Applied logistics knowledge impact on financial performance

Applied logistics knowledge impact on financial performance Purpose – The purpose of this paper is to examine the relationships between internal process improvement investments, applied channel logistics knowledge, and financial performance for make‐to‐order (MTO) and make‐to‐stock (MTS) manufacturers. This study takes the position that knowledge, specifically tacit or applied knowledge, may serve as a key indicator of organizational performance. In this study, the tacit knowledge exhibited in intentional logistics integration activities is captured in the construct applied channel logistics knowledge. Design/methodology/approach – A structural equation model, controlling for firm size and demand uncertainty, is used to examine these relationships. A sampling frame of 1,264 senior manufacturing “executives” provided 222 usable surveys representing 210 firms. Findings – The results show that for MTO firms, higher investments in internal process improvement relate to higher applied channel logistics knowledge, whereas for MTS firms, the relationship does not hold, and this difference is significant. In addition, the results indicate a positive relationship between internal process improvement investment and financial performance for MTO firms, whereas again the relationship does not hold for MTS firms. Both MTO and MTS firms show increased financial performance when applied channel logistics knowledge increases, although the increase in financial performance is significantly greater for MTO firms. Originality/value – Historically, the success of integration strategies has been postulated to be equally effective for MTO and MTS firms, a “one‐size‐fits‐all” approach to improving system effectiveness. However, given the inherent differences in these manufacturing strategies, this speculation deserves further investigation and serves as the focus of this research. The use of the tacit knowledge construct applied channel logistics knowledge is also unique and of value in understanding supply chain relationships. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Operations & Production Management Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0144-3577
DOI
10.1108/01443571111153058
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine the relationships between internal process improvement investments, applied channel logistics knowledge, and financial performance for make‐to‐order (MTO) and make‐to‐stock (MTS) manufacturers. This study takes the position that knowledge, specifically tacit or applied knowledge, may serve as a key indicator of organizational performance. In this study, the tacit knowledge exhibited in intentional logistics integration activities is captured in the construct applied channel logistics knowledge. Design/methodology/approach – A structural equation model, controlling for firm size and demand uncertainty, is used to examine these relationships. A sampling frame of 1,264 senior manufacturing “executives” provided 222 usable surveys representing 210 firms. Findings – The results show that for MTO firms, higher investments in internal process improvement relate to higher applied channel logistics knowledge, whereas for MTS firms, the relationship does not hold, and this difference is significant. In addition, the results indicate a positive relationship between internal process improvement investment and financial performance for MTO firms, whereas again the relationship does not hold for MTS firms. Both MTO and MTS firms show increased financial performance when applied channel logistics knowledge increases, although the increase in financial performance is significantly greater for MTO firms. Originality/value – Historically, the success of integration strategies has been postulated to be equally effective for MTO and MTS firms, a “one‐size‐fits‐all” approach to improving system effectiveness. However, given the inherent differences in these manufacturing strategies, this speculation deserves further investigation and serves as the focus of this research. The use of the tacit knowledge construct applied channel logistics knowledge is also unique and of value in understanding supply chain relationships.

Journal

International Journal of Operations & Production ManagementEmerald Publishing

Published: Jul 19, 2011

Keywords: Logistics; Knowledge; Manufacturing strategy; Process improvements; Integration; Make to order; Make to stock

References

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