7. - 9. 11.

2012, Jesenk, Czech Republic, EU

LOGISTICS DETERMINANTS OF BUSINESS MANAGEMENT PERFORMANCE Piotr BLAIK, Rafa MATWIEJCZUK

Opole University, Opole, Poland, EU, rmatwiejczuk@uni.opole.pl

Abstract Companies permanently search for new methods and instruments of performance improvement. The recent years have seen the progressive growth of logistics significance as a management concept influencing economic and market outcomes. In particular, more and more frequently managerial re-evaluations in the performance concept are emphasised. Trying to identify logistics factors influencing business management performance, its necessary to pay attention to changes which undergo the category of performance. Performance category is widely known and applied, but too often its not subsequently defined. Such terms as performance, efficiency, effectiveness, productivity are used as synonyms and the term performance is often restricted to the relation of outcomes and inputs. Defining performance in t he managerial aspect, one should take into account its five basic constituents: components (outcomes, goals, inputs, costs, value added), relations, criteria, indices, and determinants. The development and contemporary challenges of logistics point at a need of influence identification of: assumptions of logistics concept and implementation degree of logistics concept on business management performance. It is an impulse allowing to recognize the influence of logistics managerial aspects of the development and integration on contemporary business management. The paper attempts to empirically identify and verify the relation between logistics and business management outcomes within the research project conducted by the Chair of Logistics and Marketing, Opole University, Poland. Among the logistics determinants of business management, the following have been highlighted: implementation of flow orientation, logistics competences, implementation of logistics strategies, instruments of logistics management, logistics planning, organizational solutions in logistics, and logistics controlling. Keywords: logistics, performance, effectiveness, efficiency, management INTRODUCTION Performance category is a notion frequently used, among others, in the field of management sciences, although it is not always consistently understood and interpreted. The symptom of the lack of consistency may be the interchangeable use of such notions as performance, efficiency, effectiveness, productivity, etc. Subsequently, there is a wide range of various views, depending on the authors, concerning the nature of the basic performance dimensions, such as efficiency and effectiveness [1] [2] [3] [4] [5] [6]. The contemporary interpretations of efficiency and effectiveness point at the nature and structure of these categories as well as at some changes in their interpretation going in managerial direction. In the evaluation of logistics influence on business management performance, besides logistics effectiveness and logistics efficiency, the recent years have seen more emphasis on such elements as: logistics changeability, logistics adaptability and logistics differentiation. All these elements may be considered as the key parts of logistics performance concept and understood as its dimensions determining the structure and level of overall market and economic outcomes.

