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1. Implications of packaging services for Agility in U.A.E vis-à-vis its relationship with Pfizer
Chapter One: Introduction
The structure of the introduction section will be first to present the overview of the topic and
then the research aims and objectives. Through this section the significance and the rationale
behind selecting this research topic will be explained.
1.1 Research Overview
According to Kumar et al., (2011) the last decade in the life of business management has seen
the emergence of Supply Chain Management as a revolutionized field of logistics services
especially in the manufacturing industry. With this the change in the field outsourcing the
logistics functions is now being seen as a compelling choice for many manufacturers. Chiang et
al., (2011) noted that this change further and say that the increase in the scale and number of
third part logistical service providers, the focus has changed from just getting the products
transported to developing a healthy relationship throughout the supply chain in order to ensure
that the entire supply chain is performing effectively. In the context of the evolution of logistical
services, the increase in their number and their importance in the overall supply chain of an
organization the issue of “value added services” is an important academic and practical
consideration. Hansen (2000) describes value added services as the complementary or
secondary services that “add value” to the core product or service of the organization from the
perspective of the customer especially. These value additions (products or services) help the
organization in gaining competitive advantage over those who are just focusing on the core
product as it increases the number of parameters for success in the market gained through
increased customer satisfaction and customer loyalty. According to Hansen (2000) in the issue
of homogeneity of products and services, value added services are gaining a decisive role and
act as facilitators for developing a clear profile and a unique identity of the organization in the
market. However in regards to the issue of value added services it has also been noted by the
author that even though the term is widely used in both management theory and practice the
meaning of the term is still somewhat vague and broad definitions are used to explain it. Apart
from that different perspective exist in explaining the effectiveness and the impacts of these
services on the organization.
Thus the rationale behind selecting this research is to address this ambiguity in the impact of
providing value added services. This will be achieved by conducting an in depth and empirical
study so that an effective contribution can be made to the pool of existing research. What will
be seen basically is the impact that these “extra” services have on a selected case and thus
whether the organization should continue with these services or not. For the purpose of this
research the case of Agility Logistics Services has been selected. The reasons for selecting this

2. organization will be focused upon in the third chapter of this research report. In the context of
Agility the more specific issue being looked into by this research is that of the supply chain
relationship between Agility and Pfizer in the UAE region. Pfizer is one of the biggest
pharmaceutical organizations in the world (Forbes, 2014) and has a strong presence in the UAE
region as well (Pfizer, 2014). According to Forbes (2014) Pfizer rank 18th in terms of the market
value of the global pharmaceutical industry and has a market capitalization 203 billion dollars.
The importance of value added services for any pharmaceutical organization is of great
significance because they deal in large volumes and even in the slightest change in the supply
chain is likely to have a massive financial impact on both the vendor and the organization itself.
In its essence this research intends to explore the impact that relational benefits have in supply
chain by taking a single relationship benefit into consideration and the synergies that this
relational benefit is producing. The important thing to be taken into consideration through this
research is that the manufacturer (Pfizer) is actually the buyer of the logistical services being
provided by the Logistical Service Provider (Agility). Furthermore through this research the
satisfaction and the successful outcome that the manufacturers as well as the supply chain
partners are able to achieve through relational benefits will be focused upon.
1.2 Research Significance and Scope
According to Sramek et al., (2008) the issue of relationship benefits as exists in the academic
literature today is built on the early works of Bendapudi and Berry (1997) and that of Gwinner
et al (1998) who based their research on customer perspectives and on the three categories of
benefits that is, i) Confidence benefits, ii) Social benefits and iii) Treatment Benefits
respectively. Contemporary researches have taken into account the proposals presented by
these researchers to further elaborate upon the issues of logistical services, supply chain
management and supply chain relationship management.
This particular derives its significance from the tangible importance of relational benefits for
every member in the supply chain. For example Prahinski and Benton (2004) note that through
these relational benefits the linkages in the supply chain are strengthened through mutual
commitment, increased loyalty and closer interaction with each other. Su et al., (2009)
emphasize that this approach of relational benefits mostly appears in the marketing literature
and its significance is often overlooked in the field of operations and logistics research where
again it plays a key role. This means that a more empirical investigation is required in the
current academic literature to see how the satisfaction of the manufacturer with the logistics
service provider enhances with the better timings and services. Focusing on the issues of value
added packaging services in logistical relationships this particular research will make an effort in
contributing to the available literature.

