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Cruise ship suppliers: A field study of the


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service supply chain
Article in Tourism Management Perspectives October 2015
DOI: 10.1016/j.tmp.2015.07.008

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Cruise ship suppliers: A eld study of the supplier relationship


characteristics in a service supply chain
Simon Vronneau a,, Jacques Roy b, Martin Beaulieu b
a
b

Naval Postgraduate School, USA


HEC Montral, Canada

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

S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

interdependence between suppliers/service providers and cruise


organizations?
This article is divided into ve main sections: The rst is the above
introduction; the second reviews the relevant literature; the third delineates the study's methodology; the fourth reports on the ndings from
the eld study, covering several aspects of the relationship, and introduces a supplier classication; the fth section expands on the importance of the supplier relationship in providing service quality; and the
last discusses implications and directions for future research.

2. Background on SCM and supplier relationship


Supply chain management is now considered a research discipline in
itself (Burgess, Singh, & Koroglu, 2006), which can be further divided
into different research themes and sub-disciplines. If one considers
only the sub-discipline of purchasing and supply management thousands of peer reviewed journal articles can be found between the
years 20022010 (Spina, Caniato, Luzzini, & Ronchi, 2013). Furthermore
the management of the supplier relations is considered to be central to
the discipline and an important area in need of further understanding of
the supply chain management dynamic in organizations (Burgess et al.,
2006; Chen & Paulraj, 2004; Co-Editors: Benn Lawson, Squire, Cousins,
Lawson, & Squire, 2006).
The relationship between an organization and its suppliers is often
looked at with a binary perspective (Wagner & Boutellier, 2002). On
one side the enterprise can be seen as having antagonist arm length relations based on the short-term horizon for the exchange of a product or
specic service where information is kept to a minimum and the focus is
on reducing transaction costs. In this type of relations, the buyer wants
to avoid any form of long term commitment to the relations (Dyer, Cho,
& Chu, 1998; Svahn & Westerlund, 2009). On the other end of the spectrum we can see relations that center on cooperation where information
is shared in order to achieve a common objective. This information sharing can go up to the strategic level taking a long-term horizon perspective to the relations in order to reduce total cost for both rms. This
is also known as a partnership model (Dyer et al., 1998; Marc Day,
Magnan, & Moeller, 2010).
This binary perspective of supplier relation is although too simplistic.
The two aforementioned options represent to the extreme end of
the spectrum where multiple forms of combinations between the
antagonist and the collaborative model may exist (Dyer et al., 1998;
Gelderman & Van Weele, 2003; Olsen, 1997; Rezaei & Ortt, 2012).
Naturally, some of these options are better suited to one rm or another
depending on the market structure governing the respective sectors.
More than 30 years ago Kraljic (1983) already suggested that a matrix was necessary to separate purchases from organizations into different categories of products, each with its own unique strategy adapted to
the given category purchased (Gelderman & Van Weele, 2003) and incidentally expanding this to also include a coherent alignment between
the relation strategy and the product category (Lindgreen, Vanhamme,
Van Raaij, & Johnston, 2013; Wagner & Boutellier, 2002). Hence, a rst
criterion to discriminate the supplier relations is the importance of the
product being bought whether it is the actual monetary cost, and its
strategic or overall importance to the nal customer (Kraljic, 1983;
Rezaei & Ortt, 2012). Wagner and Boutellier (2002) further add a characteristic to this: its commonality, where the product is not contributing
to differentiating the end product, and where no customizing is
required.
To these internal criteria Kraljic (1983) suggests that we must analyze the level of dependence between the organizations and the supplier market. Hence is the supplier in question part of a market
oligopolistic or monopolistic, or does the supplier possess special technical knowledge or even benets from strong brand equity? Therefore
a buyer must weigh in these external criteria and adjust the overall
strategy in line with these specicities (Lindgreen et al., 2013).

