoretical framework. With the help of the defined company-specific performance objectives, arguments for and against different options are formulated and the most appropriate decisions are identified.

In order to have a structured surrounding of the optimal warehousing strategy, the whole supply chain strategy is analysed as well. This seems to be needed because until now many decisions are based on intuitions and the demand is perceived as very unpredictable.

The decisive factors in the quantity decision are the characteristics of the goods stored with regard to volume and weight as well as to the duration of storage. The result of the quantity decision is that the optimal number of warehouses is two. In one warehouse the relatively small and fast-moving goods are located which are currently stored in the P+P warehouse. In a second warehouse the goods from the Stolze warehouse and the goods belonging to Marine Service are stored.

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are mainly transported by air freight. The solution that satisfies all stakeholders to the highest possible extent is to locate the warehouse with the relatively light goods in Hamburg and the other one in Singapore which is identified as the most frequently supplied destination.

The ownership decision area which deals with the make-or-buy analysis is based on the objectives high flexibility and quality, availability of qualified workforce and the possibility of capacity extension. These are all arguments for outsourcing.

In order to structure the supply chain the paradigms agility and leanness are used, depending on the situational context. The former is applied to situations in which flexibility and speed are important whereas the latter is used when the focus is on costs reduction and efficiency. To sum up, having two outsourced warehouses in Hamburg and Singapore is the optimal warehousing strategy, embedded in a supply chain strategy that applies lean and agile principles.

The advantages of the recommended solution are summarized below in order to show the value of the proposed optimal warehousing strategy:

• Close headquarter proximity for warehouse in Hamburg

• Close customer (vessel) proximity, leading to high customer service, in Singapore • Good infrastructure in Hamburg and Singapore

• Protection of intellectual property in Germany and Singapore

• HIS’s future market orientation to Asia; Singapore as the gateway to Asia

• Large availability of logistics companies with specialized know-how in Singapore • Local presence through office in Singapore facilitates location search

• Possibility of supplier search extension in Asia

• High flexibility due to outsourcing and due to warehousing locations on two continents

• More structure in the supply chain strategy through uniform procedures

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transition phase, will be relatively easy with regard to the contractual agreements because no formal contract between Stolze and HIS exists.

For the warehouse in Hamburg, the existing contract with P+P should be compared to offers from other companies. Even if the relationship with P+P is extended, it is important to keep in mind that in the new situation the goods belonging to Marine Service are not stored in Hamburg anymore.

A long-term analysis in order to identify to which extent the lean and agile distinction can be applied to the shipments of Hamburg International Shipping should be conducted before the new principles are incorporated in the work processes.

All changes in the warehousing and supply chain strategy have to be explained in an early stage and carefully implemented in the department in order to prevent resistance to change among the employees.

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6.3.QUANTITY DECISION ... 42 6.4.LOCATION DECISION ... 45 6.5.OWNERSHIP DECISION ... 54 7 RESULTS ... 59 7.1.SCENARIO ... 59 7.2.SINGAPORE ... 62 7.3.RECONCILIATION... 63 8 DISCUSSION ... 64 8.1.IMPLICATIONS ... 65 8.2.LIMITATIONS ... 65 8.3.FURTHER RESEARCH ... 66 9 CONCLUSION... 68 10 RECOMMENDATIONS ... 70 REFERENCES ... 72 APPENDIX A: FLEETLIST ... 75

APPENDIX B: ORGANIZATIONAL CHARTS ... 75

APPENDIX C: INTERNAL PROCESSES ... 75

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APPENDIX E: QUESTIONNAIRE ... 76

APPENDIX F: OUTCOME OF THE QUESTIONNAIRE ... 78

APPENDIX G: TRANSPORTS ... 79

APPENDIX H: PICTURES OF P+P AND STOLZE WAREHOUSE ... 82

APPENDIX I: KEYPORT LIST ... 86

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LIST OF FIGURES

Figure 2.1.: Organizational Structure – HIS Group……….. 15

Figure 2.2.Hamburg International Shipping – Supp&Log………. 16

Figure 2.3.: Simple Supply Chain – HIS……….... 19

Figure 3.1.: Graphical Representation of Triggers………. 22

Figure 3.2.: Conceptual Framework……….... 24

Figure 5.1.: Factors Impacting the Warehousing Strategy..……….. 28

Figure 6.1.: Supply Chain Concept – Urgent/Standard Distinction……….. 43

Figure 6.2.: Destinations – Combined……….. 48

Figure 7.1.: SuppMan Warehouse in Hamburg………... 62

Figure 7.2.: MatMan Warehouse in Singapore………... 62

LIST OF TABLES

Table 2.1.: Increasing Amount of Vessels – SuppMan………... 13

Table 2.2.: Increasing Amount of Vessels – MatMan ……….... 14

Table 2.3.: Comparison of two Exemplary Vessels..………... 14

Table 5.1.: Factors Influencing the Quantity Decision………... 29

Table 5.2.: Factors Influencing the Location Decision…...……… 31

Table 5.3.: Advantages of Outsourcing……… 34

Table 5.4.: Risks/Disadvantages of Outsourcing………. 36

Table 6.1.: Performance Objectives – Quantity Decision………..…. 44

Table 6.2.: Goods in Warehouses .………..…. 45

Table 6.3.: Transports 2009 – Supp&Log……… 47

Table 6.4.: Performance Objectives – Location Decision………... 50

Table 6.5.: Performance Objectives – Ownership Decision………..…. 56

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LIST OF ABBREVIATIONS

Hamburg International Shipping = HIS Materials Management = MatMan Supply Management = SuppMan Supply and Logistics = Supp&Log Marine Service = MS

P+P Team Service GmbH = P+P Johann Stolze oHG = Stolze

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1 INTRODUCTION

Supplying the moving vessels perfectly. This is the goal of Hamburg International Shipping and should be kept in mind when making strategic decisions with regard to the supply chain and warehousing strategy. It seems to be an obvious and simple goal, but it actually contains a high level of complexity. The sentence includes the basics as well as the problems of this thesis. The verb ‘supplying’ refers to the area supply chain in which the thesis is established and to the Supply and Logistics department of Hamburg International Shipping which is the case department of the analysis. It is important to notice that the department is not responsible for the cargo on the vessel but for the supply of items that concern the vessel, the crew and the fastening of the cargo. The characteristic ‘moving’ describes the most critical problem in the supply as the destinations of transports are constantly – often unpredictably – changing. This takes the whole topic to a higher complexity level. ‘Vessels’ indicate the area in which the company is operating, namely shipping. The vessel is regarded as the customer. Taking the customer perspective means in this case looking for the best solution from the viewpoint of the vessel. Logistics can improve the customer service (Razzaque & Shen, 1998). A problematic issue it to identify what is meant by ‘perfectly’ because the meaning can be highly subjective.

