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a r t i c l e
i n f o
Article history:
Received 11 May 2015
Received in revised form 15 July 2015
Accepted 20 July 2015
Available online xxxx
Keywords:
Supplier relations
Cruise ships
Service quality
Service supply chains
Global operations
a b s t r a c t
Given the signicance of the service industry, the role of global service supply chains is becoming an important
new area of research. This paper examines the ways suppliers positively contribute to service quality in the cruise
industry and denes the nature of the relationships between a major cruise line corporation and its suppliers. The
data stems from a 4-year eld study of a large cruise line corporation and twenty-one semi-structured interviews
conducted on board and shore-side with senior management. Additionally logistics processes were observed and
analyzed through an ethnographic lens. The characteristics of the relationship are described and hence enabling a
better understanding of the service quality creation among suppliers. The results have implications for service
and hospitality supply chains in such settings as large resorts and humanitarian logistics.
Published by Elsevier Ltd.
1. Introduction
Cruise ships typically sail weekly from departure ports around the
world toward various foreign and exotic destinations (see: Vronneau
& Roy, 2011). The ultimate goal of the cruise company is to deliver to
its guests a perfect vacation experience focused heavily on onboard service quality (Brejla & Gilbert, 2014). This onboard service quality is supported by the company's supply chain, which is responsible for the ontime replenishments of ships and the availability of supplies onboard
(Vronneau & Roy, 2012). In this paper we consider a service supply
chain (SSC) to be a supply chain supporting service rendition. Cruise
ships today are not just a mode of transport ferrying travelers to exotic
destinations and equipped with various and numerous amenities (Xie,
Kerstetter, & Mattila, 2012), but have grown to become a destination
themselves (Papathanassis, 2012; Vronneau & Roy, 2011) like many
other modern hospitality and resort settings. The food and beverage offering is therefore an important part of the onboard experience (Erkoc,
Iakovou, & Spaulding, 2005; Qu & Ping, 1999), and while it constitutes a
majority of the supplies loaded for the duration of the week, other, various supplies also need to nd their way on board (Vronneau & Roy,
2009a). All these supplies uniquely contribute to the support of the
high-quality onboard service delivery.
The views expressed in this document are those of the authors and do not reect the
ofcial policy or position of the Department of Defense or the U.S. Government.
Corresponding author at: Naval Postgraduate School 555 Dyer Road Monterey, CA
93943 USA.
E-mail address: sveronne@nps.edu (S. Vronneau).
http://dx.doi.org/10.1016/j.tmp.2015.07.008
2211-9736/Published by Elsevier Ltd.
One of the recurring themes evident during the eld study was
the devotion of employees within the supply chain department to
support the service delivery. Without hesitation, employees of various levels and backgrounds were keen to point out the paramount
importance of the supply chain in providing a great vacation experience to passengers, and this principle seemed to guide their daily
activities. It was also found that some suppliers consistently showed
deep commitment to the relationship between them and the cruise
company, as well as to the satisfaction of both cruise line employees
and onboard customers.
This paper reports on part of the ndings of a 4-year eld study, carried out equally on board and shoreside, of a cruise corporation's supply
chain (see: Van Maanen, 1988; Yin, 2003). The study included twentyone semi-formal interviews of senior supply chain management managers and supervisors, which were conducted both on board ships and
at the head ofce as well as nine supplier representatives. The goal of
this paper is to look at the specic nature of the relationship between
the cruise ship company and its suppliers. It also answers numerous
calls for more research on the cruise industry (Gibson, 2008; Marti,
2004; Papathanassis & Beckmann, 2011; Sun., Jiao, & Tian, 2011; Teye
& Leclerc, 1998; Toh, Rivers, & Ling, 2005) as well as the call for more research into tourism supply chain management (Zhang, Song, & Huang,
2009).
