The Importance of Logistics Efficiency to Customer Service and Firm Performance

Logistics is considered to have a significant impact on a manufacturing organization's performance. This research utilizes a pilot study, a large‐scale survey of manufacturing managers, and linear structural relations (LISREL). The research methods develop measures and test relationships among six constructs: physical supply, physical distribution, logistics spanning processes, customer service, manufacturing flexibility, and firm performance. The results from the research confirm that logistics influences a manufacturer's ability to satisfy customers and overall performance. The level of manufacturing flexibility in the firm, as indicated by the presence of advanced process technology and the participation of manufacturing management in strategy formulation, alters logistics role in organizational success.