Switching costs in logistics service Custos de mudança em serviços logísticos

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Gestao e Producao
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Aymard P.
Brito E.P.Z.
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Switching costs are related to difficulties which emerge when suppliers are changed to new ones, and they exist in all supply chain relationships. Despite the subject importance to the buying decision process, there is not much evidence about how buyers in the business-to-business setting consider them in their working routine. The main proposal here is to present an exploratory discussion on how buyers deal with switching costs and how switching costs affect buying decision. In depth interviews with buyers of logistics services of chemistry and petrol firms located in the São Paulo State - Brazil were conducted. The results show that many types of switching costs can occur simultaneously when considering changing a supplier, and each type affects differently the decision. The respondents affirmed that it is hard to objectively calculate the total cost of ownership because many of its components can be assessed only qualitatively by members of the buying department. As those people have different perceptions about each cost, that is, each person perceives differently the cost and benefits linked with a supplier substitution, a compounded evaluation is costly. The situation leads to a very stressful condition which was appointed as one of the most relevant switching costs. The higher is the satisfaction with the current supplier, the lower is the predisposition to change, and the higher is the switching costs and on the contrary, the higher is the dissatisfaction with supplier, and the higher is the intention to assume the switching costs. The complexity and specificity of the service provided increase the switching costs since it increases the perceived uncertainty.
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