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1. THE NATURE OF PERFORMANCE CATEGORY In its general meaning, performance in comparison to other distinguished before categories is the most capacious notion, reflecting appropriate relations among outcomes, goals, inputs and costs in the structural and dynamic view. In order to explain the nature of logistics performance category, five immanent performance indications can be distinguished: components, relations, criteria, indices and determinants [7] [8]. The mentioned indications build the performance category and facilitate the explanation of the structure and dynamics of performance concept. They also determine the possible and desired levels and areas of performance analysis and evaluation. In such understood performance concept one may consequently separate specific components of performance category structure being simultaneously the basic elements of the management system the subsystems of goals, inputs, costs, outcomes and customer value. Such performance components structure extension consequently prejudges the possible perfor mance interactions and relations, their character and structure, as well as the criteria and determinants hierarchy in the whole performance concept. Such an approach to the performance concept points at the need of considering in the comprehensive process of its analysis and evaluation not only the relations between outcomes and inputs, but also the relations between: goals and outcomes, outcomes and customer value, goals and inputs, inputs and costs, etc. The relations between: (i) the inputs and potentials involved in the value creation process and (ii) the reached outcomes have to undergo the evaluation based both on teleological criterion concerning the effectiveness of customer value management (market dimension of performance) as well as on rationality criterion concerning the efficiency of business resources management (economic dimension of performance) [9]. The former dimension refers to the formation of the optimal structure of customer value added, that is such value and utility features, which satisfy the customers needs. The latter dimension refers to the formation of the optimal activities costs structure in the value creation process, as well as in reaching the rational relations between the costs and the expected outcomes / value structure. 2. MANAGERIAL REEVALUATIONS TOWARDS THE CONTEMPORARY PERFORMANCE CONCEPT In the recent years the concept of Logistics Performance Measurement (LPM) is more and more frequently presented as the basis for systemic analysis and evaluation of achievements within the framework of logistics organizational structure and logistics processes leading to value creation [10] [11]. Performance Measurement is generally understood as a development of several measures considered in different forms and according to different criteria. They may be useful in the evaluation of logistics activities and achievements as well as logistics services capacities in relation to specific objects of value creation system [12]. The trend of the LPM concept development and importance growth is characterised by the spread of many criteria considered within the concept. It can be seen in the comprehensive approach to the evaluation of the way and outcomes of performed activities and gradual spread of many criteria and measures applied within the concept. Along with the criteria and dimensions of the performance concept, such as logistics effectiveness, logistics efficiency or logistics productivity, there are other criteria which are more and more emphasised: logistics flexibility, logistics changeability, logistics adaptability, and logistics differentiation [13] [14] [15] [16]. B. Moseng and H. Bredrup [17], and A. Rolstadas [18] point at a rising role of managerial and market aspects in the development and evaluation of logistics processes performance within the LPM concept. Besides the effectiveness and efficiency, the authors also emphasise such performance dimensions and evaluation criteria as strategic capabilities of decision making, aiming at the expecting changes in logistics (changeability) and capabilities of logistics adaptation to changeable situations (adaptability). The authors, who perceive the LPM concept as the integration of three dimensions: (i) effectiveness, (ii) efficiency and (iii) changeability / adaptability, emphasise the need for activities optimisation and comprehensive evaluation of the involved achievements within the LPM model. They
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simultaneously emphasise the aspect of strategic consciousness and managerial approach to changes, or the aspect of capacity and capabilities creation in relation to the active logistics adaptation to the changes. B. Fugate, J. Mentzer and Th. Stank [19] pay attention to a little different aspect of performance concept development. In their opinion, the key element of logistics performance concept is the desired differentiation level of customer value creation process and logistics services, stimulating the logistics excellence and leading to sustained, long-term competitive advantage on a given market segment [20]. Logistics excellence in the field of customer value creation and other achievements may be significantly realized by uniqueness and distinctive logistics activities and services in comparison to the key competitors. It means that apart from effectiveness and efficiency, logistics assets and logistics achievements are perceived as differentiated and distinguished in a given market segment, ensuring the best net value for the customer. In this aspect, the concept of logistics achievements evaluation is defined in its multidimensional sense as a symptom of the integration of effectiveness, efficiency and differentiation (competitive advantage outcomes) connected with logistics activities performance. 3. THE SCOPE AND DIRECTIONS OF LOGISTICS INFLUENCE ON BUSINESS PERFORMANCE IN THE LIGTH OF RESEARCH The level and growth of business management performance significantly depend on the development and efficient implementation of contemporary management concepts. One of the concepts is contemporary logistics. Business logistics concept, which is implemented in a comprehensive way, may be perceived as a performance orientation and a determinant of business performance growth. The most beneficia l outcomes of implementing logistics into business management system are [21] flow time reduction, better delivery accuracy and reliability, increasing capacity of services as well as total logistics costs reduction. In the logistics field, there are many factors determining not only the growth of logistics performance, but also the growth of business management performance. The improvement of logistics performance level and mutual relations among its components have a positive influence on business management performance, first of all including the achievement of expected market and economic outcomes by a company (fig. 1).

