Business Relationships and its Impact on Customer Requirements A Case Study at Volvo Group

Examensarbete för masterexamen

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Type: Examensarbete för masterexamen
Master Thesis
Title: Business Relationships and its Impact on Customer Requirements A Case Study at Volvo Group
Authors: Palmér, Jakob
Apelqvist, Simon
Abstract: As of January 1st, 2020, new regulations regarding sulphur emissions will be implemented, called IMO 2020. This implies that the limit for sulphur in fuel oils used in ships operating outside Emission Control Areas (ECAs) is decreased from 3.5 % to 0.5. A majority of today's shipping fleets use bunker oil. However, this fuel does not comply with the new regulation in terms of sulphur emissions. Therefore, the shipping lines are forced to act in order to comply with the new restrictions to avoid sanctions. There are three strategic options for the carriers in order to adapt, where the indications point to that the most widely used option will be a switch to LSMGO fuel. This fuel is more expensive than the fuel used today, and the container shipping industry alone could see a total of $15 billion in increased fuel costs yearly. This cost will ultimately be put on the customers. Because of this, Logistics Purchasing is interested in finding how specifications and requirements could be challenged or adjusted in order to decrease costs and to mitigate the additional cost that derives from IMO 2020. The aim of this master thesis is to identify possibilities and hinders to adjust current specifications and/or requirements in order to reduce costs. This was achieved by examining the sourcing process together with an analysis of Logistics Purchasing’s current relationships with two container carriers in order to identify the characteristics of the relationships. To reach the aim of the thesis, interviews were carried out internally and externally. From the interviews, it was possible to identify the level of involvement, what interface, types of collaborations, as well as uncertainties that exists. The thesis has shown that the relationships with the carriers are characterized by low involvement with a specified interface. It has also shown that the type of collaborations between Logistics Purchasing and the carriers differ to some extent, and that uncertainties exist. It has been identified that Logistics Purchasing could increase the price orientation by using more standardized specifications and requirements, resulting in increased competition among carriers. This could ultimately impact the price. Possibilities have also been identified in terms of having a different strategy towards the carriers. This would mean that Logistics Purchasing could have different levels of involvement with different carriers depending on the carriers’ unique capabilities and resources. This could create possibilities to benefit from low involvement relationships and optimize each transaction with carriers who economize through scale and scope, while high involvement relationships would focus on long term operational optimisations with carriers who economize through innovation. In a high involvement relationship, specifications and requirements could be created jointly in order to achieve mutual benefits, such as reduced total costs.
Keywords: Produktion;Transport;Grundläggande vetenskaper;Hållbar utveckling;Övrig industriell teknik och ekonomi;Production;Transport;Basic Sciences;Sustainable Development;Other industrial engineering and economics
Issue Date: 2019
Publisher: Chalmers tekniska högskola / Institutionen för teknikens ekonomi och organisation
Chalmers University of Technology / Department of Technology Management and Economics
Series/Report no.: Master thesis. E - Department of Technology Management and Economics, Chalmers University of Technology, Göteborg, Sweden : E2019:011
Collection:Examensarbeten för masterexamen // Master Theses

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