3. Moving on the scope of this research will be limited to the logistics industry and manufacturers
in the UAE region. The reason for this limitation of scope is because the UAE economy is still in
its growing phase (John, 2013; World Bank Data, 2013) and the amount of research available in
the context of UAE especially concerning operations management is lacking. Thus conducting
research specific to the issue of UAE is expected to be significant. Another important aspect as
to why this research is being limited to the UAE market is because of the limitation of time and
resources to conduct research in other regions of the world.
1.3 Research Aims and Objectives
The aim of this research is,
“To evaluate how providing packaging services impacts the supply chain relationship of Agility
(UAE) and Pfizer”
1. Through the review of academic literature and relevant theories, to explore the value
added services that can be provided by a logistics service provider
2. To explore and evaluate the factors and impacts of providing value added services to
logistics customers for both the LSP and the manufacturer.
3. By applying the appropriate research methodologies, to study the packaging services
provided by Agility to Pfizer and the impacts that these packaging services have on the
overall supply chain
4. To draw up a set of recommendations, based on the analysis conducted for Agility in
U.A.E to improve its supply chain effectiveness through
1.4 Research Questions
1. According to the literature how does value added services impact the LSP and the
manufacturer?
2. According to the literature, what are the reasons for providing value added services to a
logistics client?
3. What value added services are being provided by Agility to Pfizer especially in regards to
packaging services?
4. What are the impacts of packaging services provided by Agility to Pfizer?
5. What operations and supply chain initiatives can agility can to improve its relation and
finances with Pfizer?

4. Chapter Two: Literature Review
This chapter of the dissertation will be focusing on the studies that have previously been
studied in the field of warehousing, logistical services and in value added services. Through this
section of the dissertation the pre existing opinions about the logistics service providers and the
manufacturers’ relationship will be noted. Furthermore the impact that value added services
have on the financial and social standing of each member will be analyzed. This section will
move forward to note how such relational issues in the supply chain can be improved for better
financial performance will be analyzed. The structure of this section will be such that first the
warehousing and logistics functions as they appear in the literature will be explained and this
will be followed by an elaboration of value added services and their importance for business
entities.
2.1 Warehousing Functions
The importance of warehousing from the perspective of a manufacturer is massive. Tompkins
et al., (2010) elaborate that there are generally four key functions of a warehouse. The first
function is to keep the product in which the warehouse is to receive the product, control the
quality of the product and then finally hold the product till it is further required. Next, the
warehouse’s function is to pick and sort the product according to the specified requirements.
The third key function of a warehouse is to pack the product or add the required value and then
finally the final function is to ship the product as and where required. The author further states
that in order to make the warehouse functions perform effectively it is vital that the design and
operations decisions regarding the warehouse are taken only with critical care. The decisions
that are required to be taken include i) design the framework and the process of the aisle
layout, ii) the process of material handling and selection, iii) the schedule of the workforce and
then finally the decisions about the technology and information flow that has to be integrated
into the warehouse.
Kleywegt et al (2004) note that the the issue of integration of transportation and inventory
services decisions has been emphasized upon by the researchers in the field of distribution and
product placement planning. The purpose of this emphasis by the researchers has been an
attempt to theoretically minimize the inventory holding and transportation costs and to
develop a reliable, flexible and systematic distribution system that is also able to minimize the
stock outs and transportation costs. In this effort Lin and Chen (2008) point out that both
deterministic and stochastic models have been applied to the issue of Inventory Routing
problem in order to develop a repeatable distribution strategy. In analyzing why these decisions
are of such critical importance to the organization, Goh et al (2001) and Ng et al (2009) say that
the operations decisions have a major impact on the throughput and the cost of not only the
organization but the entire supply chain.

