Logistics Performance: Definition and Measurement

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Data collection methods, sources and the measures used are identified.

as customer satisfaction ratings) each have strengths and weaknesses associated with them. The purpose of this article is to examine the definition and measurement of performance in logistics research. We begin with a literature review which includes an examination of the various ways in which “performance” has been defined. Data collection methods, sources, and the measures that have been used are also identified. Next, potential sources of performance data are identified and discussed. Recommendations arising from the review complete the article.

Logistics Performance: Definition and Measurement
Garland Chow, Trevor D. Heaver and Lennart E. Henriksson
International Journal of Physical Distribution & Logistics Management, Vol. 24 No. 1, 1994, pp. 17-28 © MCB University Press, 0960-0035

Literature Review
The contents of five leading logistics journals between 1982 and 1992 (International Journal of Logistics Management, International Journal of Physical Distribution & Logistics Management and its predecessors, Journal of Business Logistics, Logistics and Transportation Review and Transportation Journal) were reviewed for studies addressing performance. A number of studies from other sources were selected for examination on an ad hoc basis. Summary of the Literature The literature may be divided into six categories. They are: (1) Conceptual works; (2) Performance definition; (3) Performance measurement; (4) “Leading edge” literature; (5) Performance as an outcome variable; (6) Mathematical/economic analyses. The first category is composed of three articles and three volumes. These conceptual works are listed and summarized briefly in Table I. Armitage studied how management accounting techniques could be used to improve productivity analysis in distribution operations[3], while Mentzer and Konrad reviewed performance measurement practices from an efficiency and effectiveness perspective[4]. Rhea and Shrock presented a framework for the development of measures of the effectiveness of distribution customer service programmes[5]. While some empirical work is reported in Byrne and Markham’s volume, a key contribution lies in its conceptual treatment of measurement issues, particularly performance indicators[6]. The volume by La Londe et al. focuses on customer service[7]. This excellent work includes an ambitious survey of shippers, carriers and warehouse executives, and provides several ideas relevant to measuring customer service performance. A

Logistics research may be defined as the systematic and objective search for, and analysis of, information relevant to the identification and solution of any problem in the field of logistics[1]. A great deal of logistics research is conducted around the premiss that a relationship exists between a particular course of action and logistics performance (or effectiveness). Unfortunately, drawing broad inferences from the work that has been done is frustrating because of the great variety of ways in which performance has been defined in the literature. The definition of performance is a challenge for researchers in any field of management because organizations have multiple and frequently conflicting goals[2]. Some define goals in terms of profits. Others may choose goals such as customer service or sales maximization. Also difficult are the tasks of selecting and developing adequate measures for the chosen definition. “Hard” measures (such as net income or accounting figures) and “soft” measures (such The authors gratefully acknowledge the financial support provided by the Social Sciences and Humanities Research Council of Canada (SSHRC). An earlier version of this article was presented at the 1993 International Logistics Congress in Toronto, Canada.


IJPD & LM 24,1

Table I. Conceptual Articles
Article/book Armitage[3]...
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