In the late 1980s, literature started to recognize the potential power that logistics can have on companies’ success. This increasing strategic importance of logistics is pointed out by several authors, such as Chan, Kumar and Choy (2006), Christopher (1993), Fuller, O'Conor and Rawlinson (1993), Korpela and Tuominen (1996), and Sum and Teo (2001). The potential of logistics include, according to Fuller et al. (1993), creation of value for customers, source of savings, and extension of production flexibility. Most important, it can be a basis for competition. Logistics are seen as undermanaged which presents an opportunity. This thesis emphasises the important roles logistics can have for a company’s competitive position, its value for businesses in general and the case company in specific. Until now few managers see logistics as a way to create value and to differentiate a company from its competitors (Fuller et al., 1993). Literature that emphasises the power of logistics is further enlarged by this thesis. Therefore, this research has a high value for managers as well as for academia.

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in this thesis, comes from Stock and Lambert: warehousing is “that part of a firm’s logistics system that stores products […] at and between point-of-origin and point-of-consumption, and provides information to management on the status, conditions, and disposition of items being stored” (2001: 390-391). It is therefore an important part of the supply chain. Warehousing strategy consists of three main decision areas, namely quantity, location, and ownership (Korpela & Tuominen, 1996). These are strategic decisions as they have a long-lasting effect on the firm (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). This partly explains the great interest of practitioners and scientists on that issue (Korpela & Lehmusvaara, 1999).

The ownership decision which deals with outsourcing and insourcing further justifies the existence of this thesis. Recently, the amount of literature discussing the outsourcing decision in general is increasing. However, literature that is focusing on outsourcing one specific logistics function, for example warehousing (Moberg & Speh, 2004), is scarce. This is especially surprising as warehousing is the oldest form of outsourcing (Razzaque & Sheng, 1998), and one of the most frequently outsourced logistics activities (Langley, Allen, & Dale, 2004). Therefore, this thesis is useful as it focuses on the outsourcing decision in the specific area of warehousing. According to Moberg and Speh (2004), it is the responsibility of researchers to examine factors that may affect the outsourcing decision.

This thesis looks at each of the three decisions – quantity, location and ownership - as well as at the interrelations between them because it is assumed that one decision cannot be seen in isolation. Making these successive decisions is done with the example of Hamburg International Shipping’s warehousing strategy. Furthermore, the supply chain paradigms agility and leanness are reviewed in the light of the company’s requirements.

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2 COMPANY DESCRIPTION – CURRENT SITUATION

In the following, the current situation of the HIS Group is described. As background information, the company’s history and current corporate culture is described as well as the company’s growth. Then, the organizational structure with its recent changes is depicted. Afterwards, differences between the two warehouses are described before the supply chain is illustrated.

2.1. Company’s History, Growth and Culture

HIS Group was founded in 1995 by CEO Niels Stolberg. The headquarter is located in Hamburg which is a city in the north of Germany with a long shipping tradition. The company started as a cargo operator. After acquiring the first own vessel in 1997, the company specialized in customer-specific transport solutions in the project and heavy-lift segment. In the following years more and more vessels, built according to HIS Group’s wishes, were bought. Despite the fact that the amount of vessels increases, it should not be neglected that several vessels were sold during that period. The following tables contain solely the vessels that are still operated by HIS. The activities of the department that is discussed in this thesis, cover an increasing amount of vessels. The department is composed of two formerly separated groups which cover slightly different groups of vessels (table 2.1. and 2.2.). The Materials Management [MatMan] group supplies all vessels whereas the Supply Management [SuppMan] group is only responsible for supplying the vessels that are not chartered by other parties. The distinction will be revisited in later sections.

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Year ’98 ’99 ’00 ’01 ’02 ’03 ’04 ‘05 ’06 ’07 ’08 ’09 ’10* ’11* Amount of new vessels 1 3 0 0 0 2 6 10 10 13 7 12 17 6 Cumu-lative 1 4 4 4 4 6 12 22 32 45 52 64 81 87 Increase in % 100 % 300 % 0% 0% 0% 50% 100 % 83% 45% 41% 16% 23% 27% 7%

Table 2.2.: Increasing Amount of Vessels – MatMan, * expected

In addition to the increasing amount of vessels, the average size of the vessels is increasing. For instance, in table 2.3., the measurements of the vessels “HIS Emotion”, build in 2004, and “HIS Sao Paulo”, which will be finished in 2010, are compared. This exemplary comparison shows the differences in size between new and old vessels. The new vessels can carry heavier and bigger cargo which may lead to an extension of the company’s competitive advantage. The new vessels are build in Chinese shipyards. A detailed overview of the vessels can be found in the fleet list (appendix A).

Vessel LOA (Length Overall) Width Depth

HIS Emotion, 2004 138 m 21 m 11 m HIS Sao Paulo, 2010 166 m 23 m 14 m

Table 2.3.: Comparison of two Exemplary Vessels

The company has experienced a strong growth since its foundation. In the last years, HIS offices were opened in several cities on all continents, including Rotterdam, London, Stavanger, Houston, São Paulo, Mumbai, Tokyo, Singapore, Beijing, Shanghai, Johannesburg, and Sydney. Worldwide around 550 employees work in the HIS offices, most of them in Hamburg, and 1500 employees on board of the vessels. The HIS Group is also engaged in several social shipping-related activities. In 2005, for instance, the HIS Sea Academy which is HIS’s own educational institute opened its doors.

