An investigation of performance measurement: The impact of logistics structure and strategy

Performance measures monitor the conversion of labor and capital inputs, such as warehousing costs, into outputs, such as customer service. The research objective was to examine empirically how logistics strategy and structure relate to performance measurement across three channel positions: manufacturers, wholesalers and retailers.; A 2 x 2 typology of performance measurement was developed. The first dimension distinguished cost from differentiation performance measurement. The second dimension distinguished internal performance measurement from competitive bench-marking. These four types of performance measurement served to create six dependent variables.; Three groups of independent variables were examined. The first group consisted of: (1) formal integrative devices such as a logistics mission statement; (2) whether logistics controls customer service or logistics systems planning; and (3) the total number of activities controlled by logistics. These variables are positively related to performance measurement within all three types of firms. Thus, organizations having these attributes were found to have more extensive performance measurement systems.; The second group of independent variables consisted of: (1) the maturity of the logistics; (2) participation in business unit strategic planning by the senior logistics executive; and (3) the title level of the senior logistics executive. These variables are sporadically related to performance measurement. These variables, especially variables describing the "position" of the senior logistics executive, are of lessor importance with respect to performance measurement.; The third group of independent variables consists of: (1) the number of times logistics has been reorganized during the past five years; and (2) the frequency of updating the logistics strategic plan. These variables, possibly because they are indicative of logistical flexibility, are unrelated to performance measurement.; The major finding regarding channel position is that while firms at different levels of the channel are not equally involved in logistics performance measurement, the relationship of logistics strategy and structure to performance measurement are the same. The results of this research provide additional evidence that the "best" practices of logistics management are independent of channel position. Additional insights are provided regarding the impact of structure and strategy upon best practice.