5. A number of elements have been noted to have an impact on the performance of the
warehouse. The focus of literature in this regard has mostly been about the aspects such as the
location, design, layout and the sizes of the overall location as well as that of the individual
components. For example the research of Gue et al., (2006) find that the more the congestion
in the warehouse the lower will be the productivity of the employees and the larger will be the
overall costs of the organization mostly. Parikh and Meller (2009) take this point further and
state that ineffective layouts of the warehouse can lead to loss in the value of inventory thus
leading to not only a major financial burden on the logistics service provider but also to a strain
on the relationship between the service provider and the manufacturer. Thus in making the
warehousing functions effective the operational capability factors and the impact of individual
activities needs to be understood and critically developed by the logistic service provider. An
important consideration for effective warehouse management is that of the integration of
technology in the warehouse. This includes aspects such as robotic picking, real time shipping
scheduling and tracking and integrated roaster for employees in the warehouse. In this regard
Gue and Meller (2009) find that the literature available on the impact of technology on the
warehouse functions and especially on the turnaround time of inventory is significant.
2.2 Value Chain and Value Addition
The importance of relational managementfora supply chain was seen in the introduction section. This
sectionof the literature reviewwill further that argument to understand how the value added services
provided by the members of the supply chain to each other have an impact on the accrued relational
benefit and the impact that they have on the financial competences of the organization. However
before movingtothe issue of value addition for businesses, it is vital to understand what “value” is for
supplychains. Walker(2005) analyzesthe value view of supply chains and notes that organizations can
enhance theircompetitivestandingsbyunderstandingand analyzingtheirvalue streams through which
theyoperate aswell asthe parallel supplychainsthatsupporttheiroperations. According to the author
these include supply chain value streams such as those of retail stores and distributors. According to
thisvalue view of supply chains, supply chains are essential the movement of value from one node to
another such that after passing from every node the “value” or the “financial or brand worth” of a
product or service is enhanced. In the studies of supply chain management for example the ones
conductedbyHeizeretal (2009) the streamof value throughthe supplychainhasthe abilityto increase
the competitive positioningof the entire supplychainthusintroducingmore opportunitiesfor individual
organizationsintermsof more demandfor their products or services in other supply chains and also in
terms of reduced costs through better efficiencies in the operations. This is true mostly because the
focus on enhancing value automatically leads to a positive change in the competitiveness positioning
and the operations of the organization.
The other viewof the issue of value isthe “supply view”. Feller, Shunk and Callarman (2006) discussing
supply view and the value view note that the two are fundamentally different. In the supply view,
avoidingexcessinventory,the bullwhipeffect and long lead stimes are the key objectives. The authors

6. note that the value chain view was first discussed and proposed by Michael Porter in 1985 however
further work on this is still limited (Holweg and Helo, 2014).
Barney(2012) notesthat eventhoughthere usa significantamountof literature available in on various
aspectsof supplychainmanagementthe actual value addedbythisliterature is limited mostly because
of the disunionandcontinuousargumentsconcerningthe field. AccordingtoBurgessetal., (2006) some
key decisions on value chain include those concerning location decisions, facilities, flexibilities and
structural decisions. Given the arguments and differing perspectives regarding the supply chain and
value chainviewcontemporaryresearchersinwhichfield including Holweg and Pil (2008) have worked
to develop concepts such as value grids and value constellations. These concepts suggest the
organization to go beyond the linear management of supply chain relations and seek to develop
superiorvalue.Accordingto HolwegandPil (2008) thisisimportant by bundling up the work within the
supply chain such that they can achieve greater productivity, minimum costs and more effective
systems. Barney(2012) notesthatthrough suchmanagementof the value streams, an organization can
add significant value in the overall supply chain and would be better able to develop and maintain
relations that can benefit the entire supply chain.
2.2.1 Value Addition in Logistical Services
Neeraja, Mehta and Chandani (2014) discuss the issues of logistics and supply chain as they presently
exists and note that the competitiveness of the business world is increasing day by day. In this
competitiveness,transportationmanagementcomprises of an area on the basis of which organizations
can achieve effective cost performance. The Council of Supply Chain Management Professionals
(CSCMP, 2014) defines the function of logistics in the following words,
‘Thatpart of the supply chain management that plans, implements, and controls the efficient, effective
forward and reverse flow and storage of goods, services and related information between the point of
origin and the point of consumption in order to meet customers’ requirements.”
Apart from this Stern and El-Ansary (1988) have also worked to develop a definition for logistics
management which is as under:
“The term Logistics Management encompasses the total flow of materials, from acquisition of raw
materials to the delivery of the finished product to the ultimate consumer and the counter-flow of
information that controls and records the material movement’
Wang, PerssonandHuemer(2014) discussthat overtime the importance of logistical services and their
contribution in the organization grew to such an extent that Third Party Logistics Service Providers
emergedinthe market. Through such emergence the ability of the organization to outsource non core
functions of the manufacturing and sales process grew and allowed the LSPs to become as supporting
actors for the manufacturing organizations (Rabinovich and Knemeyer, 2006). The study by Wang,
Persson and Huemer (2014) however notes that even though a number of researchers have analyzed
the growth and importance of third party logistics service providers and their enhancement of value

