Journal of Transportation Management

Volume 27 | Issue 1 Article 5

7-1-2016

An empirically derived framework of logisticsmanagement strategyMichael A. McGinnisPenn State New Kensington Campus, mam47@psu.edu

Ali KaraPenn State York Campus, axk19@psu.edu

Leslie I. WolfePenn State Electro-Optics Center, lid101@psu.edu

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Recommended CitationMcGinnis, Michael A., Kara, Ali, & Wolfe, Leslie I. (2016). An empirically derived framework of logistics management strategy.Journal of Transportation Management, 27(1), 31-44. doi: 10.22237/jotm/1467331440

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AN EMPIRICALLY DERIVED FRAMEWORK OF

LOGISTICS MANAGEMENT STRATEGY

Michael A. McGinnis, CPSM, C.P.M. 1

Penn State New Kensington Campus

Ali Kara

Penn State York Campus

Leslie I. Wolfe

Penn State Electro-Optics Center

ABSTRACT

The purpose of this paper is to present an empirically derived framework for Logistics Management anddiscuss how it integrates organization’s short-term objectives with the need to respond to the complexexternal environment. Organizational theory, strategic planning and logistics management literature werereviewed carefully in identifying the conceptual support for the derived framework of logistics managementand organizational competitiveness. The proposed generalized framework demonstrates that LogisticsManagement Strategy has the strongest positive effect on Organizational Competitiveness when it ismediated by Logistics Coordination Effectiveness and Customer Service Commitment. Overall LogisticsStrategy is a necessary, but not sufficient, condition for increased organizational competitiveness. If theOverall Logistics Strategy is accompanied by (a) effective logistics coordination and (b) customer servicecommitment then organization competitiveness is likely to be greater. This conceptual study contributes tothe field by presenting a generalized framework to improve researcher and practitioner understanding of therole Logistics Management in Organizational Competitiveness. This study integrates previous research andthought domains to develop a generalized framework that guides our understanding of the role of LogisticsManagement and its consequences on Organizational Competitiveness.

INTRODUCTION

There has been a modest effort in the literature thatattempts to develop a generalizable framework thataddresses the role of logistics management inorganizations. Much of this discussion focuses onthe specific activities and relationships amongorganizational components. For example, Mentzer,et al. (2001) conducted an extensive examination ofthe literature and developed a model of inter-corporate and inter-functional (intra-corporate)collaborations that led to supply chain flows inproducts, services, information, financial resources,demand, and forecasts that resulted in customersatisfaction/value /profitability/competitiveadvantage. Although they provided some insights

into supply chain management’s components, themodel provided little explanation into the dynamicsof logistics management.

Over time there has been a moderate level ofdebate among scholars regarding the meaning ofbusiness logistics and, later, supply chainmanagement. However recent discussions havefocused on examining the relationship of supplychain management with logistics, marketing,production, and operations management (Mentzer,Stank, and Esper, 2008). Their efforts contributedto the development of a hierarchy of research focusfor future debate of the relationships of inter-firmsupply chain phenomena, intra-firm functionalphenomena, and functional level phenomena.

1 Deceased

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Specifically, they proposed a hierarchy of researchfocus comprised of three levels. Level 1 researchwould examine functional level phenomena. Thethree areas of this level were Logistics (time andplace transformation), Marketing (exchangetransformation), and Production (physicaltransformation). At this level research would focuson the specific key elements of these three areas.Level 2 research would examine OperationsManagement. This level would focus on therelationships among intra-firm functional levelphenomena of logistics, marketing, and production.Finally, Level 3 research would examinerelationships among inter-firm supply chainphenomena.