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2.2. Organizational Structure

The HIS Group consists of three sub-organizations (see figure 2.1.). Firstly, HIS Shipping GmbH is the umbrella organization and responsible for the strategic planning, human resources, marketing and accounting of the whole HIS Group. Thus, it is organized in functional areas. Secondly, HIS Chartering GmbH is organized in geographical areas and is responsible for chartering the fleet with cargo. In addition, there are, for instance, an operations and a transport engineering department to which the MatMan group belonged. Thirdly, Hamburg International Shipping GmbH`s [HIS] tasks are related to the crew on board, technical support and new vessels. This organization is structured according to tasks, such as new building, crewing and supply management. Within the SuppMan department, all employees are grouped into teams of about three people with one team leader. This department will be the main focus of attention within this thesis’ analysis. Organizational charts of HIS Chartering and HIS can be found in appendix B.

Figure 2.1.: Organizational Structure – HIS Group

Recently, a change within the organizational structure occurred. The groups that are affected by this change are marked in red in the organizational charts (appendix B and figure 2.2.). Initiated in November 2009, the MatMan group, belonging to HIS Chartering, was combined with the department SuppMan, belonging to HIS. Together, they form the new ‘Supply & Logistics’ [Supp&Log] department that belongs to HIS (see figure 2.2.). The reason for this structural change is that the tasks of both formerly separated groups are overlapping to a huge extent and it is expected that synergies can be achieved. This change has several consequences, like the fact that different employees work more closely together. Prior to the structural change, both groups had their own warehouse. Considerations of merging the two warehouses came up when the two groups merged. This point is also discussed in section 3.1.

Figure 2.2.: HIS Fleet Management – Supp&Log

2.3. Warehouses

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P+P Team Service GmbH. The warehouse of the former SuppMan department is

owned and maintained by the P+P Team Service GmbH [P+P]. The P+P warehouse is located close to the airport in Hamburg, 3 km away from the HIS headquarter. In addition to warehousing, P+P offers several other services, such as transportation within Europe with their own truck fleet, transportation to airports in north Germany, and air cargo handling at the airport Hamburg. P+P possesses a specialized know-how and qualified employees with regard to warehousing and air cargo handling. Furthermore, equipment for goods handling, like fork lifters that can lift up to 5 tons, are available. With regard to security, the site is closed and secured with a camera surveillance system. Officially, only authorized persons can enter the site. P+P uses a barcode system for picking and organizing the goods which is useful as a large amount of goods is already packed. Especially its location close to the airport Hamburg makes the company an attractive partner. Close to the airport Hamburg are not many other similar companies that are authorized for air cargo handling. Consequently, P+P has a monopoly position with a high bargaining power. HIS is one out of fifteen customers and rents most of the space at P+P.

Goods at P+P include overalls, office materials, filter spares, and test kits. The rented space is not fixed in m³ as the contract is not specified by the amount of cubic meters but by the amount of vessels for which goods are stored. The space occupied by HIS goods varies highly and is difficult to predict. If required, there is more space available in the P+P warehouse. Especially attractive for HIS is the service of air cargo handling at the airport Hamburg as P+P has the specialized know-how for these activities. In addition, HIS makes use of the following value added services of P+P: incoming and outgoing goods administration, picking activities, opening of packages, take and transfer pictures, disposal of waste and transferring information to HIS by phone. As mentioned before, the warehousing activities are administered according to the vessels. In this way, each product can be accounted to one vessel. In addition, the so called ‘Marine Service’ [MS] stores goods at P+P that are unspecified, thus all vessels can use these goods. MS buys them in huge amounts and especially when goods have long delivery times. If these goods are actually needed, they are transferred from MS to one specific vessel.

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department, on the other side, wants to get rid of these goods as they stay relatively long in the warehouse which increases the costs.

Johann Stolze oHG. In Hagen, close to Bremerhaven, is the second warehouse of HIS

located which belongs to the MatMan group. Johann Stolze oHG [Stolze] owns the warehouse and performs the warehousing activities. The warehouse is located in the countryside, 40 km away from the HIS headquarter, which has the advantage of lower storage and labour costs. Furthermore, it is relatively close to the ports Bremerhaven, Hamburg and Bremen. Storage space is available inside as well as outside and can be extended.

The core activities of the company Stolze is trading with construction materials. The main purpose of the warehouse is to store these construction materials. Due to the fact that the main business of Stolze is not warehousing, expert know-how in this area does not exist. This is also true for knowledge about the HIS’s material. Stolze owns a few trucks and fork lifts for handling the goods. In addition, HIS placed one additional forklift suited for heavy goods on the site. Recently, HIS installed its own desk and computer within the Stolze warehouse in order to have a working place on site if required. However, it is only used seldom. At Stolze, no barcode system is employed and the goods are unpacked.

HIS is the only external party that stores goods in this warehouse but no formal contract exists. The goods are stored inside and outside on floor and rack storage. In addition, outside are large racks which are flexible with regard to the distances of the rack arms. Examples of goods stored inside are airbags, bottom twist locks, triangle plates, chain saws as well as lifting and lashing materials, like lashing grommets, shackles, and lifting nets. Other goods are stored outside, such as wood, H-beams, steel bridges, stacking frames, steel wire ropes, and heavy load platforms.

The two warehouses are not completely separated. Relatively heavy goods that belong officially to the P+P warehouse are often stored in the Stolze warehouse due to fact that there is more space available.

Temporal Warehouses. In addition to the above described warehouses, HIS stores

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there is more capacity available. In Spain a few other goods are stored which are not used anymore. Only the sale of these goods still has to be organized.

2.4. Supply Chain

The following paragraph describes and illustrates HIS’s supply chain with a specific focus on lead time as it will become a crucial topic in the course of this thesis.

When looking not only at the warehousing strategy but on the whole supply chain, the improvement may be higher. Figure 2.3. shows the supply chain of HIS in a very basic form. The work of HIS starts when the vessel or a person responsible for the vessel orders items. HIS either orders the required goods at a supplier and sends them directly to the vessel, or HIS takes the goods from one of the warehouses (where the supplier sent the goods some time before) and sends them via a carrier to the vessel. The goods are transported by truck and/or air. For each transport, several carriers are contacted in order to get the best offers available. In some cases, the service of a courier is used. After the goods arrive at the vessel, a notice is send from the corresponding vessel to the HIS office. In addition, agents in each port are in direct contact with the captains and the HIS office. Internal process descriptions can be found in appendix C.