77

On the boundary between internal and external criteria, Wagner


and Boutellier (2002) distinguish between discrete and relational exchanges. Wherein discrete exchanges all transactions between the
contracting parties, both past and future, are assumed to be independent of one another. On the other end, the relational exchanges involve
complex social relationships. In this latter case the organizations will be
more inclined in fostering a collaborative framework. To these criteria
we can add a nal one: the allocation or resources to fostering the business relations (Dyer et al., 1998; Olsen, 1997). Therefore, even if the organization wishes to establish a collaborative framework with all its
suppliers, the investment in resources and time that these types of relations require would render this solution counter-productive.
Whereas some argue that close relationships are benecial (Gofn,
Lemke, & Szwejczewski, 2006), and others warn of their downsides
(Erin & Sandy, 2005). While the two aforementioned paper views
offer solid justication for their diametrically opposed positions, the authors still agree on the importance of those relationships and on which
degree of closeness should be sought. While no papers directly relating
to supplier relationships within the cruise industry were found, interesting elements from other sectors were explored and tested within
the cruise supply chain paradigm. Some elements that were recently
validated in a study by Gofn et al. (2006) include the following: commitment, delivery performance, joint problem solving, and long- term
vision. Overall, it was found that there remains a paucity of research
on specic attributes of close successful relationships and extant research calls for more study on the matter.
We conducted our eld study through the lens of organizational
socialization theory (J. E. Van Maanen & Schein, 1977), building on
previous research on the impact of socialization on supply chain management from Cousins and Menguc (2006) as well as its impact on supplier relations from Cousins, Handeld, Lawson, and Petersen (2006)
and service quality from the work of Cronin and Taylor (1992);
Parasunaman, Zeithaml, and Berry (1985);Parasunaman, Zeithaml,
and Berry (1988), and on SERVQUAL and its implications. The nature
of these relationships and their attributes are however perceived with
some variance. Needless to say, these constructs warrant further investigation and corroboration in order to ensure the level of external validity called for by all the above-mentioned researchers. Fundamentally,
everyone concurs that good relationships are benecial in any supply
chain; however, proposals on how to achieve these harmonious relationships for the long term often depend on the avor of the year in
the academic literature. Following from and expanding on the aforementioned theories, this paper proposes new avenues to the securement of the kinds of relationships benecial to service and tourism
supply chains.
Finally, the literature discusses two types of socialization in organizations: formal and informal (Van Maanen & Schein, 1977). These socialization mechanisms can enable the creation of relational capital,
strengthening the relation (Cousins et al., 2006) and promoting the integration of members in the supply chain (Cousins & Menguc, 2006),
which then facilitates the transmission of the norms and practices of
the parent company to the suppliers, allowing the culture to be
absorbed by the supplier and potentially fostering understanding between actors.
3. Methodology
For this study, twenty-one directors and managers at various levels
in the supply chain management department of a Miami based global
reaching cruise corporation were formally interviewed both on board
ships and shoreside. These sources also represented various classes of
ships to control for ship- and class-specic issues, and were chosen for
their critical role in the corporation and supply chain department. Furthermore nine supplier representatives serving the cruise company
were interviewed. A semi-structured interview technique, as described
in Rubin & Rubin (2005), was used in order to gain an understanding of

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S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

the strategic, tactical, and operational issues. Interviews typically lasted


60 min and focused on letting the subject elaborate on their perspective
of the organization's dynamics. They were all audio recorded and then
transcripted to texts. In total 30 h of audio recording was collected
and transcripted as part of the entire study. Themes that were touched
on included: past experience in supply chain, current role in the organizations, service quality within the supply chain, supplier relations and
integrations, as well as the state of the industry and their views for the
near future. Informal interviews of internal customers and employees
in other functions were also carried out both randomly and when specic information called for complementary data from a specic function,
as suggested by Flick (2008). This proved to be the best option when
dealing with busy people in the middle of the operations such as dockworkers and warehouse workers. In the former case, semi-structured
interviews were used; in the latter, non-structured/casual interviews,
as described by Kvale (2008), were preferred. The research program
was conducted using ethnographic techniques (see: J. Van Maanen,
1988) including lengthy observations, in line with Angrosino (2008),
and detailed note taking of the operations. Given the exploratory nature
of this research, the scope for interviews and data collection was broad,
as suggested by Stebbins (2001), allowing for the exploration of multiple perspectives, as well as ensuring that critical aspects were not excluded by too narrow a focus.

