Identifying the Overarching Logistics Strategy of Business Practices

Abstract

In a 'hyper competitive context’ (D'Aveni 1994), a major issue for enterprises is the strategic use of logistics capability to gain create and leverage value in the marketplace. Management is now appreciating that a logistics strategy makes a key contribution to corporate strategy and performance. This paper investigates the extent of complementarity between the logistics strategy and business practices in 20 organisations in the management of their operations, inventory, alliances, customers, supply chain integration, performance assessment, information technology and EDI practices. Non-linear canonical correlation analysis is used to establish the degree of concordance between business practices and the logistic strategy for a sample of Australian organisations involved in freight transportation. The evidence suggests that there is very strong synergy between a logistics strategy and the broader set of business initiatives in transport businesses, giving strong support to the overarching role of logistics strategy. This is in contrast to non-transport organisations where logistics is still seen as a separate activity centre, with the exception of information technology and EDI.