Aligning transport performance measures with customised retail logistics: a structured method and its application

Abstract

One way in which companies can obtain competitive advantage is through customising their logistics operations to particular market segments. A challenge for businesses pursuing this strategy is to develop a performance measurement (PM) system that enables the differing objectives of divergent distribution channels to be met. However, this issue has not been fully addressed in the literature, with the one exception of Kallio et al. ’s conceptual framework (Kallio, J., Sarrinen, T., Tinnila, M. and Vepsalainen, A.P.J., 2000. Measuring delivery process performance. International journal of logistics management, 11 (1), 75–87). The aim of this paper is thus to evaluate Kallio et al. ’s approach empirically. The context of the study is the grocery retail logistics sector. An action research methodology has been deployed, including a 3-month secondment to a case company focusing on their convenience store operations. A six-step method is developed in the paper based around business process re-engineering approaches. The research identifies the type of customised logistics solution required, and from this reveals a misalignment between the focus of the retailer's current distribution performance measures and the performance objectives of convenience stores’ logistics operations. Therefore, new measures are proposed that are more appropriate to convenience stores. A review of the research after 12 months confirmed a high degree of usefulness of the new measures to the company. The paper contributes to the literature through the empirical evaluation of PM within the context of customised logistics. Existing frameworks enable this, but have not, until this paper, been tested empirically.

Keywords:

• business process re-engineering
• action research
• convenience stores
• grocery industry