Segmenting logistics service users based on their provider selection criteria to succeed in outsourcing

Purpose Logistics service providers (LSPs) may invest a lot of time in tenders unsuccessfully, as they do not meet the expectations of logistics service users (LSUs). In order to help them classify and target their customers more efficiently and effectively and make logistics outsourcing more successful for both LSUs and LSPs, this paper analyzes underlying dimensions of criteria German manufacturing and trading companies actually use in selecting an LSP and clusters of LSUs based on these dimensions. Design/methodology/approach A questionnaire survey with 110 manufacturing and 135 trading companies was conducted in Germany. Principal component analysis (PCA), cluster analysis, multivariate analysis of variance, analysis of variance and discriminant analysis were performed on the sample data. Findings PCA revealed eight dimensions of LSU criteria in selecting LSPs and that cost alone seems not decisive. Based on these dimensions, cluster analysis produced nine LSU groups. These groups differ the most in the selection criteria dimensions cost-performance ratio, operational collaboration, quality and locations. Recommendations for servicing these groups are given. The two largest groups, which make up 43.5%, seem not that demanding and price sensitive. The selection criteria dimensions and LSU groups enable LSPs to classify and target their customers more efficiently and effectively, to evaluate and develop their core competencies, and contribute to successful logistics-outsourcing relationships. Originality/value This research is the first to examine selection criteria dimensions and resulting clusters of German manufacturing and trading companies in order to make logistics outsourcing more successful.