The focus of this research is on the role of logisticsin contributing to organizational effectiveness.2 Asdescribed by Mentzer, er al (2008), the purpose oflogistics is time and place transformation byplanning, controlling, and executing activitiesassociate with seven activities. They are Transportnetwork design and management; Warehouselocation, design, and management; Materialshandling; System inventory management; Ordermanagement and fulfillment; Procurement; andCustomer service. In this manuscript the authorsfocus on Overall Logistics Strategy (OLS),customer service, and its role in organizationaleffectiveness. The authors will integrate a seminalorganizational theory with the empirical findings oftwenty-five years of research into a generalizedframework to guide logistics management strategy.This study is organized into several sections. Wefirst provide an overview of an organizational theoryconstruct. Next we present information aboutselected insights from several well-respectedscholars in logistics. Third, we present theconceptualization and validation of the proposedempirically based framework of logisticsmanagement, and discuss the context of logisticsmanagement within the organization. Finally, weprovide conclusions and discussion that include thesignificance of this manuscript for teachers,practitioners, and researchers of logisticsmanagement.

2 The authors appreciate the helpful commentsprovided by James R. Stock on an earlier draft ofthis manuscript.

THEORY AND CONSTRUCTJames D. Thompson (1967) postulated that anorganization faces a dichotomy of (a) having tomaster its core technologies (the technologicalsubsystem) while (b) responding to a dynamic anduncertain external environment. The technologicalsubsystem attempts to isolate itself from the externalenvironment by (in order of preference):

Sealing—where core technologies aresealed from the external environment.Thompson (1967) mentions the continuousprocessing of chemicals as an example of aprocess where there is a high degree ofcontrol with little influence of outsideinfluences.

Buffering—where input and output“cushions” such as raw material safetystocks and finished goods inventoriesinsulate the technological cores fromfluctuation in supply and demand.

Smoothing—where supply and demand aremanaged to reduce fluctuations in demandon the technological core. Examples ofsmoothing include peak and off peak pricing(of electric power usage; airline, hotel, andrental car pricing; early-bird pricing inrestaurants; and the scheduling of non-emergencies in health care facilities.

Adapting—where the technological core isadjusted in anticipation of changes in theexternal environment. Here forecasting,employee scheduling, and the use of casual(on call) employees are examples ofadapting.

Rationing—where an organization may setpriorities (ABC analysis of products,customers, and markets), placing customerson allocation of scarce products, and settingof treatment priorities in health careorganizations.

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Core technologies are usually assessed on hard,objective measures of performance such as priceper item, performance versus deadlines, output perunit time, service versus service standards,performance versus budget, and quality versusstandards. The external environment is dynamic andis evaluated based on soft measures such asgeneralized norms, standards of good practice,elements expressing the public interest, and marketdynamics. These measures of success are likely tobe abstract or subjective.

The organization’s institutional layer oradministrative subsystem mediates the technologicaland the external environment (In the Mentzer et al,(2008) article, Level 3 of Figure 4 is comparable tothe concept of mediating between the internal andexternal supply chains). Attempts to mediate therelationship between organizational subsystems andthe external environment result in a “paradox ofadministration,” where both flexibility from thetechnological core and certainty in the externalenvironment are simultaneously sought. Therefore,the administrative subsystem seeks to obtainadequate commitment from the institutionalsubsystem to achieve technological core success interms of hard measures of performance and fromthe technological subsystem enough capacity andslack to permit administrative discretion. This couldbe described as seeking order in schizophrenicsurroundings.

The challenges of the administrative subsystemdescribed in the previous paragraph are similar tothe ideas summarized in Figure 4 of the Mentzer, etal (2008) article. Here Logistics, Marketing, andProduction are considered as “functional areas” thatOperations Management coordinates within the firmwhile Supply Chain Management is a coordinatingconcept that balances its supply chain with thesupply chains of other organizations. However,Logistics, Marketing, and Production are not trulyclosed systems which operate in isolation. Thefollowing paragraphs provide a more holisticperspective of the nature of logistics in which short-term (technologically focused) and long-term(institutional level) objectives have to mesimultaneously managed.

PERSPECTIVES OF SHAPIRO ANDHESKETT

In a similar line of thinking, Shapiro and Heskett(1985) discussed a fundamental dichotomy oflogistics management. On the one hand, theintricacies of the day-to-day operations oftransportation, inventories, sourcing, network andlocation analysis, and control and coordination mustbe managed. On the other hand the broad,qualitative, long-term aspects of logistics must berecognized to insure that organizational objectivesare achieved. This dichotomy was summarized byShapiro and Heskett as the “The Two Faces ofLogistics” where both (a) tactical, short-term,quantitative, and detailed analysis and (b) broad,qualitative, long-term, and strategic considerationhave to be factored in simultaneously for effectivelogistics management.