1 Supplier Warehouse 2 Transport Vessel

Figure 2.3.: Simple Supply Chain – HIS

Lead time in its broad sense is defined as “a span of time required to perform a process […]. In a logistics context, it is the time between the recognition of the need for an order and the receipt of goods” (Schönsleben, 2007: 10). In the case of HIS, lead time is, therefore, the time between HIS’s recognition of the need for an order from a vessel and the receipt of the good by the vessel. A detailed lead time composition is displayed below.

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In many destinations the customs clearance time is longer than the transportation time. However, the customs clearance time can hardly be influenced by HIS, therefore, the HIS’s main intention is to shorten the transportation and administration time.

The customer order penetration point [COPP] is “the point in time at which a product becomes earmarked for a particular customer” (Schönsleben, 2007: 40). As shown in figure 2.3., there are two points where the order can penetrate the supply chain. At which point the order penetrates depends on whether the items are on stock or not. In the case of HIS, items that apply to the following categories are stored: Firstly, items that have a long production lead time. The production lead time can be defined as long if it exceeds the acceptable total lead time of the vessel minus transportation, customs clearance, and administration time. However, the acceptable lead time can differ greatly depending on the order’s urgency. Therefore, the decision if a production lead time is classified as long or short is difficult to predict. The second reason for having items on stock at HIS is discount purchases. These can be calculated for each item by taking into account purchasing costs, warehousing costs and risk of obsolescence.

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3 PROBLEM STATEMENT

Within HIS, there is a general discontent with the current warehousing strategy which leads to the consideration of a strategic change. The dissatisfaction is triggered by several factors which are described in the following. From this description, the research question and the conceptual framework are derived.

3.1. Problem Finding

An overview of the triggers described in this section can be found in figure 3.1. It is the result of several interviews with information gatekeepers at HIS.

Firstly, P+P has relatively high prices. Due to its monopoly position and the resulting good bargaining power, the company is able to charge these prices.

Secondly, with regard to Stolze, the problem of low professionalism is described. Stolze is not a specialist in warehousing activities.

The third point which leads to a general dissatisfaction of the current situation is the low representation value of the Stolze warehouse as it is located on the countryside and is rather old-fashioned.

The fourth point has a historical background. In the beginning of the short company’s history, several decisions were taken intuitively. This means that no calculations were made and historical data was not available. The warehouse location decision is one example. The minimum stock levels of the goods are based on intuition and personal experiences. Another indication for this approach is that no contract between Stolze and HIS exist. The relationship is solely based on personal verbal agreements. As the company is growing quickly, there is an increasing need for more professionalism.

The HIS Group is dealing with project- and heavy lift cargo which is a sector that is only slightly affected by the current economic crisis. However, this event raised questions about reducing warehousing costs within HIS which displays the fifth trigger.

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Finally, one implication of the structural change (section 2.2.) is that there are now two warehouses belonging to the Supp&Log department. Therefore, the question of combining both warehouses comes up as a logical next step after merging MatMan and SuppMan which could result in economies of scale.

Figure 3.1.: Graphical Representation of Triggers

3.2. Research Questions and Conceptual Framework

According to Cooper and Schindler, a research question is “the hypothesis that best states the objective of the research; the answer to this question would provide the manager with the desired information necessary to make a decision with respect to the management dilemma” (2006: 716). As described in the previous section, there are many reasons that trigger the need for a warehousing strategy improvement, and thus a supply chain optimization. The management dilemma refers to these triggers. The management question focuses solely on the ownership decision with regard to warehousing. After the first literature search and semi-structured interviews, it became clear that the initial management problem, namely the ownership decision, cannot be determined in isolation. The location and quantity decisions have to be taken into account as well because the outcomes of these decisions influence the input of the ownership decision. The resulting research objective is to find a solution for the requirements of HIS with regard to warehousing that conforms to their performance objectives. The following research question and sub-questions are derived from the management problem and the problem finding and explain the aim of the research more differentiated:

What is the optimal warehousing strategy with regard to the company-specific performance objectives of HIS?

• Which performance objectives are crucial for the company? • What is the optimal supply chain paradigm?

• What is the optimal quantity of warehouses? • What is the optimal warehouse location?

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The related conceptual framework (figure 3.2.) explains the basic idea of this thesis. A very large amount of performance objectives have been identified in literature – ranging from traditional objectives like cost and speed, to recently emerging objectives like environmental friendliness. These performance objectives can be applied to the whole supply chain of a company or to one part of it. Up to now, they are mainly applied to the production part. This thesis applies traditional as well as modern performance objectives to the warehousing strategy. It is assumed that each company focuses on other performance objectives. This has an influence on the optimal warehousing strategy for the respective company. Following this thinking, the performance objectives have to be identified before an optimal warehousing strategy – consisting of three sub-decisions – can be recommended. In this way, ‘performance objective’ represents the independent variable which influences the three dependent variables which depict together the warehousing strategy.

The conceptual framework in its current state cannot be applied to a case company because the independent variable ‘performance objective’ has to be replaced by the concrete objectives that are identified for the actual case company. Therefore, at this state of the model, it cannot be determined how exactly (positive or negative) the performance objectives influence the warehousing strategy decisions because the effect will be different for each company-warehousing strategy combination.

The first and basic hypothesis is that the company-specific performance objectives influence the warehousing strategy decision.

As already introduced before, warehousing strategy is in this thesis divided into three sub-decisions. Therefore, the second hypothesis states that the company-specific performance objectives influence the amount of warehouses (i.e. quantity decision).

The geographical distance means the distance between the warehouse and the headquarter or between the various warehouses, depending on the outcome of the quantity decision. Next to the outcome of the quantity decision, the company-specific performance objectives influence the geographical distance (i.e. location decision). This depicts the third hypothesis.

The final hypothesis is that the company-specific performance objectives influence the degree of ownership (i.e. ownership decision).

It becomes obvious that the three sub-decisions influence each other. This is a logical result of the fact that all three interrelated decisions together display the warehousing strategy.