4. Results and discussion


4.1. The supplier relations
The corporation in this study is one of the three major U.S.-based
cruise corporations currently offering worldwide cruises. As such, its
brand is widely recognized and enjoys a good reputation among
cruise-goers, especially in North America, due in part to numerous, aggressive marketing campaigns in various media. Pertinently, internal
studies of the corporation consistently underscore its appeal to the average American. This wide recognition seems to have a positive impact on
the supply chain department. A logistics supervisor remarked that he
encountered many suppliers who want to work with the company: If
you sell widgets, you want to sell them to our cruise company. It's
been my experience with our cruise company. It is widely understood
that brand equity exists in business-to-customer transactions (Aaker,
1991) and that brand equity also inuences decisions to buy in a
business-to-business context (Bendixen, Bukasa, & Abratt, 2004). The
logistics supervisor's remark, however, suggests a reverse-brand equity
phenomenon, in which the supplier wants to sell to the company because of its strong brand reputation. Furthermore, managers added
that, when they were in a supply emergency, the suppliers jumped
through hoops to get them what they needed and that the managers
responded likewise. Arguably, the suppliers see the cruise line brand's
prestige and consequent visibility as benecial to their own brands, or
perhaps they see the bragging rights conferred on them as suppliers
to a major cruise line as attractive to prospective clients.
It is now well understood that efcient supply chains have developed generally good relations with their suppliers (e.g. Carr & Pearson,
1999; Choi & Hartley, 1996; Corsten, Gruen, & Peyinghaus, 2011;
Krause, Handeld, & Tyler, 2007; Salmi, 2006).In our formal interviews,
the managers in the supply chain department, when asked to describe
their relationship with suppliers, generally concurred that it was a
good and interdependent relationship, despite a very demanding environment where the volumes and velocity are high. Good relationships
with suppliers are crucial to cruise lines, for the time windows for loading supplies are frozen and no second chance exists for re-supplying the
ships. Ships cannot sail away without having the right product in the
right quantity and at the right quality secured before departure (see:
Vronneau & Roy, 2009b). And yet despite a situation potentially
fraught with tension the consensus among suppliers is that, even