The insights provided by Shapiro and Heskett(1985) and Thompson (1967) provide thefoundations of a framework for understanding theenvironment in which logistics managementoperates. More specifically, while logisticsmanagement has to execute its role efficiently basedon measurable performance outcomes (cost peritem picked, customer service versus customerservice standards, inventory levels, stock outfrequencies, and a host of other evaluative criteria),it also has to help the organization to achieve itsoverall objectives (on-time new productintroductions; quality standards; compliance with anarray of local, state, national, multi-national, andinternational laws and regulations; and profitabilitygoals). The following section presents anempirically derived framework that explains howlogistics management balances the contradictions ofthe technological core and the external environmentto contribute to organizational effectiveness.

PROPOSED FRAMEWORK ONLOGISTICS STRATEGY

In their original discussion of Process, Market, andInformation Strategies, Bowersox and Daugherty(1987) recognized that classification of organizationsbased on strategic orientation was not absolute and

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that organizational forms (strategic orientation)overlapped. Further, they recognized that manyfirms combine more than one type of orientation andthat no single type dominates within an industry.According to Wheelen and Hunger (2010), thebasis for this theoretical structure lies within theframework of strategic management theory.

The process of classical strategic managementbegins with environmental scanning (identifyingstrategic factors) followed by strategy formulation(creating mission statement, objectives, strategies,and policies). The next stage is strategyimplementation (developing programs, budgets,procedures) and finally evaluation and control(monitoring objectives). These activities proceed ina sequential, yet interactive, progression whereprevious steps may be modified based on feedbackobtained from subsequent steps. For example,challenges in strategy implementation may cause anorganization to rethink portions of strategyformation. Once in place, change spreads throughthe organization as it evolves over time. The overallobjective of strategic management is to insure thatan organization remains healthy in a business senseand can continue to advance its competitiveadvantage in the market place. The role of logisticsmanagement is to insure that its strategies supportthe overall strategy(ies) of the firm.

The strategy formulation phase also takes place atthe functional level (Wheelen and Hunger, 2010).Here each business unit such as marketing, finance,R&D, operations, purchasing, logistics, humanresource management, and information technologyin turn must formulate their functional area strategies.The alignment of functional strategies with theoverall corporate strategy is needed to achieve aunified effort working towards the common goal. Agreat deal of research in strategic management andrelated fields addresses how policies and objectivesare developed and implemented within anorganization.

Hult, Ketchen, and Arrfelt (2007) used theories oforganizational learning and information processing toinvestigate how the culture of competitiveness andthe knowledge base shape supply chain

management strategy to meet the challenges ofcompeting within a volatile market. The implicationof this research is that maintaining competitiveadvantage is often driven by successful strategicmanagement policies at the functional levels as wellat the corporate level. Moreover, Defree and Stank(2005) studied how strategic management principlesand processes impacted supply chain structuraldevelopment and performance. The authors foundan iterative relationship within the framework ofstrategy, structure and performance processeswhich suggested that supply chain managementstrategies needed to be aligned with their partners.This research illustrates a broader issue of thesequential nature of the strategic managementprocess driving the functional areas within thebusiness unit. Heskett (1977) emphasized thatlogistics considerations can play an important role inachieving strategic objectives, such as increasedmarket share or increased profits. In traditionalcorporate structures, successful logistics strategyshould result in increased effectiveness of businessoperations. Among the many functional areasaffected, customer service is recognized as an areaof primary concern for many organizations.Therefore, effective logistics can result in enhancedcustomer service operation.

Tseng (2009), proposed a conceptual framework touse a knowledge chain based on customer, supplier,and competitor information to support and improvethe organization’s competitive advantage.Donaldson (1995) examined manufacturingcompanies and concluded that organizations whichwere more responsive to customer needs would bebetter able to improve their competitiveness. Therehas been a large body of research on many facets ofcustomer service both from the empirical andtheoretical perspectives. The overwhelming resultsleave little doubt that customer service at both thefunctional and corporate levels can provide asubstantial competitive advantage. An examinationof several selected published research articlesshown in Table 1, indicates that logistics strategyaffects logistics coordination effectiveness (LCE),customer service commitment (CSC), andcompany/division competitiveness (COMP).

