Journal des affaires et de l'économie

Outbound Logistics Performance and Profitability: Taxonomy of Manufacturing and Service Organizations

Abstract

Matthew J. Liberatore and Tan Miller

This paper develops a taxonomy of manufacturing and service firms formed by their emphasis on different key performance metrics to monitor and manage the outbound logistics portion of the supply chain. Furthermore, this study determines whether the use of specific key metrics by firms in these different classifications varies by industry, and what effect, if any, the varying emphases on different key performance metrics within classifications have on firm financial performance. The original data for this study were obtained from SAPs Benchmarking Program for Supply Chain Planning and utilizes performance metrics data from 247 manufacturing and service firms. Cluster analysis was used to develop a taxonomy based on the outbound logistics metrics. Four clusters were found to be distinct and well-formed and emphasize different sets of outbound logistics performance metrics. The clusters were named Inventory Investment Minimizers; Low Cost, Low Service Providers; Planners and Efficient Distribution Spenders; and Heavy Distribution Spenders. This study evaluated whether the emphasis on specific sets of outbound logistics performance metrics tends to be associated with firms in specific industries, and whether differences in firm financial performance, as measured by net operating margin, were found across clusters. This is the first effort to investigate whether a taxonomy of firms can be developed based on the firms’ use of different performance metrics to monitor and manage outbound logistics.