though the cruise line can be a very demanding customer, it is a positive


relationship and one to which the cruise company is committed.
4.2. Suppliers' characteristics
As outlined in Vronneau & Roy (2009a), there are six main categories
of cruise ship suppliers: hotel suppliers, food and beverage suppliers
(F&B), corporate suppliers, technical suppliers, transport service providers, and fuel suppliers. A hotel supplier mainly provides products
that will be consumed or used by passengers, like mattresses, linens,
and shampoo. The F&B suppliers provide the entire food and beverage
selection, from produce and meat to alcoholic beverages. The corporate
suppliers deliver products needed for daily ofce operations, such as
computers and stationery. The technical suppliers provide both very
specic parts for engines, deck machinery, and navigation equipment
and everyday items such as garbage bins and carpeting. The service providers are mainly transportation companies as well as some logistics companies. Transport companies include airfreight, global integrators, road
and ocean carriers, and some specialized companies providing services
like brokerage. The fuel suppliers are responsible for providing the fuel to
power the ship, which amounts to a major expense for the cruise company.
Our interviews revealed that the nature of the relationship between
suppliers and a cruise line varies greatly by the type of suppliers. This
variety appears to be determined by their respective power, which is a
function of the market structure and the locus of knowledge, that is,
where the knowledge resides in the relationship. Fig. 1 illustrates graphically this supplier's power function and assigns the different categories
of suppliers to their most appropriate quadrant, but it is important to
bear in mind that the cruise industry is oligopolistic, a structure that
counterbalances some of the market conditions.
As Fig. 1 illustrates, technical suppliers, assigned to quadrant 1, operate in an oligopolistic market and provide a specialized expertise to the
cruise ship. Corporate suppliers are assigned to quadrant 2, hotel suppliers and transport services across quadrants 3 and 4, fuel suppliers
across quadrants 1 and 4, and F&B suppliers across quadrants 3 and 4.
The rationale behind these assignments will be made apparent in the
following paragraphs detailing the market conditions.
5. Markets, oligopolies and sole sourcing
Some companies dominate certain markets. One of the most contentious relationships that prevailed for several years in the cruise industry
involved a South Florida fuel supplier that secured an absolute monopoly in the state of Florida. If you want to buy marine fuels, you buy it
from [that company]. Because the cruise company had no recourse to
competitive alternatives, the supplier lacked the incentive to develop
a cooperative relationship. When the cruise company moved away
from this monopoly by pursuing alternatives the fuel company had
not foreseen, e.g. fueling outside the U.S. in various ports of call, the relationship changed drastically. Now that a balance of power has been
achieved, the two companies enjoy a closer collaboration. A few structural changes effected this transformation: First, the cruise line has experienced signicant growth in its eet size, which in turn increased
its demand for fuel; secondly, it has become a large importer of fuel
and thereby developed its own distribution network; lastly, it has diversied its re-fueling ports. When the fuel company realized the losses
that were compounding month after month and witnessed the emergence of the cruise company as a competitor, it reached out to the cruise
company in order to develop a mutually benecial partnership. Another
example of dual oligopoly exists between the cruise lines and the ocean
transport service providers, oligopolistic companies specializing in container shipping. Some companies even secure a monopoly over certain
routes. Given the globalization of supply chains in general, a cruise company is seldom in a position to have its shipments delivered on its terms.
A myth persists that, even within other departments in an organization, a large cruise company can pick from myriad suppliers eager to do

S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

79

Fig. 1. Suppliers' power classication.

business. The reality, however, is that at a certain scale of operation it


becomes increasingly difcult to nd suppliers who can provide the required quantity under the required specication. The number of suppliers capable of handling large cruise volumes is limited. At the time
of this study, for example, though four major food service distributors
supplied goods in South Florida, only two were active in the cruise
line sector. Because cruise lines need suppliers with the depth necessary
to ensure consistent supply, often nearly or completely oligopolistic
market conditions result.
The cruise line purchasing manager, characterizing the thought process of a supplier seeking the company's business, offered the following:
Well, I've stayed at a hotel or I've supplied a hotel before. I can supply a
cruise ship company with no problem. The manager added that this is a
common mistake; suppliers seeking business with cruise lines often
overlook or are unaware of the unique challenges that the cruise ship industry presents over and above those of hotels. The F&B supplier pool
provides an informative example. While many F&B offerings found on
board are common household items, very few suppliers have the infrastructure to distribute the requisite volume, and many underestimate
the quantities required weekly by each cruise ship. Ships carry, on average, between 2500 and, for the biggest class of ship currently sailing and
under construction, 8465 passengers and crew (see: Cruise Industry
News Annual Report, 2012; Marine Log, 2007). As these numbers suggest, suppliers seeking cruise line business often overestimate their capacities while underestimating the industry's demands. Moreover, a
purchasing manager explained that in his experience with both conventional hotels and cruise ship operations, cruise companies are much
more effective at monitoring the suppliers' performance and adherence
to specications than are hotels.
The nature of some of the supplies carried on ships, e.g. engine parts
and other highly specialized goods, give rise to more sole sourcing than
is common in other industries. Tellingly, a purchasing manager from a
service industry not related to cruise ships or hospitality expressed