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However, these articles do not provide a clearunderstanding of the relationships among logisticsstrategy, LCE, CSC, and COMP. Furtherexamination of results of additional research willprovide additional insights into how logistics strategyintegrates short-term objectives and responds to theexternal environment in order to achieveorganizational competitiveness. For example,McGinnis and Kohn (1990) identified that LCE,CSC, and COMP varied among logistics strategies(Intensive, Integrated, Low Integration, and LowEffectiveness) but did not identify clear relationshipsamong those variables. Again, McGinnis and Kohn(1993) identified logistics strategy clusters andfound that LCE, CSC, and COMP varied amongthese clusters without identifying clear causalrelationships. Clinton and Closs (1997) focused onthe Bowersox/Daugherty typology to examine theroles of Process, Market, and Information strategiesand concluded that each strategy had a uniqueemphasis (e.g., process strategy akin to internalintegration, market strategy similar to externalintegration, and information strategy similar tointegrated planning and operations). However, theywere not successful at developing an integratedconceptual model of logistics strategy.

Autry, Zacharia, and Lamb (2008) identified twodistinct logistics strategies, Functional LogisticsStrategy (whose primary goal was maximumlogistics efficiency) and Externally OrientedLogistics Strategy (whose main goal is to respondquickly and efficiently to changing customer needs,outbound delivery, and support and services). Theirassumption was that these two strategies weremutually exclusive of each other, concluding that ablend of these two strategies in one organizationwas unlikely to be found. Finally, McGinnis, Kohn,and Spillan (2010) compared empirical data onlogistics strategy collected over an eighteen yearperiod and concluded that LCE and CSC wouldbetter measure logistics strategy outcomes.However, they did not develop a clear conceptualrelationship between logistics strategy and theoutcomes. Subsequently, the authors hypothesizedthat there may be relationships among logisticsstrategy, LCE, CSC, and COMP. The followingparagraphs present the conceptual basis for the

integrated framework. This framework proposesthat logistics strategy and organizationalcompetitiveness can be summarized using theseinterrelated components that influence one another.Table 2 provides brief description of eachcomponent based on the literature support.

Structural Representation of the ConceptualFrameworkIf we consider logistics strategy as a higher orderlatent construct consisting of Bowersox andDaugherty dimensions, then a conceptual model canbe developed to validate this structure andinvestigate the linkages between logistics strategyand organizational outcomes. Bowersox andDaugherty (1987) suggested that process(PROCSTR), market (MKTGSTR), andinformation strategies (INFOSTR) have a commonobjective of managing the logistics process. There isa strong need to examine the interactions amongPROCSTR, MKTGSTR, and INFOSTR and howthey further organizational strategies. Literaturelisted in in Table 1 support the argument that apossible course of inquiry would be to (a) examinethe roles of PROCSTR, MKTGSTR, andINFOSTR in logistics strategy and (b) how LCErelates to overall logistics strategy, (c) how CSErelates to overall logistics strategy and organizationalstrategy, and (d) how logistics strategy relates toCOMP.

Accordingly, the first component of this conceptualmodel is “Overall Logistics Strategy” which iscomprised of three dimensions discussed byBowersox and Daugherty (1987). They are“Process Strategy”, “Market Strategy”, and“Information Strategy”. Inspection of thecomponents of these three constructs suggests that:

Process Strategy corresponds well withThompson’s (1967) “Technological Core”and the Shapiro and Heskett’s (1985) faceof logistics that focuses on the near term.Summarizing Bowersox and Daugherty(1987), the process orientation seeks tomaximize efficiency by managing costthrough consolidating traditional SCM,operations and logistics functions includingpurchasing, manufacturing, scheduling, and

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physical distribution within the firm.Thompson (1967) summarizes thetechnological core as a sub-organizationthat is focused on the organization’technical function. This sub-organizationmay focus on, for example, the processingand supervision of administrative data(medical claims or tax returns), handlingcustomer service complaints, ortransforming raw materials into finishedproducts. Shapiro and Heskett (1985)describe the “two faces of logistics” wherethe logistics manager must simultaneously

pay attention to detail (tactical, short-term,quantitative), while being able to see thebig picture (broad, qualitative, long-term,and strategic). Here, the former of the twois comparable to Bowersox andDaugherty’s process strategy andThompson’s technological core. Theauthors concluded that Process Strategy isone component of logistics strategy.

