Logistics and financial performance

Abstract

PurposeTo explore the present logistics performance of Finnish small and medium‐sized enterprises (SMEs) and to analyse the relationship between logistics performance and financial performance in these firms.Design/methodology/approachThe dataset comprises 424 SMEs that participated in a nationwide Finnish logistics survey in 2006. Logistics performance measures were derived from the survey data, and based on these values logistically top‐performing firms were identified within different industry groups. The financial performance of these firms was then examined vis‐à‐vis their industry peers using financial reports‐based data.FindingsThe results imply that the overall level of logistics performance among the examined companies might be at such an elementary level that no statistically observable positive linkage between logistics performance and financial performance exists. The group of firms for whom logistics is a key source of competitive advantage in this sample is small and therefore statistical analysis at an industry level might be too aggregate to reveal this linkage. It is also surprising that service level and logistics cost efficiency are positively related; thus, companies who have a relatively high‐service level tend to have relative low‐logistics costs. These findings might imply that logistics is just starting to gain more attention among SMEs in Finland and at least in the short‐term, it might be relatively easy for SMEs to gain competitive advantage by focusing more on logistics performance.Originality/valueThis study is the first large‐scale attempt to focus on the logistics performance of SMEs and analyse the linkages between financial and logistics performance among the companies using both self‐reported data and financial reports‐based data. In addition, a theoretical framework of the linkages between logistics performance and financial performance is suggested and revised based on the findings of the study. The revised framework requires testing as a part of future research.