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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S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

exchange like the following, related by a senior purchasing manager,


takes place:
What is the spec on the server that you want?
Oh, well, I got this quote from HP. This is what I need.
Well, ok. Is this what you need, or is it [the supplier] who told you
what you needed?
The problem is that internal customers are allowing suppliers
to act as free consultants laying out specications, which prevents
the purchasing agents from adopting a competitive, open-bidding
strategy.
5.2. Interdependence
Some suppliers, particularly transport service providers and some
hotel suppliers, are highly dependent on the cruise company for their
growth and success. Conversely, the cruise company is highly dependent on single suppliers of critical parts, as in the case of a marine engine
technical supplier exclusively approved to provide certain parts. According to a senior logistics manager, the relationship with some road
transport providers is excellent; the business of the cruise company
has spurred three-fourths of them to grow their businesses signicantly
by expanding their eets with new equipment and signing long-term
lease agreements. Without long-term contracts from the cruise company, these road carriers are taking a calculated risk; however, even
though they are dependent on the cruise company in the aforementioned case, they trust the current relationship.
5.3. Current practices in the relationship
The maritime industry has always been notoriously slow in paying
bills. As reported by Redlich (1942), suppliers, called ship chandlers in
earlier days, were often paid more than six-months after delivery.
Today's marine supply chain isn't much quicker with remuneration. A
senior supply chain manager, relating feedback from a supplier meeting,
said the message was clear: The cruise company needed to pay the bills
faster. Sometimes months go by before invoices are settled, and while
such delays are nothing new to the maritime business, many of the suppliers, who are not primarily marine suppliers, are accustomed to landbased standards. Tensions are compounded by the lack of transparency
in the maritime trade: Deliveries are made by third parties and suppliers
through a dual channel of direct-to-ship deliveries and the cruise line
consolidation center. This global delivery to different entities makes
tracking goods and ascertaining their stage in the order cycle no small
challenge.
Another unique feature of the cruise supply chain, according to a logistics manager, is that re-supply involves chasing a ship: We tend to
think as fast as the vessel moves, always focused on hitting a moving
target, which brings a sense of urgency. He added that this sense of urgency, albeit well understood by the suppliers, who go to great lengths
to respond expediently, is a double-edged sword: On the one hand, it
encourages suppliers to understand the nature of the business; on the
other, it exposes the cruise company's chief vulnerability. Even though
suppliers have yet to use this knowledge to their advantage, some managers felt that suppliers made clear their awareness of this chink in the
cruise line's armor.
A senior supply chain manager acknowledged that the strain on
the supplier is often considerable: We are hard on our suppliers in
the context that the expectations are really high, and we can't be
forgiving because of tight schedule. He added that he explains
the situation to new suppliers simply if not gently: The good
news is we know when the ship is going to be there, where it's
going to be, and how long it's going to be there. The bad news is