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performance objectives of HIS. In addition, the optimal supply chain paradigm is analysed which is seen as the environment of the warehousing strategy and the conceptual framework.

Figure 3.2.: Conceptual Framework

4 METHODOLOGY

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descriptions and contracts, and historical data from the company, like warehousing measurements. Additionally, platforms like the HIS intranet and the ERP system ‘Navision’ were consulted. Based on all these data, several analyses were made, for instance of warehousing costs and transports.

Reviewing the theoretical literature in the area of the research helps the researcher discovering what is already known in this area, which theories are used and what are still open questions (Flick, 2006). The literature background on the research topics was derived from several sources in order to have a realistic picture of the current academic state. Books about supply chain management were consulted as well as a broad range of articles published in internationally acknowledged journals, such as ‘Supply Chain Management’, ‘International Journal of Production Economics’ and ‘European Journal of Operational Research’. During the information collection much attention was paid to the reliability and of the sources. The use of trustworthy and reliable literature was favoured. Access to academic literature was provided by the Library of the University of Groningen.

After the basics, in the form of the company’s current situation and a theoretical framework, have been identified, the data gathering method of questionnaires was employed. Three information gatekeepers were asked to fill in a questionnaire developed with a graphical rating scale which enables the researcher to discern fine differences (Cooper & Schindler, 2006). With the help of these questionnaires, the company-specific performance objectives were identified on which the warehousing decisions were based.

5 THEORETICAL FRAMEWORK

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five are combined in section six. The combination of topics in this thesis will result in useful implications for the business world and interesting impulses for academia.

5.1. Warehousing Strategy and Supply Chain Management

Warehousing is an important part of a logistics system as it often displays the link between producers and customers. To have a clear understanding of the main thesis’ concept, the definition of Stock and Lambert is repeated here: warehousing is that “part of a firm’s logistics system that stores products […] at and between origin and point-of-consumption, and provides information to management on the status, conditions, and disposition of items being stored” (2001: 390-391).

There are numerous reasons for holding inventory, thus different functions of warehouses. One of the most often displayed reasons in literature is to achieve transportation economies by consolidating shipments from multiple sources into one single shipment (Ballou, 2004; Korpela & Tuominen, 1996; Stock & Lambert, 2001). Many transportation providers encourage large-size shipments by offering discounts (Simchi-Levi et al., 2008). The second reason is to take advantage of forward buys and quantity purchase discounts which are often offered by distributors and retailers (Ballou, 2004; Simchi-Levi, 2008). Thirdly, changing market conditions can be met with inventory (Schönsleben, 2007). The final reason is to secure against long delivery lead times (Ballou, 2004).

Supply chain management. Warehousing strategy should always be in line with the

supply chain management and supply chain strategy that deals with the whole logistics network. The topic supply chain management can be seen as the environment of this thesis’ topic. Only a definition and different supply chain concepts will be described here because they will be revisited later in this thesis. Supply chain management is “a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements” (Simchi-Levi et al., 2008: 1).

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decision making authority, narrow spans of control, and formal procedures and practices to which people strictly adhere. This rigid organization focuses on efficiency and is used when stable conditions are present (Wienclaw, 2009).

Agility, on the other hand, means “using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile marketplace” (Naylor et al., 1999: 108), thus in unpredictable environments with a high need for flexibility. An organic organizational structure matches best with this paradigm. An organic organization has a flat structure, less formal practices and procedures, and decentralized decision making authority. It is appropriate to organizations that have “a continuing need for ongoing problem solving and flexibility to adapt to unforeseen requirements for actions that cannot be articulated or solved a priori” (Wienclaw, 2009: 3). A detailed overview of the different attributes of lean and agile supply can be found in appendix D.

It is possible to divide the supply chain into upstream and downstream parts by using the COPP concept. Recent research focuses on applying the ‘leagile’ paradigm which results in a hybrid supply chain by bringing together the best of both - leanness and agility (e.g. Christopher & Towill, 2000).

Warehousing strategy decisions. As described before, warehousing strategy consists

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Figure 5.1.: Factors Impacting the Warehousing Strategy

In the following (sections 5.2.-5.4.), lists of factors that influence each decision area are compiled. It becomes obvious that some factors are contradicting each other, for instance high customer service and low costs. Trade-offs like these are often found in supply chain research (Slack & Lewis, 2008). The lists are later utilized to find out the company-specific performance objectives.

5.2. Quantity Decision

In literature, the main difference with respect to the quantity decision is made between single site and multiple sites. Thus, whether two or more sites are considered is less relevant. A single warehouse location is simpler and “avoids the need to consider competitive forces, division of demand among facilities, inventory consolidation effects, and facility costs” (Ballou, 2004: 551). Schwartz (1999) recognizes an increase in the importance of consolidation and optimization in the warehousing industry. Thus, there is a general trend towards fewer but bigger warehouses and re-locations to more cost-effective regions.

Derived from literature, several factors affecting the quantity decision are listed in table 5.1. and some of them described below.

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which items ordered [by customers] can be made available” (Heskett, 1994: 4). Here, speed refers to the lead time.

Factors influencing the quantity decision Source

Economies of scale Chopra & Meindl, 2004 Importance of customer service Chopra & Meindl, 2004 Facility costs Ballou, 2004

Transportation costs Ballou, 2004; Simchi-Levi et al., 2008 Division of demand/goods among facilities Ballou, 2004

Table 5.1.: Factors Influencing the Quantity Decision

Transportation cost is a sensitive factor. If several decentralized warehouses are used, the costs for transporting the goods from the production location to the warehouses are relatively high but the costs are low for transporting the goods from the warehouse to the customer. The opposite situation occurs with one centralized warehouse (Ballou, 2004; Simchi-Levi et al., 2008).

Sometimes it is possible to divide the demand among the facilities (Ballou, 2004). In case there are two groups of products with different requirements, it could be wiser to have two warehouses. In this way, no multiple safety stocks are needed and the requirements can be fulfilled by different types of warehouses. The feasibility of this depends on the characteristics of the goods and of the transports.

5.3. Location Decision

In the following, the importance of the location decision and the factors that can have an influence on the warehouse’s geographical location, according to literature, are defined in a structured way.