Determinants influencing logistics development

Logistics concepts (levels of logistics evolution / development)

Logistics performance (expected outcomes concerning customer service and logistics costs)

Logistics determinants influencing changes in business management

Business management performance (expected market and economic outcomes)

Fig. 1. Research framework concept concerning logistics influence on business management performance In the recent years, a lot of research concerning identification of relations between logistics and business performance have been conducted [22] [23] [24], including the evaluation of the scope and level of logistics influence on business management performance components [25] [26] [27] [28] [29]. The results of empirical research conducted between 2009 and 2011 by the Chair of Logistics and Marketing at Opole University, Poland (CL&M) may have interesting contribution to the comprehensive evaluation of the relation between the development and implementation of logistics concept in business practice and business management as well as achieved outcomes [30]. CL&M research results show that there is a positive relationship between: (i) logistics concept implemented
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in companies, including implemented processes and solutions in the logistics field and (ii) the achievement of economic and market goals as well as outcomes by a company, affecting business management performance level. The range of relationships between the implemented logistics concept and variables concerning the influence of logistics components and processes on business goals achievement is characterised by V-Cramer correlation coefficients (tab. 1). Tab. 1. The correlation between (i) logistics concept implementation and (ii) logistics processes influencing business goals achievement and business management performance in the light of CL&M research. Logistics concept implementation (i) Logistics processes influencing business goals achievement and business management performance (ii) Integration of logistics strategy and business/corporate strategy Logistics concept st nd rd th 1 , 2 , 3 or 4 level of logistics evolution [31] Supplier relationship management (SRM) systems development Customer relationship management (CRM) systems development Internal functions and activities integration within a company Goods and information flow optimisation Logistics innovations development V-Cramer coefficient Economic goals 0,35 0,35 0,40 0,40 0,45 0,42 Market goals 0,41 0,40 0,30 0,41 0,39 0,47

The highest correlation degree shows the relationship between: (i) the logistics concept implementation and (ii) the influence of logistics innovations development on market goals achievement (V-Cramer=0,47), as well as the relationship between the logistics concept implementation and the influence of goods and information flow optimisation on economic goals achievement (V-Cramer=0,45). A little weaker correlation degree can be seen in the relationship between: (i) the symptoms of logistics concept implementation, including implemented processes and solutions in the logistics field and (ii) economic and market outcomes level (change) achieved by a company (tab. 2). V-Cramer correlation coefficient shows the range from 0,40 (maximum) to 0,30 (minimum). The value of V-Cramer=0,40 concerns the relationship between: (i) responsiveness speed and accuracy and (ii) EBITDA level perceived as an economic outcome. The value of V-Cramer=0,30 refers to the relationship between: (i) total costs / earnings management system implementation and (ii) ROA and EBITDA levels perceived as the economic outcomes. The research results show that the mentioned attempts to evaluate the logistics concept (flow orientation) implementation degree into business management system, as well as the attempts to evaluate the relationships between (i) logistics components and processes and (ii) business goals achievement may point at a certain influence of selected aspects of logistics concept implementation on business management system changes and business management performance. The research results also confirm a certain lack concerning the implementation of logistics concept (flow orientation) in business management and show the possibilities of wider exploitation of logistics capacity/potentials in business management field.

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Tab. 2. The correlation between (i) the symptoms of logistics concept implementation, including implemented processes and solutions in the logistics field and (ii) economic and market outcomes level (change) achieved by a company in the light of CL&M research. Symptoms of logistics concept implementation, including implemented processes and solutions in the logistics field (i) Logistics concept implementation 1 , 2 , rd th 3 or 4 level of logistics evolution
st nd

Economic and market outcomes level (change) achieved by a company (ii) ROA EBITDA Market share Customer base ROA EBITDA Market share Customer base ROA EBITDA EBITDA Logistics costs level Total turnover ratio Market share EBITDA

