1. Introduction Literature Review Methodology Finding Conclusions
Supply chain collaboration, inter-firm trust and
logistics performance:
Evidence from the tourism sector
Pairach Piboonrugnroj and Stephen M. Disney
Logistics Systems Dynamics Group,
Cardiff University
July 3rd , 2011
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

2. Introduction Literature Review Methodology Finding Conclusions
Motivation
How do firms successfully implement supply chain collaborations?
Many firms have succeeded in implementing collaborative
activities and have enhanced their performance.
However, many firms have struggled or failed to do so.
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

3. Introduction Literature Review Methodology Finding Conclusions
Aims
1 To understand how firms effectively implement supply chain
collaborative activities.
2 To empirically test such a mechanism in supply chains.
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

4. Introduction Literature Review Methodology Finding Conclusions
Supply Chain Collaborations
Definition
”At least two firms in the same supply chain work together to
achieve their mutual goals”
(Mentzer et al., 2001; Simatupang and Sridharan, 2005).
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

5. Introduction Literature Review Methodology Finding Conclusions
Costs and Benefits of Supply Chain Collaborations
Costs and Benefits
Costs: Finding the best suppliers (e.g., price, quality),
Monitoring (QC) (Barratt, 2004; Holweg et al., 2005)
Benefits: Better level of responsiveness and service level
(Speckman, 1998; Holweg et al., 2005)
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

6. Introduction Literature Review Methodology Finding Conclusions
Methodology
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

7. Introduction Literature Review Methodology Finding Conclusions
Empirical Findings 1
Exploratory case study and focus group interviews
Information sharing between the hotel and its partners e.g.,
suppliers and travel agents.
Joint team work and planning as well as investing in specific
equipment or special training.
Collaboration activities could give rise to performance via
better trust between partners.
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

8. Introduction Literature Review Methodology Finding Conclusions
Conceptual Framework
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

9. Introduction Literature Review Methodology Finding Conclusions
Empirical Findings 2
Multiple-case Study
Hotel A Hotel B Hotel C Hotel D Hotel E Hotel F
Management International Local Non- International Local Non-
System Chain Chain Chain Chain Chain Chain
Destination Island Island Island Mainland Mainland Mainland
destination destination destination destination destination destination
Location Beach City Beach Suburb Shopping Shopping
Shopping area Centre area /Riverside area area
Supplier Carbonated Poultry Alcohol Carbonated Poultry Alcohol
drink drinks drinks drinks
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

10. Introduction Literature Review Methodology Finding Conclusions
Empirical Findings 2
Multiple-case Study
Hotel A Hotel B Hotel C Hotel D Hotel E Hotel F
Collaborative Efforts
Information sharing High Moderate Low High Moderate High
Joint activities High High Moderate Low High High
Dedicated investment High Moderate High High Moderate Moderate
Inter-firm Trust
Trust belief High High Moderate Moderate High High
Trust behaviour High Moderate Low Moderate Moderate High
Logistics Performance
Order High High Moderate Moderate High High
Delivery High High Moderate Moderate Moderate High
Forecasting High Moderate Low Low Moderate High
Satisfaction
On commitment High Moderate Moderate Moderate High High
On performance High High Low Moderate Moderate High
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

11. Introduction Literature Review Methodology Finding Conclusions
Construct operationlisation
Collaborative Efforts (Nyaga et al., 2009)
Information Sharing
Joint Activities
Dedicated Investment
Collaborative Mechanism & Outcomes
Inter-Firm Trust (Kwon and Suh, 2004)
Logistics Performance (Simatupang and Sridharan, 2002)
Relationship Satisfaction (Nyaga et al., 2009)
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

12. Introduction Literature Review Methodology Finding Conclusions
Our Conceptual Framework
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

13. Introduction Literature Review Methodology Finding Conclusions
Research Hypotheses
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

14. Introduction Literature Review Methodology Finding Conclusions
Empirical Findings 3
Questionnaire Survey
Data
Questionnaire survey
Tourism industry of Thailand
109 usable responses
Analysis Methods
Confirmatory Factor Analysis (J¨reskog, 1969)
o
Path Analysis (Wright, 1918)
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