Market Strategy is summarized byBowersox and Daugherty as a limitedgroup of traditional logistics activities that

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are managed across business units.Emphasis is on leveraging an array ofactivities (ordering, invoicing, delivery, andcustomer service) across business units toreduce complexities when doing businesswith the firm or organization. MarketStrategy corresponds roughly withThompson’s “Institutional Layer(Administrative Subsystem)” where thissub-organization mediates between thetechnical subsystem and those who use itsproducts (customers, patients, and clientsfor example) and procures the resourcesneeded for carrying out the technologicalactivities. Again, Market Strategy andShapiro and Heskett’s recognition of theneed to blend the near-term (short-termtactical, short-term, quantitative, anddetailed) with the big picture (broad,qualitative, long-term, and strategic) aresimilar. Here they also address theimportance of maintaining the secondportion, Market Strategy by recognizingthat the “two faces of logistics” arecomprised of issues included in bothProcess and Market strategies.

Information Strategy is summarized byBowersox and Daugherty as activities (dataprocessing, real estate, dealer services, andfacilities) not typically in logistics. Theemphasis of this strategy puts a high priorityon external control and is highly sensitive tothe needs of inter-organizationalcoordination. This corresponds roughlywith Thompson’s “Institutional Subsystem”where the organization must interact with anexternal environment that is complex anddynamic. Finally, Mentzer, Stank, andEsper (2008) recognize the need toexamine the relationships among inter-firmsupply chains.

Taken overall, the three dimensions of Process,Market, and Information Strategies provide aframework for (a) examining logistics strategy and(b) develop a model to assess the roles ofintervening variables on organizational

competitiveness. The following paragraph discussesthese variables. The following paragraph introducestwo variables that were used to relate logisticsstrategy to the dependent variable, organizationalcompetitiveness.

Logistics Coordination Effectiveness LCE), appearsto blend the needs of logistics management to insurethat (a) immediate needs within the organization aremet, (b) the external environment is addressedthrough strategic planning coordination, and (c) theinternal and external needs of the organization arecoordinated. Here, the strategy blends Thompson’s“Core Technology” with the “Institutional Layer”and blends “The Two Faces of Logistics” ofShapiro and Heskett. The third component of themodel, Customer Service Commitment (CSC),coordinates the organization (core technology) withthe supply chain (external environment) to facilitate acompetitive advantage. Customer ServiceCommitment, more than Process Strategy, MarketStrategy, Information Strategy, and LogisticsCoordination Effectiveness, relates to Thompson’sInstitutional Layer and Shapiro’s framework. Thefinal component of the model, the dependentvariable Organizational Competitiveness (COMP),is an outcome which emphasizes the ability of thefirm to quickly and effectively respond toThompson’s external environment and achieve theoutcome sought in Shapiro and Heskett’s “TwoFaces of Logistics.”

Constructing the ModelThe structural diagram presented in Figure 1 depictsthat overall logistics strategy is linked to process,market, and information strategy as conceptualizedby Bowersox and Daugherty (1987) and supportedby the other organizational theories discussedearlier. Also, this model shows the link betweenoverall logistics management strategy and company/division competitiveness. In this conceptualization,we emphasize that the hypothesized effect oncompetitiveness is through logistics coordination andcustomer service commitment. An alternateperspective is that logistics management contributesto organizational competitiveness through (a) thealignment of logistics with organizational strategyand (b) effective execution of Overall Logistics

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Strategy, Logistics Effectiveness, and CustomerService Commitment. Figure 1 illustrates theconceptualized framework.