V-Cramer coefficient

0,32 0,33 0,32 0,31 0,34 0,40 0,36 0,36 0,30 0,30 0,30 0,31 0,31 0,31

Responsiveness speed and accuracy

Total costs / earnings management system implementation Inventory management

Time cycle concept implementation Development of optimal structure of logistics costs CONCLUSIONS

In an attempt to identify the relationships between logistics development and business management performance, it is important to emphasise the following issues, which have the key importance for empirical research conducted in the field: World symptoms and determinants of logistics development, which show a significant degree of worldclass logistics integration, determine contemporary logistics nature and strategic importance for business management performance growth, Classification and hierarchy of the logistics determinants of business management is embedded on, among others, the nature and mutual relation between (i) logistics development determinants and trends and (ii) logistics concept and logistics system, The possibilities and degree of logistics influence on expected market and economic outcomes, and in consequence on business management performance, primarily depend on the awareness of logistics concept implementation benefits and advantages, Logistics concept influence on business management performance may be strengthened by logistics management subsystems, in particular by goals, strategies, organizational structures and logistics tools.

LITERATURE
[1] [2] Gpfert, I., Die Anwendung der Zukunftforschung fr die Logistik, in: I. Gpfert (Hrsg.), Logistik der Zukunft Logistics for the Future, 3. Aufl., Wiesbaden: Gabler Verlag, 2001, pp. 60-61. Hadamitzky, M., Analyse und Erfolgsbeurteilung logistischer Reorganisationen , Wiesbaden: DU-Verlag, Gabler Verlag, 1995, p. 235, p. 251.
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[3]

[4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23]

