Logistics service performance contracts: design, contents and effects

Abstract

PurposeThe purpose of this paper is to explore how the performance management (PM) process may be affected by the design and contents of logistics service performance (LSP) contracts between customer and supplier.Design/methodology/approachA case study of four manufacturing companies' way of working with contracts towards their suppliers was conducted.FindingsDifferent design and contents of contracts, containing some patterns related to industry, company size and degree of formalization, were found. The PM process with contracts was split up into one setup and one execution sub‐process. Once the setup was made, all resources were focused on measuring, analysing and improving LSP. The changed management of the PM process may be one factor explaining the improved LSP all studied customer companies perceived.Research limitations/implicationsAn explorative approach with few cases limits the possibilities to generalize the results to analytical generalization.Practical implicationsThis paper has illustrated how companies can apply LSP contracts.Originality/valueFew empirical and especially case‐based studies of LSP contracts were found.