TEST AND VALIDATION OF THECONCEPTUAL FRAMEWORK

To test and validate this conceptual framework, aseries of empirical studies based on the work ofBowersox and Daugherty (1998) were conductedin the United States over the last twenty-five yearsand five different countries (China, Ghana,Guatemala, Peru, and Turkey) over the last fiveyears. Using Structural Equation Modeling (SEM) inthese various studies, we have empirically tested theapplicability of the conceptualized model and thehypothesized relationships among model constructsand validated the structural robustness of theframework in different country contexts and timeperiods.

Each construct illustrated in the conceptualframework was modeled as a latent variable andmeasured by several items on a five-point Likertscale. All constructs identified in Figure 1 were usedfor the purposes of evaluating logistics strategy andits effect on organization competitiveness in U.S.manufacturing firms from 1990 to 2008 and from2010 to 2013 in Guatemala, Turkey, China, Ghana,and Peru using the identical survey instrument(When used in Guatemala, China, Turkey, Ghana,and Peru the questionnaire was translated and backtranslated by native speakers). Each dimensionidentified consisted of multi-items scales that wereused to measure constructs identified in Bowersox/Daugherty typology, namely Process, Market, andInformation Strategy (PROCSTR, MKTGSTR andINFOSTR respectively). These scale items havebeen used in several studies reported in theliterature, have sufficient content validity (Kohn and

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McGinnis, 1997b) and possess adequate levels ofreliability (George and Mallery, 2003). We alsoselected three other constructs to represent theoutcomes of logistics strategy, namely LogisticsCoordination Effectiveness (LCE), CustomerService Commitment (CSC), and Company/Division Competitiveness (COMP). The scaleitems had been previously developed using factoranalysis, have been replicated, appear to fit theconstruct name, and have relevant levels of reliability

(Kohn and McGinnis, 1997b). Data for thesemultiple studies were collected using identicallyworded questions in the survey instruments.Logistics managers in manufacturing firms were usedas subjects in the studies.

RESULTS OF EMPIRICAL TESTING

Validation of the model was conducted in two steps.To validate the proposed structure of the

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conceptualized framework, various statisticalanalyses were performed. A number of model fitindices such as Chi-square, Root Mean SquareError of Approximation (RMSEA) Goodness of FitIndex (GFI), and Comparative Fit Index (CFI) areused to assess the model fit of the hypothesizedstructure for logistics strategy. The two-stepapproach suggested by Anderson and Gerbing(1988) was used to first examine the measurementmodel and then the structural model. In themeasurement model, the hypothesized relationshipbetween the 9 logistics strategic orientationstatements and the three first order factors wereexamined to understand how well the relationshipsfit the data. As shown in Table 3, eight of nine datasets had Goodness of Fit (GFI) >0.9. ConformationFit Index (CFI) for eight of nine data sets exceeded0.9, and Root Mean Square Error ofApproximation (RMSEA) was below 0.05 in threeof the nine data sets and between 0.05 and 0.10 infive of the data sets, and above 0.10 in one data set.

In the structural model, we examined therelationship between the three first order factors andthe Logistics Coordination Effectiveness (LCE),Customer Service Commitment (CSC) andOrganizational Competitiveness (COMP). Table 4

provides the analytical structural equation resultsunderpinning the generalized model. Inspection ofTable 4 shows that GFI values in four datasets weremore than 0.90; three datasets had GFI valuesbetween 0.85 and .90, and two datasets had GFIvalues between 0.75 and 0.80. The results for CFIshow better model fit where seven datasets had CFIvalues greater than .0.90 and two datasets had CFIvalues between 0.795 and 0.874. Finally, four of thedatasets had RMSEA values less than 0.05; fourdatasets with values between 0.05 and 0.10 andone dataset (United States 1990 data) had anRMSEA value of 0.96. These indices indicatesstrong model fit for the proposed conceptualstructure.