7. addition in the supply chain, very few researchers have discussed the issue of value creation and
benefits of collaborative working.
Research by Jayaram and Tan (2010) says that value added services being provided by logistics service
providers is in fact a natural progression of expanding the logistics system within the supply chain
especially across the multinational organization whereby outsourcing the non core functions of the
organization have become a norm (Qureshi et al., 2007). The complexity in this however is noted by
Long and Nelson (2010) according to who it is critical for the logistics service providers to understand
the businessandthe marketsof the manufacturerandto be able to play a strong supporting part in the
manufacturer’s supply chain process.
In this regards Rafiq and Jaafar (2007) have noted that value addition has become a globally prevalent
strategyin the logistics services where the LSP is supporting both the pre sale production functions of
the manufacturer and the after sales service functions. By such arrangement within the supply chains
the flexibilityof the business,costefficienciesandthe levelsof customersatisfaction are improved. The
authorsnote that throughsuch relationshipswithinthe supplychainthe boththe manufacturer and the
logisticsservice providerare able to benefitsociallyandfinanciallyespecially during the times of crises.
Other value-added benefits come from the knowledge of new regulation and rules in security
compliance and safety (Chao and Lin, 2009). In this study, value-added benefits are also related
to LSP's familiarity with manufacturer's businesses, safety rules and compliance responsibility.
After the tragedy of September 11 in the United States, the House and Senate passed the SAFE
Port Act in 2006 and President Bush signed the Act into law to ensure national security. The
security requirements have changed the procedure that international logistics should follow.
Many manufacturers are not familiar with the new compliance rules and often are uncertain
about how to abide by the new security regulations. For example, the Customs-Trade
Partnership against Terrorism (C-TPAT) program has sought to enhance supply chain security
throughout the international supply chain, from point of stuffing, through to the first U.S. port
of arrival (Customs Trade Partnership against Terrorism, 2009). At the time of shipment, cargo
consolidation should be confirmed, pick-up be arranged by the carrier, containers be inspected
for integrity, and customs clearance and documentation be taken care of. This is a kind of
fraternization often occurs between the manufacturer and the LSP in addition to the core
service provided by the LSP. The sense of reduced anxiety, faith in the trustworthiness of the
provider, reduced perceptions of risk, and knowing what to expect are critical value-added
benefits to the manufacturer.
Relational benefits tend to connect firms across various linkages of a supply chain, with the
resulting pattern of close interaction, mutual commitment, and loyalty (Prahinski and Benton,
2004). While this approach has been widely recognized as important in the marketing literature
(Berry, 1995 and Su et al., 2009), the central role of relational benefits in logistics service
perceived by operations managers is often overlooked in current research. A more systematic