The main research questions addressed are as follows: What is the
nature of the relationship between the supplier/service provider within
a cruise ship company and its environmental factors? Does the relationship dynamic differ across supply categories? And what is the degree of
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surprise at how many contracts for supplies in the cruise ship industry
are sole sourced. On the service provider side alone, changing from
sole sourcing on the transport side to an 80/20 approach allowed
some leverage to be gained with suppliers with bad habits. Good service
providers were rewarded with more business and lower performing
ones penalized with a diminution in business.
For a supplier, seeking a cruise company's business is not necessarily
like digging a gold mine, as one purchaser explained: The margins
when supplying hotels are better. They make less money on us and on
more volume. Moreover, cruise lines have very specic requirements
for customs documentation, like health certicates and detailed palletization lists, since most of the products are exported. Add to these the
delivery constraints of a non-exible, just-in-time environment and
elaborate labeling specications, and the logistics requirements alone
exceed any faced by a typical hotel or resort. The average national hotels, however, don't move sufcient volume to compel their suppliers
to align with their practices as do cruise companies. Nonetheless, the
cruise line's purchasing and logistics managers strive to streamline
their processes to simplify the demands on their suppliers and thereby
improve the chain's overall efciency.
5.1. Locus of knowledge
The locus of product knowledge can vary greatly from one area of
purchasing to another. A senior manager explained that in some cases
the supplier actually drives the buying by dening the specications required for the purchasing to take place, especially in high technology
areas such as computer hardware and marine parts: Our suppliers dene our requirements. They dene our specications. They dene what
it is that we want instead of us dening it. That's a problem. The reason
for this counterintuitive dynamic is that company end users, often
lacking the technical knowledge required to make an informed decision,
ask the supplier what would solve their problem. Typically, an
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Table 1
Suppliers characteristics taxonomy.
Suppliers'
category
Market
Key challenges
Power
Locus of
knowledge
Key characteristics
Delivery
Hotel
Free
Global sourcing
Cruise line
Cruise line
Technical
Mostly oligopolistic
High-value
inventory
Supplier
Shared
F&B
Finding Suppliers
with enough capacity
Balanced
Cruise line
Fuel
Balancing power
Balanced
Shared
Corporate
Free
Balanced
Mostly
suppliers
Transport
Services
Balanced
Cruise line
Informal mechanisms of socialization consist of any encounters between a supplier and a buyer not bound by a formal context, including
suppliers' visits (Cousins et al., 2006) and informal conversations
(Cousins & Menguc, 2006). For the cruise company, informal mechanisms include cruises taken by suppliers for pleasure or work, informal
phone discussions with cruise company representatives, and other
forms of informal communication between the cruise company and
the suppliers. It was found that employees of the cruise company are
best socialized to the culture through informal mechanisms, and, in
the case of the employees, the number of cruises taken was the strongest predictor of awareness of and concern for onboard service quality.
6.2. Relational capital
It is well understood (Cousins et al., 2006) that socialization processes between a rm and its suppliers will build relational capital. The interviews conducted at the cruise company revealed collaboration,
exibility, and closeness as important strengths in the companysupplier relationship. The assumption is that these dimensions of the supplier
relationship reinforce socialization through the absorption of the strong
service culture of the cruise corporation. In line with existing literature,
it was found that the following three dimensions of the company
supplier relationship do indeed provide a strong contribution to this relational capital: collaboration, exibility, and closeness.
Collaboration is a two-way street, as explained by a senior manager:
Being reasonable by accepting produce slightly out of specications
now and then helps the relationship while having no impact on service
quality; usually only the chefs get impacted but the nal onboard product maintains the same quality. Managers understand that the relationship needs constant attention to foster strong ties: We are continually
improving every day. We are nding ways to improve every aspect of
the relationship. We've learned from our past lessons and we apply
them to our engagement with new suppliers.
Another example of good collaboration with specic intent to improve service quality to passengers is found in the supplying of cleaning
products. The suppliers of the cleaning agent used to disinfect the ships
and clean the passenger cabins have come on board to try to improve
the way their product is used. They have spent time reviewing the ship's
standard operating procedures (SOPs) pertaining to usage and worked
in teams to develop better SOP, not only to improve the efciency of
the cleaning procedure but also ultimately to ensure no passengers
would fall ill on their vacations.