The location of a warehouse is a decision on the strategic level (Aikens, 1985; Powers, 1989; Schönseleben, 2007) and is often important for a supply chain’s competitiveness (Chan et al., 2006). This is because it determines the path through which goods are directed (Ballou, 2004) - the supply chain design (Chopra & Meindl, 2004).

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factors that focus on cost reduction and profit maximization (Korpela & Lehmusvaara, 1999) should be taken into account. A combination of costs and qualitative factors will lead to the most appropriate and all-encompassing solutions (Chan et al, 2006; Eldrandaly et al., 2003; Korpela & Tuominen, 1996). This can also be observed as a general trend in supply chain management (Melo, Nickel, & Saldanha-da-Gama, 2009; Walker, 2005).

Facility location is a well established research area (Melo et al., 2009) and therefore well covered by literature. An overview of the factors affecting the location decision can be found in table 5.2. which includes both tangibles and intangibles. Intangible criteria are harder to quantify than tangible ones. The factors that are in need for a clarification are explained below.

‘Transportation’ covers several factors described by various authors (Ballou, 2004; Chan et al., 2006; Chopra & Meindl, 2004; Schönsleben, 2007; Stock & Lambert, 2001) that all mean almost the same. Transportation companies have to be available and the corresponding infrastructure, such as ports, airports, train lines and a road network, should be easily accessible because transportation is closely related to warehousing. In addition, the loading area should be easily accessible by trucks.

Future market potential is becoming more critical due to the impact of globalisation (Schönsleben, 2007). The target markets of a company can be spread around the globe. The nature of the product influences the required characteristics of the warehouse and the immediate environment (Korpela & Tuominen, 1996). For instance, some goods should not be stored in a very humid environment. Here, the close relation to the climate condition factor can be defined (Chan et al., 2006).

The labour conditions should satisfy several criteria which are discussed by, for example, Barrar and Gervais (2006), and Schönsleben (2007). There should be enough quantity of labour available from which the appropriate employees can be chosen. Furthermore, the skills of the available labour should be appropriate as well, thus the quality has to match the company’s requirements. The last criterion is the cost of labour which is currently an often discussed topic with regard to global sourcing.

Factors influencing the

location decision Source

Financial Considerations/costs Chan et al., 2006; Korpela & Tuominen, 1996; Schönsleben, 2007

Transportation/availability/ Infrastructure

Ballou, 2004; Chan et al., 2006; Chopra & Meindl, 2004; Schönsleben, 2007; Stock & Lambert, 2001

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Nature of the product Korpela & Tuominen, 1996 Climate conditions Chan et al., 2006

Labour conditions

(availability, quality, cost)

Ballou, 2004; Barrar & Gervais, 2006; Chan et al., 2006; Chopra & Meindl, 2004; Korpela & Tuominen, 1996; Schönsleben, 2007; Stock & Lambert, 2001

Cost and availability of land/renting Ballou, 2004; Stock & Lambert, 2001

Room for expansion Min & Melachrinoudis, 1999; Stock & Lambert, 2001 Availability of computer services Stock & Lambert, 2001

Single/multiple use Stock & Lambert, 2001 Taxes/state incentives/

governmental regulations

Ballou, 2004; Chen et al., 2006; Chopra & Meindl, 2004; Min & Melachrinoudis, 1999; Schönsleben, 2007

Headquarter proximity Min & Melachrinoudis, 1999

Supplier proximity Ballou, 2004; Min & Melachrinoudis, 1999; Stock & Lambert, 2001

Customer proximity

Ballou, 2004; Chopra & Meindl, 2004; Min & Melachrinoudis, 1999; Schönsleben, 2007; Stock & Lambert, 2001

Table 5.2.: Factors Influencing the Location Decision

To be able to have a warehouse at a specific location, there has to be land and/or facilities available in order to rent or buy them. If so, the costs have to be considered (Ballou, 2004; Stock & Lambert, 2001).

State incentives, like subsidies, and governmental regulations, like special treatments for toxic goods, and the level of tax payments are conditions that are externally determined and influence the location decision with regard to countries and geographical regions (e.g. Min & Melachrinoudis, 1999).

According to Ballou, the “proper scope for the facility location problem is to include all product movements […] from plant […] to customer location” (2004: 40). Therefore, in the case of warehouse location decision, the distance to suppliers as well as to customers plays a crucial role. According to Schönsleben (2007), globalisation with its increasing importance on the time factor, especially with regard to short delivery times, makes the factor customer proximity even more crucial than a few decades ago.

If a relocation is conducted, it should be done in a manner that minimizes any potential disruption of the supply chain (Min & Melachrinoudis, 1999). Furthermore, the initial investment should be balanced against the cost savings and non-cost benefits.

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and the location decision reviewed periodically accordingly (Schönsleben, 2007). This is despite that fact that strategic decisions should, by definition, last for a considerable amount of time.

The warehouse site selection is a complex process and which has effects on the types of transportation, the markets to be served and the service level (Korpela & Tuominen, 1996). There is a large number of mathematical methods and computer-based models for calculating the optimal warehouse location (e.g. Aikens, 1985; Eldrandary et al., 2003). Especially the analytical hierarchy process method, which combines costs and qualitative factors, receives a lot of attention in literature (Korpela & Lehmusvaara, 1999; Korpela & Tuominen, 1996; Min & Melachrinoudis, 1999). According to Ballou (2004), site selection is more of an art that a well-defined process.

Interrelationships. Figure 3.2. indicates that the three warehousing strategy

sub-decisions influence each other. The quantity decision determines how many places have to be identified in the location decision. The relationship between the location decision and the ownership decision is inherent in several of the above listed factors. The first issue refers to the factor ‘single/multiple use’. Assuming that the warehouse is owned by a company (insourced), it is likely that it is only used by this company (single use). The company in question has the power to decide who has access to the facility which gives a higher level of control and better protection of intellectual property. Secondly, when warehousing activities are insourced, issues like tax incentives and subsidies are much more relevant to the company. Thirdly, the proximity to headquarter may be of less importance if the activities are outsourced as the company itself is not directly responsible for controlling the workforce. Finally, labour conditions play a less important role when outsourcing the warehousing activities because it is no longer in the company’s direct responsibility. Schönsleben (2007) also mentions this close association between the location decision and the ownership (“make-or-buy”) decision.