8. empirical investigation of the extent to which relational benefits contribute to manufacturers'
satisfaction and future logistical service purchasing decision is a timely research topic (Davis -
Sramek et al., 2008).
Palaima and Auruskeviciene (2007) extended the relational benefits concept to the logistical
service setting at the firm level and demonstrated that the same relationship benefit
dimensions suggested by Gwinner et al. (1998) and Hennig-Thurau et al. (2002) existed in parcel
delivery services. Consequently, it is learnt that acquiring logistical service is essentially a
purchasing activity in supply chain. Given the pivotal strategic role of the purchasing function in
developing effective business communication, this research believes that there is a need to
formally investigate the relational benefits which directly affect buyer's satisfaction and loyalty.
1.4 Packaging Services in Logistic Services
Two types of packaging can be identified, consumer and industrial packaging (Coyle et al.,
2003). Consumer packaging is mostly concerned with attracting customer at the retail store for
fast moving consumer goods. Industrial packaging is connected to logistics where emphasis is
on protection, ease of handling and information display.
In a value perspective, logistics is defined as, “providing time and place value of materials and
products in support of organization objectives” (Coyle et al., 2003 p.39). According to the
definition, logistic can add value to a product by delivering it at the right place and in the right
time. However, this should be done in support of a firm’s objectives. A firm’s objectives could
for example be its aspiration for a certain level of customer service by decreasing costs and
provide a high level of quality. Lean thinking is a Japanese perspective for managing processes
where the focus is on reducing non-value adding activities, such unnecessary transportation,
without lowering customer service and quality (Heizer et al., 2009). Previously, the view on
customer service has been that higher level of customer service results in higher logistics costs.
Saghir (2003) emphasizes the importance of understanding the complexity of packaging and its
influence on logistics and marketing. The important issue is to find the balance between the
customer service level, the cost of logistics and the benefits for the firm (Coyle et al., 2003).
Good packaging can have positive impact on materials handling but it could also be the other
way around. The result of poor packaging could be exemplified when oversized packages would
degenerate the materials handling operations (Coyle et al., 2003). If the package is not designed
properly, the efficiency of the logistical system will decline (Dahan et al., 2010). The ability to
display and provide information is an important advantage of packaging. Information can
relieve the materials handling operations because the information on the package allows
warehouse personnel to locate and quantify the products easily. The size and protection of
products have direct impact on materials handling as well as quality. The size aspect influences

9. the utilization of a warehouse. Size also affects the quantity of products that can be moved at
the same time. The level of protection that the package provides enables different
transportation alternatives. It is not only necessary for a package to protect the product from
physical damage, the package might also be required to support weight of products stacked
above it (Coyle et al., 2003). Efficient materials handling can improve warehouse ability to
provide customer service in terms of quick and accurate response to customer demands.
Efficient materials handling could also reduce cost by consuming less resources such as forklift-
time, manual labour and warehouse space (Coyle et al., 2003).
Customer service is a logistical activity that is also affected by packaging. Customer service has
various meaning throughout an organization and it is important to consider these aspects.
Customer service can be viewed as something that is provided by the firm to the buyer
purchasing the product. From a marketing perspective, there exist three levels of product; the
core product, the tangible product and the augmented product (Kotler, Wong, Saunders &
Armstrong, 2005). The augmented product provides secondary benefits to the purchased
product and logistical services are one of these features that add value (Coyle et al. 2003).
Services that are offered in addition to the basic service level, often to key customers, are
known as value-added services (Teece, 2010). This value adding services are often results of
unique demand from customers that is developed in collaboration between the two parties in
order to increase efficiency and effectiveness in for example quality and customer convenience
(Saghir, 2004). Value-adding services could be found in a broad span of activities such as
customized packaging, unique product mix to support manufacturing and customized bulk
transport. Packaging is an important factor in providing customer service (Saghir, 2004). For
example, a packaging solution might be good for the firm but the customer might not be able to
handle the packages at its premises and then the customer service is lost (Shafer et al., 2005).
This adds to the interrelations between packaging and logistical activities. Due to the logistical
view of this report, customer service will be handled within a logistical perspective. The role of
logistics in serving customers could be defined as (Coyle et al., 2003):
“Having the right product, at the right time, in the right quantity, without damage or loss, to
the right customer”

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