15. Introduction Literature Review Methodology Finding Conclusions
Confirmatory Factor Analysis 1
Survey items Factor
Loadings
CFA Model 1: Collaborative efforts
(Chi-square/df =1.093, CFI=0.933, TLI=0.989, NFI=0.927, RMSEA=0.051, AIC=70.040)
Information sharing (α = 0.937)
We inform this supplier/buyer in advance of changing needs. .926
It is expected that any information, which might help the other party, will be provided. .948
The parties are expected to keep each other informed about changes that may affect
the other party. .883
Joint activities (α = 0.942)
My firm and this supplier
have a joint team. .921
conduct joint planning to anticipate and resolve operational problems. .950
make joint decisions about ways to improve overall cost efficiency. .887
Dedicated investments (α = 0.811)
In building the relationship with my firm, this supplier
has invested substantially in personnel. .847
has provided proprietary expertise and/or technology. .829
has dedicated significant investment. .632
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

16. Introduction Literature Review Methodology Finding Conclusions
Confirmatory Factor Analysis 2
Survey items Factor
Loadings
CFA Model 2: Collaborative mechanism and outcomes
(Chi-square/df =1.010, CFI=0.999, TLI=0.999, NFI=0.915, RMSEA=0.017, AIC=112.455)
Inter-firm trust (α =0.823)
My firm can understand this supplier well. .812
This supplier is genuinely concerned that we succeed. .946
We trust this supplier keeps our best interests in mind. .667
This supplier/buyer considers our welfare as well as its own. .520
Satisfy with relationship (α = 0.900)
My firm is satisfied with this relationship in terms of:
- Coordination of activities. .826
- Participation in decision making. .809
- Level of commitment. .977
Logistics performance (α =0 .971)
This relationship has
improved our order processing accuracy. .949
improved our on-time delivery. .858
increased our forecast accuracy. .919
improved our order accuracy in term of product types. .964
improved our order accuracy in term of product quantity. .980
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

17. Introduction Literature Review Methodology Finding Conclusions
Hypothesis Testing
Result from Multiple Regression Models
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

18. Introduction Literature Review Methodology Finding Conclusions
Interaction Effects of Collaboration Efforts
High level Low level
3
3
of Joint Activities of Joint Activities
2
2
Moderate level
Inter-firm Trust
Inter-firm trust
1
1
Moderate level of Joint Activities
of Joint Activities
0
0
High level
of Joint Activities
Low level
-1
-1
of Joint Activities
-2
-2
-3
-3 -2 -1 0 1 2 3 -3 -3 -2 -1 0 1 2 3
Information sharing Dedicated Investment
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

19. Introduction Literature Review Methodology Finding Conclusions
Follow-up Interviews
Joint activities can enhance the creditability and
comprehensibility of the information shared between supply
chain.
Such activities can provide an opportunity to build
inter-person trust and personal relationship between hotels
and their supply chain partners.
Hotel managers are more likely to believe in data if they knew
and trusted the person that gave them the information.
Joint activities are a necessary when firms share their
information with supply chain partners.
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

20. Introduction Literature Review Methodology Finding Conclusions
Conclusions
Firms can the enhance benefits from supply chain
collaboration if their employees work together with supply
chain partners in a joint team.
Supply chain collaborations leads to better inter-firm trust.
Such trust can further improve logistics performance and
inter-firm satisfaction.
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

21. Introduction Literature Review Methodology Finding Conclusions
Acknowledgements
“The author is grateful to
the Royal Thai Government
through the Commission on Higher Education
for financial support of this study.”
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge

22. Introduction Literature Review Methodology Finding Conclusions
Thank you
Q&A
Pairach Piboonrugnroj and Stephen M. Disney Logistics Systems Dynamics Group, Cardiff University
Supply chain collaboration, inter-firm trust and logistics performance: Evidence from the tourism sector, EurOMA2011, Cambridge