it's really going to be there, and it's really going to leave on


time. His words sum up succinctly the cruise line's intolerance
of error. In business parlance, precisely timed and targeted resupply is known as redening just in time. As the term suggests,
products for delivery must not only be on hand but also meet particular specications and particular quality levels. A senior manager offered this telling analogy: It's going to be literally our factory
and it is going to be gone at ve o'clock.
5.4. Supplier classication
From the above descriptions of the supplier-cruise company relationship and data gathered from extensive eld observations. From
this, a taxonomy of various supplier characteristics was developed, as illustrated in Table 1. While this taxonomy is by no means exhaustive, it
does capture the main characteristics found for each supplier type. In
section ve, we discuss strategies designed to enhance relations with
some of these suppliers.
6. Strategies for enhanced supplier relations and service quality
Delivering service excellence is deeply engrained in the cruise
corporation's culture. Every employee is socialized to understand the
importance of providing excellent service on board. Excellence for internal customer service is reinforced through their quality service delivery
training. It is widely understood that service quality is crucial to customer satisfaction (see: Cronin & Taylor, 1992). More recent research
(Stanley & Wisner, 2001) has also found that service quality was important to good customer relations and hence a well-performing supply
chain. One less studied aspect is the notion of end-customer service excellence and the mechanism for transmitting this understanding upstream of the client. One nding of the rst phase of this research was
that all employees within the internal supply chain of the company
have a good understanding of onboard service excellence and what is
required to deliver it. The best mechanism to gain this understanding
was both formal and informal socialization processes, the formal including orientation and training and the informal such things as taking
cruises as passengers. It was found that the extent to which one has
been socialized to the service culture was a better predictor of concern
for shipboard service excellence than was a role in the organization or
even level of education.
Particular to service supply chains at large is that the end consumption is not a product but a service. In these supply chains, an understanding of service excellence and of the importance of even one
product's contribution to it can be a determinant of success. Building
on our observations, we therefore nd that two main strategies yield
enhanced relations with suppliers and subsequent service quality: socialization and the creation of relational capital. We illustrate these
two strategies in Sections 5.1 and 5.2 with examples taken from the different categories of suppliers identied in Table 1.
6.1. Socialization
Formal mechanisms of socialization include such activities as joint
workshop and classic reporting structure (Cousins et al., 2006). For
the cruise company, these formal mechanisms took the form of suppliers' conferences, open forums in which all suppliers are invited to
participate. These meetings offer updates on the company's future and
market direction to ensure that all suppliers understand the business
model and the mutual requirements to achieve common goals. They
are also occasions for the purchasing agents and suppliers to meet
face-to-face in informal exchange. One of the most important socialization mechanisms available to all suppliers is the intranet portal, which
serves as a central repository for all information and regulations suppliers are required to know.

S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

81

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

Mostly Consolidated at a logistics


center

Technical

Mostly oligopolistic

High-value
inventory

Supplier

Shared

F&B

Finding Suppliers
with enough capacity

Balanced

Cruise line

Fuel

Free, (with some


restrictions on the
capacity to meet demand)
Oligopolistic

Balancing power

Balanced

Shared

More sourcing is offshored to low


cost countries. Very good cooperation
with some consumable suppliers
Marine suppliers are determined at
the construction of the ships. Mostly
no option to change
Local Produce suppliers sometime
used as local agent for the ships for
other types of procurement
Adversarial relationship that evolved
into a cooperative one

Corporate

Free

Open bidding and owning


the specications

Balanced

Mostly
suppliers

Long time suppliers some monopoly


in the case of computer equipment

Transport
Services

Free for road, oligopolistic


for maritime

Global timely supplies.


Long lead times global
trafc

Balanced

Cruise line

Long time road transport provider,


Ocean transport provider can have
monopoly of certain lines

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

Small high value items consolidated


at a logistics center
Most items are delivered direct to
ships
Direct to ship, except in few
locations where fuel is consolidated
and stored for later distribution
Mainly delivered to head ofce
except for few items consolidated
e.g. computers & brochures
Truck Load fo Continental and
40-ft container for overseas

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

S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

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.

