The Linkage between Logistics Activities and Firms' Performance: An Empirical Study

Abstract

The main objective of this paper is to analyse the impact of a set of logistics activities on firm's performance. To reach this, a performance measurement system is proposed. The logistics activities studied are the ones related with warehousing, that is, inventory control, handling, packaging, picking and also the warehousing activity.

Structural Equation Modelling (SEM), in its non-parametric approach (Partial Least Squares - PLS), was performed in order to test the hypotheses formulated and the reliability of the structural model proposed. The empirical results of this study indicate that the practices developed within the logistics activities have an influence on firms' performance, mainly in their costs. Moreover, the activity that seems to have a high impact on firms' performance is the inventory control. In this sense, a special attention must be given to the way logistics activities are performed whether firms want to have not only higher responsiveness to market and higher quality of their products and services, but also lower lead times, and costs.

Keywords: Logistics activities, Performance measurement, Structural Equation Modelling (SEM)

JEL Classification: L81, M10, O52