A study of logistics strategies in small versus large U.S. manufacturing firms

Abstract

INTRODUCTION Smaller businesses frequently make an assortment of logistics-related decisions, relating to purchasing, customer service, warehousing, inventory management, order management, transportation etc. (Murphy, Daly and Dalenberg, 1995). While larger organizations make these same decisions, there are continued questions about whether there are any similarities or differences between the two (Evans, Feldman and Foster, 1990). Larger companies generally have a variety of people who are trained in supply chain or logistics management. (Evans, Feldman and Foster, 1990). Smaller businesses, on the other hand, may have only one person who has logistics management responsibilities and other functions to perform (Harrington, 1995). As such, logistics management personnel at smaller companies may have less formal logistics training, and may be less experienced than at larger organizations. Whether this situation causes increased logistics costs and/ or less responsiveness in small firms has not been adequately addressed. The majority of the logistics literature focuses on large companies. A review of the literature identified two articles on small company logistics. Halley and Guilhon (1997) investigated the logistics strategies of small businesses using both anecdotal and primary data. The results revealed that among small businesses there were no good or bad logistics strategies. However, two key factors associated with small business logistics strategy development were identified. They were the role of the owner-manager involvement and the company's dependency on other firms. In another study of selected logistics practices of small businesses engaged in international trade, Murphy, Daley, and Dalenberg (1995) found different types of distribution departments among the firms studied. The idea that small and large firms have similar logistics management practices is probably something that the average manager would not expect given firm size and economies of scale (Harrington, 1995). However, Pearson and Ellram (1995) discovered that there were no statistically significant differences between small and large electronic companies in their selection and evaluation of suppliers. Similarly, Calof (1993) maintained that business size is not an obstacle to internationalization nor is it a constraint in selecting a country in which to do business. Despite the fact that logistics strategy has been widely discussed in the literature (Clinton and Closs, 1997), the research reported in this paper focuses on a typology that has been examined over the last two decades. This typology, proposed by Bowersox and Daugherty (1987), focuses on three forms of "advanced organizational structures" comprised of "process strategy", "market strategy", and "information strategy". While support for the Bowersox and Daugherty typology has been shown empirically in large firms (Clinton and Closs, 1997; McGinnis and Kohn, 1993, 2002 and 2010; and Kohn and McGinnis, 1990 and 1997) and across industries (Autry, Zacharia, and Lamb, 2008) it is not yet clear whether the typology is relevant to small firms. The purpose of the research presented in this manuscript is to identify similarities and differences in logistics strategies of large and small U.S. manufacturing firms. This research compares logistics strategies and assesses logistics strategy outcomes of large and small manufacturing firms. Levels of logistics strategy intensity (emphasis on process, market, and information) and outcomes (logistics coordination effectiveness, customer service commitment, and competitiveness) are compared. Insights and implications for logistics practitioners, researchers, and teachers are provided. The remainder of the paper is organized into six sections starting with the literature review. This discussion is followed by sections on research questions variables, and hypotheses; methodology, analysis, findings, and conclusions. …