One of the biggest strengths of a supplier is the exibility to meet an
unusual or untimely request. A purchasing manager explained that
when one of his ships runs out of a critical cleaning supply like bleach
while traveling in a region where he has no regular suppliers, he will
simply call a supplier operating there. He added that, even if the supplier
has no bleach on hand, he will ask, Can your guy go out to the store and
buy it? To which the typical answer is, Sure no problem, we can do
that and will bring it to your ship. To the manager, this exibility and
willingness to go above and beyond are essential qualities in a supplier.
Because suppliers are located throughout the world, the willingness to
cooperate makes them a valuable network of unofcial agents serving
as local experts. In cases where the supplier is unable to meet a request
himself, he will be sure to recommend someone who can. In this manner, just about any atypical circumstance can be handled and any odd
request accommodated.
Anecdotal evidence and past experience suggest that produce companies (providers of fresh fruit and vegetables) are among the suppliers
with the best local knowledge and connections and usually the quickest
to extend a favor. In the past, the cruise company has even asked their
local produce companies in Vancouver to procure commercial printing
supplies for a ship. It is these sorts of relationships that are most valued
in a complex global deployment because they can be indispensable in
ensuring continued smooth service on board. Cruise companies always
need somebody on the ground who knows the local market. Though
they have ofcial local agents who act as their liaisons, it was found
that these agents are concerned primarily with making a prot, whereas
the local suppliers are concerned more with maintaining a good relationship and increasing their value to the cruise company. The agents
often form a monopoly in ports, given their tight network and historical
presence. Because their advantageous market position nearly guarantees their perennial presence, they can afford to be less cooperative
and/or to charge a large premium for ad hoc errands. In contrast, suppliers who perform beyond normal expectations reveal that they understand the cruise company's need to deliver consistent onboard service
quality under just about any circumstances.
Some suppliers are very close to the company and take great pains to
keep a good relationship with the cruise company, as noted by a logistics supervisor: One supplier is 100% committed to us the owner drives
the truck over to us himself to bring over the load of supplies, he checks
everything with the guys in receiving. If something is amiss, it's xed
right away. He has done that for years and is very close to our company.
He is very conscientious with us, and makes sure that everything is perfect. He doesn't drive any trucks for our biggest competitor or other
companies. He has his employee do those deliveries. The supervisor believes that the main underlying reason for the owner's level of commitment is that it's a small family hotel supplier that has benetted greatly
82
from the business of the cruise line. The purchasers are equally committed, and not just because of the competitive pricing, but because of the
total package of service that the supplier deliveries.
Some suppliers demonstrate their commitment in a different way:
by sending representatives every turnaround day to ensure smooth delivery and complete satisfaction. Then if an issue arises, a dual channel
can be employed to solve the problem, as opposed to the sole channel
of internal escalation. As the onboard logistics manager explained:
This [kind of] supplier is very proactive with their own customer service coordinator at the dock every week ensuring that everything is
ok. Some suppliers do not have a customer representative, but the driver himself represents the company; the driver can be a good proactive
representative. Pertinently, a dual channel for problem escalation resolved problems much more quickly. Contrary to the above-described
good relationship are those in which the supply company creates
more, not less, work for the cruise line. For example, some companies
employ drivers who do not speak English, making transactions laborious and requiring the ship's translator, normally reserved for passengers, to intervene.
7. Conclusion and implications
This paper has outlined the current practices of and relations between a major cruise company and its supplier base. In this research,
we have detailed the various dynamics across the different types of supplier and provided a taxonomy classifying them. Clear differences were
observed across categories and their key characteristics noted. While
there are certain limitations to the generalization of the ndings, it is believed that, given the oligopolistic nature of the cruise industry and its
supplier base, the current sample offers valuable insights. It is clear
from the above ndings that numerous unique elements enter into
agreements with a cruise liner. From the results of this eld study, a
number of best practices designed to deal with the various challenges
faced by the cruise company can be outlined. In addition, these practices
can be applied to other service industries to address similar challenges.