Both the measurement model (illustrated in Table 3)and the structural model (illustrated in Table 4)provide strong statistical support for theconceptualized model of logistics managementstrategy in multiple time periods and in all countrieswhere the empirical studies were conducted. Theseresults validate the proposed causal structure and itsrobustness in different contexts. Accordingly,empirical results show that Overall LogisticsStrategy (OLS) affects Company/DivisionCompetitiveness through two intervening (or

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moderating) variables (Tabachinck and Fidell, 2007),Logistics Coordination Effectiveness (LCE) andCustomer Service Commitment (CSC). In otherwords, Overall Logistics Strategy is a necessary, butnot sufficient, condition for it to lead to increasedorganizational competitiveness. If the OverallLogistics Strategy is accompanied by (a) effectivelogistics coordination and (b) customer serviceeffectiveness then the organization competitiveness islikely to be greater.

CONCLUSION AND DISCUSSION

Based on the empirically tested conceptual model andthe organizational thought discussed earlier, it is clearthat the organizations must strive to perform well interms of hard measures of performance (thetechnological core) while responding to an externalenvironment that is complex and difficult to forecast.Mediation between the two is accomplished throughthe institutional subsystem (administrative level) whichseeks flexibility from the technological core whileseeking commitment from the external environment.

The model of logistics management described in thismanuscript, and indicated by the results of Table 3,offers a reconciliation of a similar dichotomy whereday to day execution of (Process Strategy) iscombined with two other constructs (Market Strategyand Information Strategy) to achieve the efficiency,flexibility, intra-organizational coordination, and controlneeded to respond to other organization functions andthe external environment. Stated another way,Logistics Coordination Effectiveness and CustomerService Commitment are mediating (or implementing)variables that further contribute to OrganizationalCompetitiveness. The empirical results support thisconceptualization that the impact of the OLS onCOMP is strongest when it is mediated by LCE andCSC, as shown in Table 4.

While logistics management strategy is found tocontribute to Organizational Competitiveness, it is notthe contention of this manuscript that it is the soledeterminant of organizational competitiveness. Ourempirical results tested in various countries over timeindicate that the explained variance by the modelconstructs ranges between R2=0.10 to R2=0.75. A

number of other major factors are known toaffect Organizational Competitiveness were notincluded in our conceptualized framework. Forinstance, product characteristics, marketingstrength, organization strategy, manufacturingcapabilities and flexibility, financial strength anddecisions, human resource strategies, and theorganization’s culture are known to influencecompetitiveness. However, it is clear that at leastin some industries, in the absence of an effectiveOverall Logistics Strategy together with LogisticsCoordination Effectiveness, and CustomerService Commitment, the potential of the othermajor factors discussed above may not berealized.

For teachers, this paper provides a context forunderstanding the conflicting roles of logisticsmanagement and the need to understand theimportance of both the immediate and long term.So often the execution of logistics managementactivities must be conducted in the context of theorganization’s overall strategy. For practitioners,the insights provided in this paper help put therole of logistics management in perspective. Inaddition, this paper helps practitioners appreciatethe need to think both of day to day executionand long term strategy. Researchers may benefitfrom the insights provided in this paper to furtherpursue the roles of logistics/supply management ina variety of industries, cultures, and multi-nationalorganizations. In addition, future research mayvalidate, modify, or challenge the finding of theresults presented in this paper.

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BIOGRAPHIES

Michael A. McGinnis, CPSM, C.P.M. is formerly Professor of Business at the Penn State NewKensington Campus. He recently passed away. Michael had been a major contributor to the journal aswell as serving as its Associate Editor and will be missed by the JTM community and all of his colleagues.He held B.S. and M.S. degrees from Michigan State University and a D.B.A. degree from the University ofMaryland. His research areas were in purchasing, logistics strategy, negotiations, and supply chainmanagement. E-mail: mam47@psu.edu

Ali Kara is Professor Marketing at the Penn State York Campus. He holds a doctorate from FloridaInternational University, Miami, Florida and an MBA degree from the University of Bridgeport, Connecticut.He has published numerous articles in journals such as the Journal of Marketing Research, Journal ofAdvertising, International Journal of Research in Marketing, European Journal of OperationsResearch, Journal of Global Marketing, and the International Journal of Logistics Management. E-mail: axk19@psu.edu

Leslie I. Wolfe is a Project Portfolio Manager at Penn State Electro-Optics Center. E-mail:lid101@psu.edu