7.2. Socialization best practices enacting service quality in SSC


In order to keep suppliers in line with the cruise company's culture
and goals and thereby foster a good relationship, it is essential that socialization mechanisms be enacted. For example, it was found that annual meetings with suppliers are a good way to get feedback and to
ensure the company and its suppliers are on the same page. Distributing
a quarterly newsletter is also a good way to keep suppliers abreast of recent developments and to announce new administrative requirements
and practices. On a daily basis, the intranet plays a vital role and acts
as a boundary object, in this case a central repository for all the documentations and schedules required by suppliers for interfacing with
the cruise company's supply chain. One of the most important of these
schedules is the master loading schedule, which determines shipment
dates for given voyages. Finally, one of the most effective socialization
mechanisms, one that generates both higher service quality and social
capital, is the suppliers' experiencing the product. When the suppliers
go on a cruise, whether for their personal enjoyment or for business,
they are informally socialized in the company service culture and have
the chance to interact with the nal client of the service supply chain,
giving them insight into the ultimate goal of the SSC and a better understanding of the customer reality in the particular cruise ship's supply
chain.
When signicant relational capital is created, the relationship is enhanced, a dynamic in line with current views and ndings in the literature. These suppliers were then willing to go the extra mile to fulll
requirements because they understood the nature of the demand and
the mutual benets accrued by meeting an atypical requirement or putting full effort behind an ad hoc request. This relational capital yielded
better collaboration between members of the purchasing team and
the supplier representative. This kind of collaboration often prevents
an end-user service failure, like running out of critical supplies, while
providing better service quality to the end consumer. Finally, the process of building relational capital and the resulting closeness between
certain suppliers and the cruise company led some suppliers to become
more personally involved and detail oriented in the fullling of orders.
This personal interest and pride in the relationship on the part of the
supplier yielded not only very accurate order fulllments but also highly
responsive and efcient service.
7.3. Implications
The contribution of this research is twofold: Firstly, it describes the
unique nature of the supplier relationship in the cruise sector; secondly
it re-visits current concepts and proposes avenues for understanding
the causation of service rendition quality in SSC. For academics, it proposes new data and a supplier taxonomy for further tests and research.
It also explores an under-researched area of supply chain management
and explains the suppliercruise company relationship in a specic context. For practitioners, this paper enables a better understanding of
some of the challenges presented to suppliers seeking cruise line business. Lastly, it offers some insights for other hospitality settings regarding several best practices to ensure a smooth service supply chain.
7.4. Future research directions
This research has opened the door for the undertaking of additional
research projects. While the following list of ndings is not exhaustive,
it delineates avenues for future research seeking to add to the current
body of knowledge. From the preliminary ndings on the cruise corporation side, we observed one particular phenomenon that warranted
further investigation: Both many employees within the supply chain
department and suppliers evinced high service quality motivation, a
phenomenon that warrants further investigation in the emerging area
of supply chain research. The literature has already established that
socialization mechanisms are key to organizational cultural adaptation

S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

(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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S. Vronneau et al. / Tourism Management Perspectives 16 (2015) 7684

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.

Dr. Jacques Roy is a full professor at the Department of


Logistics and Operations Management at HEC Montreal
where he is also Director of the Carrefour logistique, a
university-industry forum on Supply Chain Management
and Director of the research group CHANE that is conducting
research activities in the eld of Supply Chain Management.
Professor Roy graduated with a B.Sc. from the Royal Military
College in Saint-Jean and completed his education with an
M.B.A. and a Ph.D. in Business Administration at cole des
Hautes tudes Commerciales de Montral, (now HEC Montral). Prior to his teaching career, Dr. Roy was employed as
an aerospace engineering ofcer with the Canadian Armed
Forces. He also possesses many years of experience as a management consultant with several large Canadian corporations and governmental organizations. His expertise lies in the areas of logistics and
transportation management. Dr. Roy has authored several articles and publications in this
subject area, and has participated in many conferences at both national and international
levels.

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Mr. Martin Beaulieu is a professional researcher at HEC


Montral's Supply Chain Research Group. He holds a Master
of Science from University of Montral. His research focuses
on supply chain integration dynamics. He his a noted
researcher on supply chain management and healthcare
operations management with numerous articles and case
studies published in the last two decades as well as government commissioned studies. Among other outlets, he has
published in journals such as the International Journal of
Operations and Production Management, Supply Chain
Management : An International Journal, International Journal
of Technology Management, and Journal of Purchasing and
Supply Management.