5.4. Ownership Decision

Ownership of warehouses can take various different forms on a long spectrum. In this section, mainly the alternatives outsource or keep in-house (insource) are taken into account. Options like strategic partnerships, acquire capabilities, or help develop supplier capabilities (Fine & Whitney, 1996) are not taken into account.

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topics in the business logistics field (Razzaque & Sheng, 1998). Embleton and Wight stress the concept of looking for expertise to handle certain business functions outside the existing firm and propose the following definition: outsourcing “entails a long-term relationship between supplier and beneficiary, with a high degree of risk-sharing” (1998: 94-95).

Outsourcing logistics functions is made possible due to recent developments in information and communication technologies (Barrar & Gervais, 2006; Embleton & Wright, 1998) and the emergence of collaborative, often global, supply chain strategies (Moberg & Speh, 2004). There is a huge amount of literature that deals with reasons for and against outsourcing, thus comparing make- with buy-options. However, literature on outsourcing warehousing activities is scarce, compared, for instance, with literature on production outsourcing. This is despite the fact that warehousing is the one of the most frequently outsourced logistics activity. To be more specific, 72% of the activities outsourced to third party logistics providers in North America is warehousing. In Western Europe this value is 70% (Langley et al., 2004).

An overview of the factors influencing the ownership decision can be found in table 5.3. and 5.4. Only the literature on insourcing and outsourcing that is relevant for the warehousing function is reviewed. The factors are divided into advantages and disadvantages of outsourcing. An advantage of outsourcing is often a disadvantage of insourcing. In the following, the factors that are in need for a clear description are explained.

Advantages of outsourcing. Some decades ago, outsourcing became an increasingly

attractive practice for many companies. In the beginning, the only objective was cost savings in order to maximize the shareholders’ value (Embleton & Wright, 1998; Stock & Lambert, 2001). Especially countries like India or China attract outsourcing companies due to the low labour costs (Bullinger & Klebert, 2007). During the years, other objectives, apart from cost savings, came into the focus of both companies and academia (Maltz & Ellram, 1997).

Advantages of Outsourcing Source

Cost savings Embleton & Wright, 1998; Stock & Lambert, 2001 Focus on core competences Barrar & Gervais, 2006; Embleton & Wright, 1998;

Simchi-Levi et al., 2008

Economies of scale Barrer & Gervais, 2006; Simchi-Levi et al., 2008 Reduce capital investment Simchi-Levi et al., 2008

Risk pooling Simchi-Levi et al., 2008

Increased flexibility

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Manufacturing competitiveness Fine & Whitney, 1996 Increase in quality Embleton & Wright, 1998 Accountability Embleton & Wright, 1998 Access to specialised workforce and

technology Embleton & Wright, 1998; Fine & Whitney, 1996 Geographical Embleton & Wright, 1998

Table 5.3.: Advantages of Outsourcing

Focus on core competencies is one of the most frequently mentioned factors that lead to an outsourcing decision. The idea is that every company should focus on what it can do best, and outsource all other activities (Embleton & Wright, 1998). This concept has its roots in the resource-based view (Barrar & Gervais, 2006). Nowadays, only few large companies can “do it all” (Fine & Whitney, 1996: 1). However, sometimes it is difficult to identify what is core (Simchi-Levi et al., 2008).

Economies of scale are often described as highly influencing the outsourcing decision (Barrer & Gervais, 2006; Simchi-Levi et al., 2008). Warehousing costs decrease if more goods from different companies are stored. Similar ideas are behind the factors reduction of capital investment and risk pooling as both investment and risk can be shared by multiple parties (Simchi-Levi et al., 2008).

Flexibility can be seen as a heading for several subcategories. For example, flexible opening hours of a warehouse are important because it is sometimes necessary to be able to pick up goods during the night or weekend. This may be only possible if more parties use a warehouse due to a critical amount. Furthermore, there is flexibility in adapting to changes in the market (e.g. Simchi-Levi et al., 2008).

Manufacturing competitiveness is described by Fine and Whitney (1996) as a broad category that includes situations when the supplier has a lower cost or faster availability for a substitutable item.

Due to a specialized workforce, for instance, the quality of a product or service can be improved when it is outsourced (Embleton & Wright, 1998).

The point accountability means that a commercial supplier is bound by a contract to provide a certain level of service. Internal departments, on the other hand, sometimes control the expenditures to a minor extent (Embleton & Wright, 1998).

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innovations stemming from the warehousing personnel. Furthermore, the warehousing company can have technology that is more suitable for the outsourced function.

The advantage ‘geographical’ refers to the fact that problems related to geographical distance can be solved by outsourcing (Embleton & Wright, 1998).

Disadvantages of outsourcing. Many companies follow the trend of outsourcing

non-core activities in order to reach cost savings. However, often the savings turn out to be less than aspired because hidden costs are often not discovered until a process is outsourced (Embleton & Wright, 1998).

If a warehouse is used by more parties, competitors can have easier access to goods that represent the intellectual property of a company (Simchi-Levi et al., 2008). Additionally, own competitive knowledge cannot be developed with regard to an activity that is outsourced. Conflicting objectives between the two companies involved in the outsourcing are likely to occur as each firm wants to maximize their profits (Barrar & Gervais, 2006; Simchi-Levi et al., 2008). Furthermore, the outsourced activity is ceded to the other company which reduces the outsourcing company’s control (Embleton & Wright, 1998; Razzaque & Sheng, 1998). Once a process is outsourced, it is highly costly to bring it back in-house (Embleton & Wright, 1998). This is meant by the point ‘reversibility’. Therefore, the act of outsourcing should not be solely a result of following a trend.

The act of outsourcing can be costly as well. It has to be assured that the benefits will outweigh these initial costs (Embleton & Wright, 1998; Stock & Lambert, 2001).

Human aspects of outsourcing are often overlooked (Barrar & Gervais, 2006; Embleton & Wright, 1998). The morale of the current workforce can be damaged. Additionally, the working conditions of the external company can influence the company’s public image negatively.