Delfmann, W., Reihlen, M., Wickinghoff, C., Prozessorientierte Logistik-Leistungsrechnung, in: W. Delfmann, M. Reihlen (Hrsg.), Controlling von Logistikprozessen. Analyse und Bewertung Logistischer Kosten und Leistungen , Stuttgart: Schffer-Poeschel Verlag, 2003, p. 25. Becker, T., Prozesse in Produktion und Supply Chain optimieren, 2. Aufl., Heidelberg: Springer-Verlag, 2008, p. 12. Langley, C., Jr., Holcomb, M., Creating Logistics Customer Value, Journal of Business Logistics 1992, Vol. 13, No. 2, p. 11. Fugate, B., Mentzer, J., Stank, Th., Logistics Performance: Efficiency, Effectiveness, and Differentiation , Journal of Business Logistics 2010, Vol. 31, No. 1, pp. 44-46. For more details see: Blaik, P., Logistyka. Koncepcja zintegrowanego zarzdzania, Warszawa: Polskie Wydawnictwo Ekonomiczne, 2010, pp. 411-428. For more details see: Blaik, P., Zarzdcze przewartociowania w koncepcji efektywnoci logistyki, Gospodarka Materiaowa i Logistyka 2012, nr 1, pp. 2-8. For more details see: Blaik, P., Logistyka. Koncepcja zintegrowanego zarzdzania, op. cit., pp. 411-420. See: Chow, G., Heaver, T., Henriksson, I., Logistics Performance: Definition and Measurement, International Journal of Physical Distribution & Logistics Management 1994, Vol. 24 , No. 1, p. 22 and next. See: Caplice, C., Sheffi, Y., A Review and Evaluation of Logistics Metrics , The International Journal of Logistics Management 1994, Vol. 5, No. 2, p. 18 and next. See: Gpfert, I., Haage, G., Zeitfhrerrschaft im Wettbewerb und Time Based Performance Measurement , Jahrbuch der Logistik 2003, pp. 175-177. Tangen, St., Evaluation and Revision of Performance Measurement Systems , Stockholm: Department of Production Engineering, Royal Institute of Technology, 2004, p. 45. Moseng, B., Bredrup, H., A Methodology for Industrial Studies of Productivity Performance, Production Planning and Control 1993, Vol. 4, No. 3, pp. 198-206. Rolstadas, A., Enterprise Performance Measurement, International Journal of Operations & Production Management 1998, Vol. 18, No. 9/10, pp. 989-999. Fugate, B., Mentzer, J., Stank, Th., Logistics Performance: Efficiency, Effectiveness, and Differentiation , op. cit. Moseng, B., Bredrup, H., A Methodology for Industrial Studies of Productivity Performance, op. cit. Rolstadas, A., Enterprise Performance Measurement, op. cit. Fugate, B., Mentzer, J., Stank, Th., Logistics Performance: Efficiency, Effectiveness, and Differentiation , op. cit. See also: Langley, C., Holcomb, M., Creating Logistics Customer Value, op. cit., p. 7 and next. Dehler, M., Entwicklungsstand der Logistik. Messung Determinanten Erfolgswirkungen, Wiesbaden: DUVerlag, 2001, p. 28. Dehler, M., Entwicklungsstand der Logistik. Messung Determinanten Erfolgswirkungen, op. cit., pp. 2452. Engelbrecht, Ch., Logistik Outsourcing: Erfolgsfaktoren und Erfolgswirkung Ergebnisse aus der Praxis, in: Erfolg durch Logistik. Erkenntnisse aktueller Forschung , J. Weber, J. Deepen (Hrsg.), Bern-Stuttgart-Wien: Haupt Verlag, 2003, pp. 43-72. Fugate, B., Mentzer, J., Stank, Th., Logistics Performance: Efficiency, Effectiveness, and Differentiation , op. cit. Gerstenberg, F., Produktivitt in der Logistik, Mnchen: Huss-Verlag, 1987, pp. 37-39. Bowersox, D., Closs, D., Stank, Th., 21st Century Logistics: Making Supply Chain Integration a Reality, Oak Brook, IL: Council of Logistics Management, 1999, p. 24. Dehler, M., Entwicklungsstand der Logistik. Messung Determinanten Erfolgswirkungen, op. cit., pp. 233-243. Engelbrecht, Ch., Logistik Outsourcing: Erfolgsfaktoren und Erfolgswirkung Ergebnisse aus der Praxis, op. cit., pp. 62-64. Engelbrecht, Ch., Logistikoptimierung durch Outsourcing, Wiesbaden: Gabler Verlag, 2004, p. 218 and next. Main details of the CL&M study are as follows: The research has been conducted in 111 companies operating in Poland, representing five lines of business (sample structure): mining and extraction mining 5,4%; industrial processing 27,9%; media production and delivery (energy, gas, etc.) 1,8%; building engineering 11,7%; commerce 53,2%. Sample structure based on a number of employees: 1-100 employed 26,1%; 101-500 employed 41,4%; 501-1000 employed 13,5%; 1001-2500 employed 9,9%; 2501-5000 employed 2,7%; over 5000 employed 6,3%. Responsiveness rate has been about 11,1%. The data has been collected using
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[24] [25] [26] [27] [28] [29] [30]

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CAWI method (Computer Assisted Web Interview). Statistics analysis has been conducted using chi-square test and V-Cramer coefficient values. For more details see: Sprawozdanie merytoryczne (punkt D) do raportu kocowego z realizacji projektu badawczego wasnego pt. Logistyczne determinanty zarzdzania przedsibiorstwami, Katedra Logistyki i Marketingu Uniwersytetu Opolskiego, report from research working paper, Opole 2011, 125 pp. See also: Blaik, P., Z bada nad wpywem logistyki na efektywno przedsibiorstwa , Gospodarka Materiaowa i Logistyka 2012, nr 4, pp. 2-9; Matwiejczuk R., The Influence of Logistics Potentials on Business Management, LogForum 2012, Scientific Journal of Logistics, Wysza Szkoa Lo gistyki w Poznaniu, Vol. 8, Issue 3, No. 3, Pozna, pp. 201 -216. [31] Logistics concepts based on: Blaik, P., Logistyka. Koncepcja zintegrowanego zarzdzania, op. cit., pp. 35-41.