7.1. Service supply chain suppliers and cruise suppliers
One of the most important factors for those involved in a Service
Supply Chain (SSC) is striving for service excellence, not only among
members of the chain but for the nal customer of the chain as well. It
is difcult for suppliers to ensure their product will contribute to service
quality. In addition to providing quality goods, suppliers must also make
an effort to ensure their products are used correctly and to their full potential. The best suppliers will adopt a proactive approach including cooperative efforts in employee training and developing proper SOPs for
the use of their supplies. A key factor in ensuring thorough understanding of the service culture of an organization is the socialization of the
suppliers. While it might be taken for granted in the service industry
that a customer-centric focus must be placed on quality, it may not be
as clear for a supplier typically serving manufacturing supply chains
where quality means meeting specications without regard to nal
usage.
An important aspect of being a cruise supplier is exibility. The ability to meet an ad hoc demand outside the normal scope of the supplier is
essential. Furthermore, this exibility must also translate into fast responsiveness in order to accommodate last-minute demands. In order
to coordinate with the supplier, it is essential for the cruise company
to have a boundary object (See: Star & Griesemer, 1989) that allows
the supplier to exchange with the company and stay current with its
plans. Before seeking a cruise company's business, a supplier would do
well to weigh carefully several considerations, not only the just-intime environment and numerous documentation requirements, but
also whether the supplier is able to meet the volume demand and respond to spikes in same, all while receiving lower margins for these
transactions.
(J. E. Van Maanen & Schein, 1977) and that socialization within a supply
chain will lead to greater relational capital between buyer and suppliers
(Cousins et al., 2006). In this study, we are interested in how these two
aforementioned constructs can lead to enhanced understanding of the
service quality dimensions of the supply chain.
A survey of internal employees in the cruise company would provide
greater internal validity to the construct developed from the interviews
and could provide for an exact coefcient measuring the correlation between the amount of socialization and the degree of service quality
knowledge. A survey of the cruise company's external suppliers would
provide hard data to generalize the conceptual framework put forward
in this paper. To complete the picture of the supplying reality for the
cruise industry, a survey could be undertaken of Cruise Line International Association (CLIA) members in order to add external validity and conrm the generalizability of the ndings.
Finally, expanding outside of the connes of a cruise supply chain
into other service supply chain domains would provide more insight
into the reality of service supply chains and contribute to further building theories on the subject. A eld study and/or survey could be undertaken in other hospitality or supply chain settings, such as large resorts
or humanitarian and military logistics, to gather more data on and perhaps provide more insight into other best practices that could be applied across elds.
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Dr. Simon Vronneau is an Associate Professor of Operations Management at the United States Navy's Naval Postgraduate School as well as an Associate Researcher at the
Supply Chain Research Group at HEC Montreal and at the
Inter-University Research Center on Enterprise Networks,
Logistics and Transportation (CIRRELT). He recently served
a three-year term as a scientic advisor on the cruise ship
wastewater science advisory panel for the Department of Environmental Conservation in the state of Alaska. He holds a
Ph.D. in Operations Management from HEC Montral and a
Master of Science in Transport & Maritime Management
from Universiteit Antwerpen. Dr. Vronneau's research focuses on global supply chains, transport management, and
real-time critical operations management. He is a noted researcher on the cruise ship business and has authored a number of book chapters and peer
reviewed science journal articles on cruise ship operations management and economics.
He is a licensed Master Mariner with work experience as a senior ofcer in the Canadian
Coast Guard as well as on cruise ships and merchant ships. Prior to joining the Naval Postgraduate School, Dr. Vronneau taught on the east coast at Quinnipiac University and HEC
Montral.