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Risks/Disadvantages of outsourcing Source

Danger to intellectual property and loss of

competitive knowledge Simchi-Levi et al., 2008

Conflicting objectives Barrar & Gervais, 2006; Simchi-Levi et al., ₂₀₀₈ Loss of control Embleton & Wright, 1998; Razzaque &

Sheng, 1998

Reversibility Embleton & Wright, 1998

Initial costs Embleton & Wright, 1998; Stock & Lambert, 2001

Morale, human aspects Barrar & Gervais, 2006; Embleton & Wright, 1998

Public image Embleton & Wright, 1998 Quality problems Embleton & Wright, 1998

Loss of flexibility Embleton & Wright, 1998, Stock & Lambert, 2001

Table 5.4.: Risks/Disadvantages of Outsourcing

If a company decides to outsource its outbound logistics, a third-party logistics provider [3PL] is frequently appointed (Simchi-Levi et al., 2008). Moberg and Speh (2004) identified responsiveness to service needs, quality of management, and track record of ethical importance as the most crucial 3PL selection criteria. It is remarkable that low cost is only ranked as fifth important criteria. Based on these criteria, the warehousing customers that participated in the survey rated regional 3PL higher than national 3PL. The performance of 3PLs is generally rated as high and there is a willingness of managers to work with 3PLs. Furthermore, there is a favourable attitude of utilizing a mix of private, regional, and national 3PLs. They are increasingly used for value-added activities, such as assembly and quality control (Razzaque & Sheng, 1998).

6 ANALYSIS

This section is the main part of the thesis as it combines the conceptual framework and the literature background with the actual case company. It forms the basis for the results and recommendations.

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In section 6.1., the questionnaire and its outcomes are presented, especially with regard to the participants’ perceptions and conflicting objectives. In sections 6.2. to 6.5. the outcomes of the questionnaires as well as company data and results of interviews are used to make analyses of the supply chain and the three warehousing sub-decisions by taking into account the company-specific performance objectives.

6.1. Performance Objectives – Hamburg International Shipping

“operations strategy must be based in some way, and an obvious starting point is to consider the operation’s range of stakeholders” (Slack & Lewis, 2008: 36). The company-specific performance objectives of HIS are discovered, among other methods, by a questionnaire that is handed out to stakeholders.

Questionnaire. A questionnaire with 15 questions is filled in by three information

gatekeepers within the Supp&Log department on June 2nd, 2010. See appendix E for a blank version of the questionnaire and appendix F for the results.

A graphical rating scale was employed in this questionnaire. It enables the researcher to discern fine differences (Cooper & Schindler, 2006). Participants are asked to mark their response at any point along a continuum. Subsequently, the score is measured as the length between one endpoint and the marked point. Attention is paid to the psychological order of the questions with the goal to encourage the participants to complete the questionnaire. Several criteria in the questionnaire are the results of the literature review, for instance the importance of flexibility and infrastructure. The points were discussed in the theoretical framework (section 5). Only a selection of those points that could possibly have an effect on the warehousing strategy of HIS is taken into account. The factors that may play a role were identified by conducting interviews and reviewing company documents.

The points that were identified in the literature review section were called ‘factors’. Within this section, they become ‘performance objectives’ because they are actually applied to the company. Additionally, other criteria like environmental friendliness are taken into account although they cannot be found in warehousing strategy literature. During first interviews and observations, it became apparent that they could have an impact on the decisions.

Conflicting Performance Objectives. “Assessing the performance of anything at any

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subjective. A consequence is that persons evaluate the same situation differently which can lead to different ratings with regard to the importance of the above described performance objectives. This is in line with Slack and Lewis, who wrote that “Perceived performance is a function of, amongst other things, who you are […], your objectives […], timescale […], measurability […], and how comprehensive you want to be […]” (2008: 26).

To explain this phenomenon better, a closer look at the ideas of Kamann and Bakker (2004) is taken. According to them, different opinions are explained by three influences: Firstly, the personal past trajectory through various networks and the habitus – the social environment of an individual – influence the personal interpretation of the real world and the individual behaviour. This individual reference-model determines which signals a person perceives as important. Thus, people differ in the elements they regard as relevant. According to Kamann and Bakker, a person “only sees what he believes” (2004: 56). Secondly, the individual status in the present company, the so-called ‘negotiated social order’, is also responsible for the existence of different opinions. The last influence, namely the company’s world view, can be neglected as the stakeholders involved in the case of HIS are employed by the same company. Although Kamann and Bakker’s research focuses mainly on differences between companies, they note that “even within a single company, differences were found” (2004: 56).

The phenomenon that different opinions about one topic often exist is also recognized by supporters of the Soft System Methodology. It is a system-based methodology for tackling real life problems which was developed by a team from the University of Lancaster, led by Peter Checkland. The underlying idea is here again that events are perceived differently by all the people involved in a system. With the Soft System Methodology, the different viewpoints and assumptions about the world can be brought to light, challenged and tested (Checkland & Winter, 2006; Por, 2008). In this thesis, the Soft System Methodology is only mentioned as a background in order to have some more evidence for the existence of different perceptions and opinions.

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Supp&Log department. The second participant is the team leader of the dispatch team which belonged to the SuppMan department and works closely together with the P+P warehouse (P+P expert). The third information gatekeeper belonged to the MatMan department and is responsible for the Stolze warehouse (Stolze expert). Therefore, one can speak of three different stakeholders.

Outcome. The questionnaires reveal interesting results (see appendix F) that are in

conformance with the theory described above. Frequently, the average results tell only part of the truth. The individual results often deviate dramatically from the average. Thus, the individual perceptions of the current situation and the related importance of the objectives are varying across the respondents.

To illustrate this point, two examples are considered. The focus on environmental friendliness (average: 4,1) is rated very high by the head of Supp&Log (8,8), whereas the two experts rate this objective very low (2,2 and 1,3). Similarly, the P+P expert perceives the support of the industry location/city Hamburg as a very important factor (8,8), opposed to the other respondents (0,9 and 1,7). However, it should be noted that the respondents do not disagree on every factor.

In interviews, different - often conflicting – opinions emerged as well. For instance, the head of Supp&Log and the Stolze expert predict the future market orientation mainly in the area of Eastern Asia and India whereas the P+P expert has the opinion that the future market orientation is completely unpredictable.